Commodity markets experienced a mixed session on Thursday. Oil prices declined as traders assessed the situation in the Middle East, while gold prices rebounded after a three-day losing streak. Base metals in London traded higher, aligning with a broader risk-on sentiment.
Crude Oil
Oil prices fell as market participants anticipated that the conflict between the U.S. and Iran would remain contained, easing concerns about renewed attacks on energy infrastructure.
Following a series of U.S. strikes against Iranian targets, shipping traffic through the Strait of Hormuz nearly halted, further straining an already fragile ceasefire between the two nations.
However, the market found some reassurance as the U.S. did not target Iranian energy facilities, and comments from the U.S. President downplaying the likelihood of a full-scale war fueled speculation that shipping activity could soon recover.
Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, noted, "The airstrike campaign appears relatively measured. Investors still expect a gradual normalization of the market. Recent developments may delay that expectation, but they haven't overturned it completely."
Shipowners are divided on continuing voyages through the Strait of Hormuz following a series of attacks on commercial vessels attributed to Iran.
Analysts at Goldman Sachs stated that recent attacks in the strait suggest the primary constraint on a rapid recovery in freight volumes is Iran's willingness to permit vessel passage, rather than shipping capacity itself.
The bank added that disruptions to Strait of Hormuz traffic could slow the region's production recovery.
Brent crude for September delivery fell 2.2% to settle at $76.30 a barrel, having earlier reached as high as $79.25. West Texas Intermediate for August delivery declined 2% to settle at $72.08 a barrel.
Precious Metals
Gold prices found support after three consecutive days of losses, with traders weighing developments in the Middle East and the potential path for U.S. interest rates.
The metal rose as much as 1.5%, trading around $4,100 per ounce. For gold traders, the reignited conflict raises the possibility of the U.S. Federal Reserve maintaining higher interest rates for longer to combat inflation, which is typically negative for non-yielding assets like gold.
Ole Hansen, head of commodity strategy at Saxo Bank, said gold found support above $4,050 an ounce and is now rebounding alongside a weaker dollar and lower Treasury yields. "All in all, the price action over the past 24 hours has strengthened my conviction that gold has moved from a capitulation sell-off to a consolidation phase," he stated.
Since the Iran war began in late February, gold has fallen more than a fifth, with profit-taking ending a three-year bull run and recently pushing prices below $4,000 on several occasions.
The sell-off has prompted banks to lower their price forecasts. HSBC cut its average price forecast for 2026 by 6.3% to $4,560 an ounce on Thursday, following similar downgrades from other investment banks including UBS, Deutsche Bank, and Goldman Sachs.
Spot gold was up 1.1% at $4,120.49 an ounce as of 3:44 p.m. in New York. Silver gained 2.8% to $59.91 an ounce, while platinum and palladium also advanced.
Base Metals
Copper prices rose, leading a broad rebound in industrial metals as the market looked past the latest U.S. strikes against Iran and instead followed a general uptick in risk assets.
Copper on the London Metal Exchange climbed 2.5% to settle at $13,489.50 a metric ton, recouping losses from earlier in the week triggered by the escalation in conflict. U.S. equity markets also moved higher on Thursday.
Al Munro, a metals strategist at Marex Group, said copper is also supported by a range of fundamental factors, including supply challenges in South America.
"Fast money dominates the trading landscape, so you see a lot of intraday volatility," Munro said via phone. "At the same time, the market continues to buy the dip."
Zinc prices jumped 3.1% following media reports of a brief fire at a major zinc smelter in South Korea operated by Young Poong Corporation. A company executive stated that, to their knowledge, production was not affected.
Other base metals on the LME also traded higher, with aluminum up 2.2% and nickel gaining 1.5%.
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