Brent crude below $79, gold nears $4,160 as markets bet on Hormuz reopening
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Crude oil prices dropped below $79 per barrel on Wednesday, while precious and industrial metals advanced, as hopes for a deal to reopen the Strait of Hormuz eased inflation fears. Gold rose toward $4,160 an ounce and copper strengthened to $6.64 a pound, even as agricultural commodities weakened.
Crude Oil Slump
Brent crude dropped below $79 per barrel on August 5, driven by optimism over a potential agreement to reopen the Strait of Hormuz. The decline reduced the inflation premium embedded in oil prices, leading markets to lower expectations for aggressive Federal Reserve tightening. The probability of a September rate hike fell to around 57%, according to CME Group data. Traders now await the ADP employment report for further clues on U.S. economic strength.
Precious Metals Surge
Gold rallied to approximately $4,160 per ounce, while silver outpaced the yellow metal, rising to near $61 per ounce. The rally was supported by a weaker U.S. dollar and steady demand from Chinese exchange-traded funds, which kept interest above the key $4,000 level. Platinum traded around $1,775 and palladium held above $1,370, with both benefiting from improving sentiment in the broader metals complex. The drop in oil prices also eased pressure on bond yields, making non-yielding assets more attractive.
Industrial and Agricultural Divergence
Copper advanced to $6.64 per pound, standing out as the strongest performer among industrial metals. Steel and iron ore remained under pressure, however, weighed by persistent weakness in China's property sector and thin margins for steelmakers. Agricultural markets lacked a clear direction, with wheat hovering near five-week lows after Black Sea logistics risks eased, while corn traded flat and soft commodities such as coffee, sugar and orange juice declined. The sector enters a cooling phase after July's price spikes.
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