Commodity markets traded cautiously ahead of the Federal Reserve’s policy announcement, with investors balancing easing geopolitical tensions in the Middle East against expectations that the Fed could maintain a more hawkish stance on interest rates through 2026. Energy markets continued to digest the implications of a pending U.S.-Iran agreement, while metals investors focused on central bank demand for gold, global critical minerals supply chains, and long-term copper growth prospects.
Oil & Gas
Energy markets stabilized after a sharp two-day decline that pushed crude oil prices to their lowest levels since early March. The primary driver remains growing confidence that the U.S. and Iran will formalize a memorandum of understanding later this week, potentially restoring energy flows through the Strait of Hormuz and reducing fears of significant supply disruptions.
While crude prices remain under pressure, underlying fundamentals continue to provide support. U.S. commercial crude inventories have declined for seven consecutive weeks, with stockpiles falling nearly 39 million barrels over that period. Recent API data also showed a substantial crude draw of 8.3 million barrels, significantly exceeding expectations. However, the market is increasingly looking ahead to 2027, when the International Energy Agency projects a sizeable global oil surplus as additional supply enters the market and geopolitical disruptions fade.
Natural gas was the bright spot within the energy complex, rising on warmer weather forecasts, strong LNG export demand, and lower production levels. Tropical storm activity along the Gulf Coast is being closely monitored for potential impacts on LNG export infrastructure, while LNG feedgas flows have climbed to multi-month highs.
Metals & Mining
Metals markets were mixed as investors awaited clarity from the Federal Reserve. Gold held near record levels despite expectations that policymakers may signal fewer rate cuts in 2026, while silver traded modestly lower. Continued central bank buying remains a key pillar of support for precious metals, with industry estimates suggesting official institutions could purchase approximately 650 metric tons of gold next year.
Copper prices remained resilient, supported by long-term electrification and infrastructure demand. Mining companies continue to highlight growth opportunities in copper production, with several producers outlining plans to expand output significantly over the coming years. At the same time, governments are increasingly prioritizing critical mineral supply chains, highlighted by new strategic partnerships between Canada and European allies as well as U.S. government support for domestic rare-earth processing projects.
Aluminum was the notable laggard, falling more than 3% and reaching its lowest level in over two months as expectations for improved shipping access through the Strait of Hormuz reduced concerns about supply bottlenecks. Gold mining shares outperformed the broader metals sector, benefiting from stable bullion prices and renewed investor interest in the sector.
Commodity markets remain heavily influenced by two major macro themes: the evolving U.S.-Iran agreement and the Federal Reserve’s policy outlook. Energy markets are shifting from geopolitical supply concerns toward questions about future demand growth and inventory trends, while metals investors continue to focus on central bank gold purchases and the structural demand story for copper and critical minerals. With both the Fed decision and key energy inventory data arriving this week, volatility is likely to remain elevated across commodity markets in the near term.
Metals Snapshot:
- Gold +0.07% to $4354.8/oz, Monthly (4.54)%, YTD +0.32%:
- Silver (0.06)% to $70.135/oz, Monthly (9.56)%, YTD (0.66)%:
- Copper (0.05)% to $6.4925/lb, Monthly +3.14%, YTD +14.26%:
- Aluminum (3.29)% to $3419.5/mt, Monthly +0%, YTD +0%:
- Nickel +1.02% to $17810/mt, Monthly +0%, YTD +0%:
- Zinc +0.14% to $3562/mt, Monthly +0%, YTD +0%:
- VanEck Gold Miners ETF +2.31% to $87.24, Monthly (0.13)%, YTD +1.71%:
- VanEck Junior Gold Miners ETF +2.29% to $114.44, Monthly (1.66)%, YTD +0.58%:
- US Dollar (0.07)% to $99.565, Monthly +0.28%, YTD +1.26%:
- CBOE Volatility Index +14.51% to $18.45, Monthly (10.68)%, YTD +11.6%:
Energy Pre-Market
Oil & Gas:
- Pricing
- WTI +0.7% to $76.58 (July)
- Brent +0.5% to $79.38 (Aug)
- Natural gas +1.6% to $3.291 (July)
- RBOB +0.1% to $2.885 (July)
- ULSD +0.8% to $3.915 (July)
