Gold prices on COMEX rebounded more than 2% on Friday, recovering from a seven-month low earlier in the week, as investors weighed the impact of potential US-Iran peace talks on the broader commodity market. Meanwhile, crude oil fell nearly 3% on optimism that a deal between Washington and Tehran could ease supply disruptions in the Strait of Hormuz.
Gold Recovers but Faces Weekly Loss
The precious metal was on track for a second consecutive weekly decline, pressured by expectations of higher interest rates. At the time of writing, COMEX gold stood at $4,201.22 per ounce, up 2.1%, while silver climbed 3.9% to $66.490 per ounce. Despite the rebound, gold has been under pressure since late February, as oil-driven inflation raised concerns that central banks would keep rates elevated. Higher interest rates typically erode the appeal of non-yielding assets like gold.
Traders are currently pricing in a 58% probability of a US rate hike by December, according to CME Group’s FedWatch tool. Data this week showed US producer prices rose more than expected in May, while consumer inflation jumped above 4%, adding to the case for tighter policy. Attention now turns to the Fed’s June 16–17 meeting, the first chaired by Kevin Warsh, where markets expect rates to remain unchanged. If Warsh surprises with hawkish remarks, gold could fall further; if he dampens rate hike expectations, the metal may recover slightly.
In a sign of broader market pressures, Rolex raised global prices of its gold watches by an average of 5% this month, marking a rare second annual increase across key markets including Britain, Hong Kong, and the United States, according to luxury research platforms and dealers.
Oil Slips on US-Iran Deal Hopes
Oil prices fell sharply on Friday as investors grew hopeful that a deal to end the US–Iran war was close, despite conflicting accounts from Washington and Tehran. West Texas Intermediate crude was last at $85.39 a barrel, down 2.8%, while Brent crude fell 2.7% to $87.98 a barrel. Crude dropped about 5% at the session low after President Donald Trump said Thursday the US had “made a great settlement of the war with Iran” that could be signed within days. Prices later rebounded somewhat after Trump dismissed terms published by Iranian media, insisting they had “nothing to do” with what was agreed in writing.
Iran’s state news agency Mehrs released a 14-point document claiming the US had agreed to withdraw forces from around Iran, lift its naval blockade within 30 days, and provide $300 billion in reconstruction funds. In return, Iran would reopen the Strait of Hormuz under arrangements set by Tehran. Despite the heightened rhetoric, analysts said oil prices have remained relatively contained. BMO Capital Markets noted that alternative shipping routes around the Strait, ongoing diplomatic efforts, and weaker Chinese crude imports have helped offset geopolitical risks. Citi echoed that view, highlighting that China’s reduced demand has eased fears of a bidding war for supplies. The bank estimated China could sustain imports near 8.7 million barrels per day without significantly depleting inventories, suggesting demand from Asia may not provide a major boost to prices in the near term.
Base Metals Rise Ahead of China Data
Among base metals, the three-month copper contract on the London Metal Exchange rose 1.1% to $13,637.47 per ton, while aluminum gained 0.2% to $3,522.15 per ton. For the oil and base metals markets, China’s May production data will be of interest next week, according to Commerzbank AG analysts. Metal production is expected to keep expanding, particularly in aluminum output. “A new record in production could deal a further blow to the price rally in the aluminum market, which has already stalled recently,” said Barbara Lambrecht, commodity analyst at Commerzbank.
The combination of diplomatic uncertainty, muted Chinese demand, and alternative supply channels has kept oil markets from spiraling higher, even as hostilities between Washington and Tehran continue. For more on related market movements, see our coverage of Gold Slips Below $4,040 as Oil Rally Revives Fed Rate Hike Fears and Energy Stocks Surge as Crude Oil Rebounds 20% on Renewed US-Iran Tensions.
This article is for informational purposes only and does not constitute financial advice.
