Commodity wrap: geopolitical tensions boost bullion; oil prices slump

Gold and silver prices hit fresh record highs on Monday as safe-haven demand increased sharply due to ongoing geopolitical tensions.Gold prices on COMEX breached the $4,600-per-ounce mark for the first time ever on Monday, while silver hit a record $85.720 per ounce earlier in the day.Meanwhile, oil prices rose for most of the day before giving up those gains to trade in the red on concerns over additional supply.Additionally, copper’s ongoing rally, supported by a weaker dollar, is contributing to a rise in base metal prices on Monday.Bullion hits record highsGold’s rally continued for a third consecutive session, briefly surpassing the $4,600 an ounce mark, a historic first.This sustained ascent is driven by robust safe-haven demand, with investors responding to a complex geopolitical landscape including US involvement in Venezuela, heightened tensions in Iran, the ongoing Russia-Ukraine conflict, friction between China and Japan, and renewed discourse concerning Greenland.Growing tensions between the Federal Reserve and the Trump administration led to a drop in Wall Street futures and the dollar’s largest three-week decline.Fed Chairman Jerome Powell characterised the threat of indictment against him, stemming from Congressional testimony he gave last summer, as a “pretext.”He suggested the true motivation was to allow the Trump administration to exert greater influence over interest rates, which the US President is pushing to have drastically reduced.The action was criticised by Powell, who described it as being related to US President Donald Trump’s broader effort to increase control over the Fed.“Still, upside momentum may be tempered by Friday’s jobs data, which reduced expectations for aggressive Fed easing in 2026,” David Morrison, senior market analyst at Trade Nation, said.With US inflation data due tomorrow and Wednesday, some traders appear hesitant to chase gold prices higher from current levels.Silver continues its strong performance, hitting a new all-time high above $84.60 per ounce earlier this morning with a gain of over 5%, before slightly easing. Notably, silver’s rally remains significantly stronger than that of gold.Oil slipsOil prices began the week on a firmer footing, but the initial gains were lost as they subsequently pulled back from a four-week high.Front-month West Texas Intermediate crude slipped back below $59 following a strong rally in the latter half of last week.Oil prices saw a decline on Monday due to two main factors: Iran’s announcement that it had regained complete control following the largest anti-government protests in years, which eased anxieties about supply from the OPEC member, and investors assessing ongoing efforts to restart oil exports from Venezuela.Foreign Minister Abbas Araqchi stated on Monday that following widespread weekend demonstrations, the situation in Iran is “under total control.”A rights group reported on Sunday that the civil unrest in Iran has resulted in over 500 deaths.This situation prompted US President Donald Trump to issue a warning of potential military intervention should the crackdown on the Iranian protests turn violent.Meanwhile, following the removal of President Nicolas Maduro, Venezuela is anticipated to soon restart oil exports.Last week, Trump announced that the government in Caracas is prepared to transfer up to 50 million barrels of previously sanctioned oil to the US.According to four sources familiar with the operations, this development has sparked a competition among oil companies.Their immediate goals are to secure tankers and establish procedures for the safe shipment of crude oil from vessels and the ageing ports of Venezuela.“Traders are also watching developments in Russia, where ongoing Ukrainian attacks on energy infrastructure and potential new US sanctions add another layer of complexity,” said Trade Nation’s Morrison.At the time of writing, the price of WTI crude was at $58.84 per barrel, down 0.2%, while Brent was at $63.11 a barrel, down 0.4%.Base metalsBase metals are experiencing a morning rally, primarily driven by a weaker dollar and the continued surge in copper prices.Adding to market developments, US non-farm payrolls data for December disappointed, falling below expectations and including a downward revision of previous figures.Furthermore, statements from US Fed officials have dampened short-term anticipation for interest rate cuts.Separately, Jerome Powell disclosed that the Fed was served grand jury subpoenas, which threatened criminal charges concerning his testimony on renovations at the central bank’s headquarters.Meanwhile, last month, Pan Pacific Copper (PPC) proposed a record-high copper premium of $330/mt to its domestic Japanese customers for 2026.The company is Japan’s largest refined copper supplier.“This spot delivery price is more than three times the 2025 level of $88, and is a premium on top of the three-month LME copper price, reflecting market supply and demand fundamentals,” Neil Welsh, head of metals at FCA-regulated brokerage Britannia Global Markets.At the time of writing, the three-month copper contract was at $13,012 per ton, up 0.2%, while the aluminium contract was steady at $3,148 per ton.The post Commodity wrap: geopolitical tensions boost bullion; oil prices slump appeared first on Invezz