Commodity prices showed mixed trends amid unresolved Middle East tensions, supply concerns stemming from the effective closure of the Strait of Hormuz, elevated oil prices fueling inflation expectations, and upcoming monetary policy decisions by major central banks.
Maritime shipping risks in the Strait of Hormuz sustained a geopolitical risk premium in oil and natural gas, while energy-driven inflation continued to influence market expectations.
Markets remain cautious as uncertainty persists over whether the US and Iran will continue negotiations. The US’ steps to restart negotiations on April 24 partially supported risk appetite in commodity markets.
White House spokesperson Karoline Leavitt said Steve Witkoff, the US Special Envoy to the Middle East, and President Donald Trump’s son-in-law Jared Kushner are expected to attend the talks in Islamabad, Pakistan, while Vice President JD Vance will not be present.
The Fed is expected to maintain its policy rate within the 3.5–3.75% range at its upcoming meeting, while Middle East–related issues could drive up inflationary pressures and potentially delay rate cuts.
Fed Chair Jerome Powell’s guidance is expected to shed light on the bank's future policy roadmap, while the upcoming meeting could very well be his last before his term expires, if Trump-nominated Kevin Warsh’s appointment is approved by Senate.
Strong US dollar, high interest rates pressure precious metals
Precious metals traded negative last week amid Middle East concerns.
Uncertainties over peace negotiations, supply concerns, and persistently high energy costs continue to fuel global inflation estimates, reinforcing the likelihood that central banks may adopt a more cautious approach moving forward.
The US Dollar Index rebounded and US Treasury bond yields rose amid waning estimates for rate cuts, pressuring non-yielding precious metals.
Silver fell 6.5%, platinum 4.5%, palladium 4.5%, and gold 2.6% per ounce.
Analysts say geopolitical risks continued to support safe haven assets, especially gold, throughout the week.
As for base metals, investors focused on China’s macroeconomic data, as it showed that the country’s industrial growth continued while the slowdown in domestic demand and investment persisted in March.
China’s industrial production rose 5.7% year-on-year and its retail sales climbed 1.7%, marking a slowdown, while fixed-asset investment in the country increased 1.7% in the first quarter, below expectations.
Nickel surged 6.3% per pound amid supply concerns and expectations, as well as reports of a potential reduction in the supply surplus and expectations of a recovery in stainless steel demand.
Aluminum increased 1.2% due to its energy-intensive production and logistics facing risks amid the tensions in the Middle East.
Copper fell 0.8% due to mixed signals on the Chinese demand side and uncertainty over the global growth outlook.
Lead prices traded flat last week.
Brent crude oil surged 13.5% per barrel with no peace prospects in sight between the US and Iran, heightened concerns over oil supply disruptions, and increased risks related to maritime trade.
Natural gas climbed 0.3% over reports that negotiations could resume on certain days of the week leading to a limited easing in prices but supply concerns still remain high.
At the same time, rising logistics and energy costs drove up agricultural commodities.
Oil, fertilizer, freight, and insurance costs continued to weigh on agricultural products.
Only 30% of winter wheat is in good condition, according to the US Agriculture Department.
Russia eliminated wheat export duties and revised production forecasts upward, limiting prices on the global supply side.
Wheat climbed 2.8% per bushel over these developments.
Corn increased 1.3% due to strong export demand and rising energy markets.
Rice and soybeans fell 2.7% and 0.5%, respectively, while sugar rose 4.6% and coffee gained 3.7% per pound, and cotton fell 0.3%.
Cocoa ended last week with a 4.8% surge per ton.
*Writing by Emir Yildirim
