Commodities continue to trade with a “risk-on/war-off” tone as oil prices plunged recently before recovering some losses amid shifting headlines surrounding US-Iran ceasefire prospects, writes Tom Essaye, president of the Sevens Report.
WTI crude futures were down more than 10% pre-market the other day, before trimming roughly half the decline. The sharp drop in oil weighed heavily on the commodity complex, sending the broad-based Invesco DB Commodity Index Tracking Fund (DBC) down 3.1%.
Meanwhile, both precious and industrial metals posted strong gains. Industrial metals modestly outperformed, with copper jumping 3.3% to within 2% of its Q1 all-time closing high near $6.30.
The renewed strength in copper remains an important bullish confirmation signal for markets because the metal continues to act as a proxy for both the broader global economy and the semiconductor/AI trade powering stocks higher.
Looking at gold, the two biggest tailwinds for the yellow metal were the “war-off” move as the dollar weakened and Treasury yields fell, helping push real interest rates lower. Gold futures rallied 2.6% on the day.
However, the rebound in gold has been less impressive than copper’s recovery, with futures still sitting more than 15% below their Q1 highs. Overall, gold remains range-bound with support near $4,500 and resistance around $4,900.
