Oil prices slipped more than 1.5% on Friday as optimism grew over the US and Iran reaching a peace deal, which could ease the flow of supplies from the Strait of Hormuz.
Meanwhile, gold and silver prices climbed as energy contracts slipped, alleviating concerns about elevated inflation levels and higher interest rates.
The aluminium contract on the London Metal Exchange fell slightly as hopes of a peace deal eased supply concerns. Copper prices fell by close to 1%.
Oil futures slipped 2% on Friday, leaving them on course for their steepest weekly decline since early April.
The drop followed reports that Washington and Tehran had reached an agreement on a possible extension of the ceasefire.
At the time of writing, the Brent crude contract was at $91.22 per barrel, down 1.6%, while the West Texas Intermediate crude was down 1.3% at $87.71 a barrel.
Brent crude has plunged about 11% this week, marking its sharpest weekly fall in seven weeks. WTI has lost nearly 10%, its biggest weekly setback in six. Both benchmarks touched their lowest levels since mid‑April.
As per media reports, the US and Iran agreed on Thursday to extend the ceasefire and ease restrictions on shipping through the Strait of Hormuz.
However, US President Donald Trump has yet to approve the deal, and Iranian state media said it was not finalised.
Prices have swung sharply in recent sessions, with both benchmarks moving as much as $6 in a day.
Traders have been whipsawed by conflicting signals over a possible end to the war and the reopening of the Strait of Hormuz, which, before the conflict, carried about one‑fifth of the world’s oil and liquefied natural gas.
Traffic through the chokepoint remains far below pre‑war levels.
Analysts at ING said reopening the strait would provide immediate relief to the market, though the pace of recovery remains uncertain.
Japan, heavily reliant on Middle East oil, reported a 66% year‑on‑year drop in crude imports in April, underscoring the scale of disruption.
Commerzbank raised its Brent forecasts to $90 a barrel by September and $85 by year‑end, assuming the strait remains closed to normal shipping for another two months.
Meanwhile, US government data showed crude, gasoline, and distillate stockpiles fell last week.
The Energy Information Administration said demand from refiners and consumers rose, while exports dropped by 1.16 million barrels per day to 4.4 million bpd.
Gold climbed more than 2% on Friday after President Trump said he would soon make a final decision on a deal with Iran.
Despite the rebound, the metal remained on track for a monthly loss as inflation worries and expectations of higher interest rates continued to weigh on sentiment.
At the time of writing, the COMEX gold contract was at $4,595.01 per ounce, up 1.4%, while silver was at $75.888 per ounce, largely unchanged from the previous close.
Prices bounced off a key technical support level, with optimism over the ceasefire extension pushing oil and the dollar lower, both supportive factors for bullion.
“Gold is thus continuing to behave contrary to its status as a safe haven asset and is moving in the opposite direction to the price of oil, which fell significantly during yesterday’s trading session,” Carsten Fritsch, commodity analyst at Commerzbank AG.
This is because the market now views Fed interest rate hikes as less likely, a development from which gold benefits as a non-interest-bearing asset.
The dollar index was headed for a weekly decline, making dollar-denominated metals cheaper for overseas buyers.
Oil prices were also set for a weekly fall, adding further support to gold’s rally.
Still, data showed US inflation rose at its fastest pace in three years in April, driven by higher energy costs linked to the Iran war.
That reinforced expectations that the Fed will keep rates unchanged well into next year.
Higher interest rates increase the opportunity cost of holding non-yielding assets such as gold, leaving spot prices down more than 2% for the month.
Additionally, demand trends also remained uneven, with Indian buyers subdued due to high prices and import duties, while premiums in top consumer China narrowed amid cautious sentiment.