Summary
- Markets are rebuilding inflation risk through oil, with the dollar supported by relative energy resilience.
- Base metals remain supported, but selling into strength suggests upside is becoming more contested.
- Oil stays elevated on disrupted flows, while precious metals remain directionless and macro-driven.
Macro
US equities pulled back as momentum around US–Iran talks faded, with no follow-up meeting taking place despite the extension of the truce. At the same time, tensions in the Strait of Hormuz remain elevated, with both sides continuing to assert control, leaving shipping flows disrupted and the situation unresolved in practical terms.
Oil pushed higher for a fourth consecutive session, reflecting the lack of progress and continued disruption to flows, reinforcing inflation concerns. The dollar held firm above 98.6, supported by the relative positioning of the US economy. Compared to Europe and parts of Asia, the US is less exposed to imported energy shocks, which improves its relative growth outlook when oil prices rise. This dynamic tends to favour the dollar against currencies like the euro and sterling, particularly in an environment of elevated energy costs. At the same time, the US 10-year yield edged lower below 4.3%, suggesting that markets are beginning to weigh the potential growth impact of prolonged disruption.
Base metals
Base metals came under pressure early in the session but recovered most of the losses into the close, highlighting continued underlying support.
Copper dropped towards 13200/t before rebounding to 13400/t as the dollar softened later in the day. However, the move higher was met with a spike in volumes, followed by a pullback. This suggests selling into strength, indicating that while buyers remain active, higher levels are attracting profit-taking and limiting immediate follow-through.
Aluminium was rangebound but managed to retake 3600/t by the end of the session, with the cash-to-three-month spread holding in backwardation around 60. This points to continued tightness in the nearby structure, supporting prices despite intraday volatility.
Nickel outperformed, rising to test 18700/t. The move is supported by a combination of supply-side factors, including policy developments in Indonesia that are lifting the cost base for producers, as well as ongoing constraints in processing inputs such as sulphuric acid. Together, these factors are reinforcing a more constructive outlook for nickel, even as broader macro conditions remain uncertain.
Overall, the complex remains supported, but price action suggests that upside momentum is becoming more contested, with selling emerging at higher levels.
Precious metals and oil
Precious metals were rangebound, with gold testing support near 4700/oz and holding for now, while silver dropped towards 74/oz before recovering to around 76/oz. The lack of clear direction reflects the balance between a firm dollar and ongoing geopolitical uncertainty, with metals remaining highly sensitive to macro drivers.
Oil prices remained elevated, with Brent above 102/bbl and WTI higher, as disruption in the Strait of Hormuz continues to constrain flows despite the extended truce.
Looking ahead, the key theme remains unchanged. Markets are adjusting to a scenario where the conflict is neither escalating sharply nor resolving, leaving a persistent risk premium across energy and keeping broader asset price direction closely tied to headline developments.