Crude oil prices declined after both the United States and Iran indicated they were in discussions regarding the restoration of shipping through the Strait of Hormuz, boosting expectations for increased Middle Eastern crude supply. Zinc prices slipped from a near four-year high following a series of indicators showing supply is struggling to meet demand. Gold prices were volatile as traders reassessed the Federal Reserve's interest rate path after easing Middle East tensions alleviated energy-driven inflationary pressures.
Oil prices fell as signals from the US and Iran regarding negotiations to reopen the Strait of Hormuz raised hopes for additional crude supply from the Middle East. West Texas Intermediate crude dropped approximately 5%, settling around $80 per barrel. The specifics of the talks remain unclear, with Iran hinting at progress in negotiations with Oman to establish a "temporary" shipping route through the Strait, but not directly with the US. Meanwhile, US President Donald Trump stated on Monday that the two sides are negotiating to reopen the waterway. Trump also indicated that, after he called off a planned major military strike, these talks represent Iran's "last chance." There is no sign yet that Iran is willing to allow free passage for vessels, but the signals from both sides have eased market fears of widespread attacks on Middle Eastern energy infrastructure. While some ships continue to transit the Strait of Hormuz, shipping risks in the waterway remain elevated. European natural gas prices also narrowed their losses, having fallen as much as 6.3% during the session. September-delivery WTI fell 5.1%, settling at $80.34 per barrel. October-delivery Brent crude declined 4.7%, settling at $83.77 per barrel.
Base metal zinc prices slipped after reaching a near four-year high, as a series of indicators suggested supply is struggling to meet demand. The metal, primarily used for galvanizing steel, rose for a fourth consecutive month in July, pressured by declining global inventories and negative treatment charges that strain smelter production. On the first trading day of August, zinc on the London Metal Exchange climbed 1.7% to $3,703.50 per tonne before giving up those gains. At the close of trading, LME copper rose 0.6% to $13,870 per tonne. LME aluminum increased 1.2% to $3,221.5 per tonne. LME nickel fell 1.1% to $17,060 per tonne. LME zinc edged down 0.1% to $3,641 per tonne. LME tin gained 0.3% to $55,446 per tonne. LME lead slipped 0.6% to $1,867 per tonne.
Precious metal gold traded with volatility as traders reassessed the Federal Reserve's interest rate path after the de-escalation of Middle East tensions eased energy-driven inflationary concerns. Gold was trading near $4,050 per ounce. The metal gained 1% in July, its first monthly increase since February. US President Donald Trump stated that new negotiations with Iran would begin on Monday afternoon. US crude oil futures settled near $80 per barrel, and US Treasury yields also retreated. "Following the Fed meeting, the environment supporting gold prices has improved," said Samantha Dart, co-head of global commodities research at Goldman Sachs. She noted that worries about further interest rate increases could raise the opportunity cost of holding gold, prompting investors to reduce their positions. "From a tactical perspective, we are not entirely out of the woods yet." As of 4:07 PM Eastern Time, spot gold was up 0.1% at $4,051.32 per ounce. Spot silver rose 0.7% to $58.004 per ounce.
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