Commodity wrap: Gold tops $4,700 as crude oil hits 2-week low

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Oil prices tumbled more than 8% on Wednesday, while gold jumped above $4,700 per ounce as hopes of an end to the US-Iran war influenced the markets.Gold on COMEX breached the $4,700 per ounce level for the first time since April 24 as energy prices tumbled, easing concerns about higher inflation and interest rates.Silver prices on COMEX also surged more than 6% to above $78 per ounce.Global economic sentiment improved following signs of the US attempting to de-escalate the conflict in Iran, driving copper prices higher for the third consecutive session.Meanwhile, aluminium slipped more than 1.5% as supply concerns eased.Gold jumps to over 1-week highFollowing reports of a potential peace agreement between the US and Iran, gold prices rose to a more than one-week high on Wednesday.This news alleviated concerns about persistent high inflation and a prolonged era of elevated interest rates.At the time of writing, the COMEX gold contract was at $4,709.30 per ounce, up 3.1%, and had risen to $4,733.86 earlier in the day, its highest level since April 24.Silver was up 5.9% at $77.895 per ounce.“The move was closely correlated to the downside move in the US dollar,” said David Morrison, senior market analyst at Trade Nation.“Investors began to cut their long side dollar positions as it became apparent that the Trump administration was winding down its operations to escort shipping through the Strait of Hormuz.”The 0.5% drop in the US dollar index resulted in a lower cost for greenback-priced metals for holders of other currencies.Risk appetite saw a resurgence as oil prices dropped by approximately 9%.This shift was prompted by reports that the US and Iran were nearing an agreement on a one-page memo to end their conflict, leading to the dollar selling off further while gold received an additional boost.“It’s unclear what may be in the agreement, especially concerning the reopening of the Strait of Hormuz. But investors seem confident that, ten weeks into the war, an end to hostilities may be in sight,” Morrison said.Rising energy costs, upward inflationary pressure, and a strengthening US dollar had collectively exerted sustained downside pressure on silver prices during the conflict.Today’s sharp pullback in oil prices has provided some relief, though the outlook remains sensitive to both central bank policy and geopolitical developments.David MorrisonSenior m...

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