The ongoing disruption in the Strait of Hormuz has removed 9–10 million barrels per day (bbl/d) from the oil market, keeping Brent crude prices near $100 per barrel and raising the possibility of prices surging above $150 per barrel if shortages persist into the summer [1]. TD Securities warns that prolonged supply constraints, elevated energy and input costs, and logistics issues could reinforce global inflation and stagflation concerns, with post-war deficits potentially keeping oil elevated in the $100/bbl territory for an extended period [1]. Despite recent optimism, physical availability of crude remains tight, and an agreement allowing unfettered flows through the Strait may not materialize soon due to ongoing tensions between Washington and Tehran [1].
Meanwhile, expectations of progress toward peace in Iran have driven a bond rally and shaped flows in the US Treasury market, with BNY noting that easing oil prices and real rates could favor the US Dollar (USD) as exporter surpluses and reserve management trends resume [2]. However, the US Dollar remains pressured, trading lower against most major currencies except the Japanese Yen, as improved risk sentiment and lower oil prices weigh on the commodity-linked Canadian Dollar (CAD) [4]. USD/CAD trades around 1.3630, with WTI crude above $90 and Brent below $100, limiting support for the Loonie [4]. Scotiabank analysts view the short-term technical trend as negative for the Greenback against the CAD, with rebounds seen as selling opportunities [4].
Gold (XAU/USD) is holding near two-week highs, trading around $4,735 after rallying nearly 3% on Wednesday, benefiting from a weaker USD and easing Treasury yields as oil prices decline and inflation fears recede [3]. Spot gold jumped 1.2% to $4,750 per ounce early Thursday, while spot silver added 3% to $79.62 an ounce, and silver futures for July delivery rose 3.9% [6]. Market watchers told CNBC that the rally in gold and silver could resume if a US-Iran peace settlement is reached, as the 'fog of war lifts' [6]. Gold and silver saw record-smashing rallies in 2025, surging 66% and 135%, respectively, but have been volatile in 2026, with gold dropping more than 10% from its January peak [6].
Fed officials remain cautious, with Boston Fed President Susan Collins stating that interest rates may need to remain on hold 'for a longer period,' warning that the odds of a worse inflation scenario have increased, though she still expects rate cuts 'down the road' [3][4]. Previous peace talks between Washington and Tehran have failed to produce a breakthrough, and uncertainty persists, with Trump threatening to resume bombardment if talks collapse [3]. Investor attention is also turning to upcoming US labor market data, with the ADP Employment Change report showing private sector payrolls increased by 109K in April, above expectations, and the Nonfarm Payrolls (NFP) report due Friday [3][4].
Industrial metals, including copper, rallied on Wednesday as signs of progress toward a US-Iran deal improved risk appetite and eased fears of a broader energy shock, but pared gains on Thursday [5]. ING analysts highlight ongoing supply risks via the Strait of Hormuz, noting that copper will remain driven by geopolitical headlines versus underlying demand concerns [5]. A sustained de-escalation would support risk appetite and ease cost pressures, but renewed disruption around Hormuz would keep supply risks in focus [5].
CONCLUSION
Markets are reacting positively to hopes of a US-Iran peace deal, with gold and silver rallying and oil prices pulling back from recent highs. However, ongoing supply disruptions in the Strait of Hormuz and persistent geopolitical uncertainty continue to pose risks to energy and metals markets. The outlook remains dependent on the outcome of negotiations, with inflation and Fed policy closely watched as labor market data approaches.