Commodity markets are showing a mixed picture this morning (Friday, June 12): gold and copper are rallying sharply while crude oil slides to its lowest in two months, driven by growing optimism over a potential US-Iran deal that could reopen the Strait of Hormuz.
Oil — Political optimism weighs on prices
WTI crude futures are trading around $86.30 per barrel, down about 1.7% on the day, after touching the lowest levels in two months. Brent crude is also declining to around $88.60, a similar drop.
The key driver: President Trump stated that a "very, very good deal" with Iran could be reached as early as the weekend, including the possibility of reopening the Strait of Hormuz. The statement follows months of conflict that shut down major shipping routes and reduced global oil supply.
Javier Blas, Bloomberg Opinion's energy and commodities columnist, published a note this week titled "10 Reasons Oil Is Still Below $100 a Barrel" despite the Middle East disruptions. In a separate piece headlined "Brace for a Flood of Oil as Soon as Hormuz Reopens," Blas signals a significant supply glut in the pipeline.
Meanwhile, OPEC+ continues to ramp up output, amplifying investor concerns about supply surpluses in coming quarters.
Gold jumps 2% — but remains near lows
Gold is rallying about 2% this morning to $4,196 per ounce, after touching a 7-month low around $4,114 on Thursday. The recovery comes amid reports that the US cancelled planned airstrikes on Iran, renewing geopolitical risk.
However, on a monthly basis, gold is still down more than 10% in June alone and about 25% from its January peak of $5,589. Key headwinds: a strong US dollar (DXY around 99.8) and expectations for higher-for-longer interest rates following the May CPI report showing annual inflation of 4.2% — the highest since 2023.
Saxo Bank's Head of Commodity Strategy, Ole Hansen, maintains a bullish long-term outlook with a $6,000 target within 12 months, citing high public debt and fiscal deficits.
Industrial metals and agriculture
Copper is surging about 2% to $6.37 per pound, extending its recovery from recent lows. Silver is also edging higher around $67 per ounce.
Natural gas (Henry Hub) is slightly weaker at around $3.13 per MMBtu.
In agriculture, yesterday's WASDE report (June 11) showed only minor changes to the 2026/27 season outlook. Corn is trading around $4.11 per bushel, soybeans around $11.13, and wheat edged up to $5.89 per bushel.
Why it matters
Commodity markets are at a critical juncture: on one hand, signs of a political resolution in Iran could release large quantities of oil onto the market; on the other hand, persistent inflation and a strong dollar continue to weigh on gold. Sectors are moving in opposite directions, signaling high uncertainty among investors.
Bottom line
Oil is breaking below $86 on political optimism that could reshape the global supply balance; gold is bouncing sharply after heavy losses but remains at risk as long as the dollar and rates stay elevated; industrial metals are showing cautious optimism. All eyes are on the Fed's interest rate decision on June 16-17 and geopolitical developments in the Middle East.
