Gold prices rose more than 1% on Wednesday as a weaker dollar and falling bond yields boosted sentiment.
Gold prices climbed back over $5,100 per ounce, while silver rose more than 4% as investors digested key employment data from the US.
Meanwhile, oil prices also jumped more than 2%, with Brent hitting $70 per barrel due to supply risks amid ongoing tensions between the US and Iran.
The dollar’s decline drove base metals higher on Wednesday. This positive movement is mirrored in the futures markets, with both the S&P 500 and FTSE 100 showing gains.
Copper prices on the London Metal Exchange last traded at $13,317 per ton, up 1.6%.
Trading activity is expected to remain quiet in the near term, specifically until after the Chinese Lunar New Year.
The post-holiday restocking rate in China will be the key factor determining price direction thereafter.
“Broader macro sentiment and expectations for Fed easing will also be key drivers for metals in the weeks ahead,” Ewa Manthey, commodities strategist at ING Group, said.
Gold, silver advances
Gold and silver prices rose due to a weaker dollar and falling yields on US Treasury bonds.
A weaker dollar makes commodities priced in the greenback cheaper for overseas buyers, thereby lifting demand.
US Treasury yields for the benchmark 10-year note declined to a near one-month low.
This drop followed the release of data indicating a decrease in core US retail sales for December, alongside downward adjustments to the figures for both November and October.
Lower yields benefit gold and silver as they are non-yielding assets unlike bonds.
At the time of writing, the COMEX gold contract was at $5,094.25 per ounce, up 1.3%, while silver was 5.5% higher at $84.760 per ounce.
The US Bureau of Labor Statistics reported on Wednesday that nonfarm payrolls rose by 130,000 in January, surpassing the Dow Jones consensus estimate of 55,000.
This seasonally adjusted total also showed an increase from December’s revised gain of 48,000.
The US unemployment rate decreased to 4.3%, which was a better outcome than the prior month’s 4.4% and the forecast that it would remain unchanged.
According to the CME Group’s FedWatch tool, investors are anticipating a minimum of two 25-basis-point rate reductions in 2026.
Brent crosses $70/barrel
Wednesday saw oil prices rise by approximately 2%.
This increase was driven by two main factors: the possibility of supply disruptions if US-Iran tensions worsen, and signs of robust demand, as indicated by reductions in key crude stockpiles.
Nuclear negotiations between Iran and the US will continue, according to Iran’s foreign ministry spokesperson, who stated on Tuesday that the talks were productive enough to proceed diplomatically and offered Tehran a chance to assess Washington’s commitment.
Despite the preparations for renewed negotiations aimed at preventing further conflict, US President Donald Trump announced on the same day that he was contemplating deploying a second aircraft carrier to the Middle East.
“This is obviously something we have seen with Venezuela,” Warren Patterson, head of commodities strategy at ING Group, said in a note.
Action against Iran, however, would be an escalation. The market would likely have to incorporate a significantly higher risk premium than the current level, primarily due to the potential for Iranian retaliation, Patterson added.
It is the potential for retaliation, which is reportedly leaving US officials reluctant to take such action for now.
Despite a significant 13.4 million barrel increase in US crude oil inventories last week, as reported by the American Petroleum Institute (API), the oil market showed strength in early morning trading today.
“If today’s Energy Information Administration (EIA) weekly crude oil stock change numbers are similar, it would be the largest build since November 2023. However, clearly geopolitical developments continue to dominate price action.” Patterson said.
The price of West Texas Intermediate crude last traded at $65.67 per barrel, up 2.6%, while Brent was 2.5% higher at $70.56 a barrel.
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