Commodity markets experienced significant volatility, with precious metals and oil declining sharply as geopolitical tensions around Iran showed signs of easing and the US dollar strengthened. Gold prices fell below the $4,600 level, facing resistance around $4,640, while silver experienced a more pronounced sell-off, dropping over 4.5% to below $90 per ounce after hitting record highs above $93 earlier in the week.
The decline was driven by two primary factors: a reduction in safe-haven demand following statements from US President Donald Trump indicating that protestor killings in Iran were ceasing, and a stronger US dollar. The dollar index reached its highest level since December 2 after data showed an unexpected drop in US weekly jobless claims to 198,000 for the week ended January 10, well below the Reuters forecast of 215,000.
Oil markets saw dramatic swings, plunging nearly 5% on Thursday after Trump's comments alleviated fears of immediate US military action against Iran. West Texas Intermediate crude fell to $59.09 per barrel. However, prices rebounded over 1% on Friday, with WTI at $59.87, as supply concerns persisted. Analysts noted that while immediate military intervention risk decreased, worries remain about potential Iranian blockade of the Strait of Hormuz, through which about a quarter of seaborne oil supplies flow.
Base metals also declined, with copper dropping 3% to $12,739 per ton and aluminium falling 1.6% to $3,118.50 per ton. The stronger dollar made dollar-priced commodities more expensive for overseas buyers, while firm statements from multiple Federal Reserve officials emphasizing the ongoing priority of combating inflation and maintaining restrictive policies added downward pressure.
Market analysts expressed uncertainty about whether the commodity selloffs represent a correction or a temporary pause. David Morrison, senior market analyst at Trade Nation, noted that silver remains "significantly overbought" with its daily MACD twice as high as levels reached at the peak of its last bull market in April 2011.
