[MARKET ANALYSIS] Crude futures pare earlier gains, spot gold returns to flat as softer USD lifts metals

Crude futures initially surged on geopolitical tensions but have since lost momentum, reflecting market skepticism about potential negotiations with Iran.

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[MARKET ANALYSIS] Crude futures pare earlier gains, spot gold returns to flat as softer USD lifts metals

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  • Crude futures started that Asia-Pac session with gains as much as USD 2/bbl amid dim prospects of another round of US-Iran talks. This came after US President Trump announced that he would not be sending Special Envoy Witkoff and Jared Kushner to Islamabad, saying there would be “too much time wasted on travelling.” WTI and Brent peaked at USD 96.68/bbl and USD 107.97/bbl, respectively. Energy prices have since ground lower, with a limited reaction seen following the Axios report detailing that Iran gave the US a new proposal, through Pakistani mediators, for reaching a deal on reopening the Strait of Hormuz and ending the war. 
  • In other news, the ceasefire between Lebanon and Israel has seemingly broken down, with both sides continuing to fire missiles. More recently, it has been reported that Israeli artillery shelling has targeted eastern Gaza city, while Hezbollah announced they targeted a gathering of Israeli enemy vehicles and soldiers with a guided missile in Tel al-Nahas in southern Lebanon.
  • Precious Metals have completely reversed the earlier losses and now point to modest gains as a softer dollar supports the metals space. Spot gold fell from USD 4720/oz to a session low of USD 4672/oz but now trades around its opening price. 
  • 3M LME Copper started on the backfoot but now trades at session highs, breaking through the intraday resistance of USD 13.35k/t. The lift in the red metal came amid the constructive risk tone following the Axios report. 
Context

Meanwhile, a weaker USD has buoyed precious metals, leading to a rebound in gold and copper prices as traders react to the shifting risk sentiment in the market, particularly in light of ongoing conflicts in the Middle East.

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