Crude oil reversed early gains on Friday as an Iranian proposal to end the war in the Middle East weighed on sentiment.
However, oil prices were set for a weekly gain with Brent prices touching $126 per barrel earlier this week, a four-year high.
Gold prices rebounded with the yellow metal climbing past $4,600 per ounce on hopes that an end to the Iran war would lead to lower inflation and interest rates.
Aluminium prices on the London Metal Exchange rose above $3,500 per ton.
The three-month contract was at $3,516 per ton, up 0.9% from the previous close.
Meanwhile, the three-month copper contract on LME fell 0.4% to $12,968 per ton.
Oil falls sharply, but set for weekly gain
Crude oil futures plunged on Friday following an Iranian proposal for negotiations with the US.
Despite the drop on Friday, prices are still set for weekly gains, as Iran continues to block the Strait of Hormuz and the US Navy maintains its blockade on Iranian crude exports.
The closure of the Strait of Hormuz, following the late February attack on Iran by the US and Israel, has caused a significant surge in oil prices.
This disruption has affected the shipment of approximately 20% of the global supply of oil and liquefied natural gas.
Deep mistrust persists on all sides, evident in the statement from UAE presidential adviser Anwar Gargash on Friday that Tehran’s unilateral arrangements for the Strait of Hormuz could not be trusted.
This friction occurs despite a ceasefire that has been in effect since April 8.
Oil prices surged to intraday highs before receding, following a threat from a senior Iranian Revolutionary Guards official on Thursday.
The official warned of “long and painful strikes” against US positions should Washington resume attacks on Iran.
At the time of writing, Brent crude oil was trading at $108.23 per barrel, down 2%, while the West Texas Intermediate price was at $101.73 a barrel, down 3.2% from the previous close.
Despite a daily dip, the Brent and WTI benchmarks were still set to end the week with a gain.
Brent’s June contract had reached its highest point since March 2022 on Thursday, touching $126.41 a barrel before ultimately closing lower.
Gold rises
Gold prices recovered on Friday, erasing earlier losses of over 1%.
This reversal was fueled by optimism regarding a potential resolution to the Iran conflict, following reports that Tehran had presented a new negotiation proposal, which helped alleviate some concerns about inflation.
The dollar index decreased by 0.3%, making gold, which is priced in the greenback, more affordable for international buyers.
Concerns about a global economic slowdown and persistent inflation, driven by rising fuel costs, were sustained despite a drop in oil prices.
Nonetheless, oil remains on course for weekly gains.
Iran has submitted its latest proposal for negotiations with the US to Pakistani mediators, as reported by Iran’s state news agency, IRNA, on Thursday.
Central banks’ potential need to maintain higher interest rates due to rising costs is a negative factor for non-yielding assets like gold, as investors are increasingly drawn to alternatives such as Treasury yields.
This trend is reinforced by the US Federal Reserve’s decision this week to keep interest rates steady and adopt a hawkish stance, leading markets to abandon expectations of a rate cut this year.
Furthermore, despite gold’s traditional function as a hedge against geopolitical risk, bullion prices have declined since the outbreak of the Iran conflict in late February.
The COMEX gold contract was last at $4,650.84 per ounce, up 0.5%, while silver was at $76.630 per ounce, up 3.5%.
“(Gold) continues to struggle to find upside momentum. But it’s unclear if it has further to fall, or if it will manage to consolidate around current levels,” said David Morrison, senior market analyst at Trade Nation.
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