Oil prices hit a four-month high as President Trump warned Iran of potential military strikes if it did not make a deal on nuclear weapons, while gold briefly broke through the $5,600 mark in a volatile day for commodities.
Brent crude, the international benchmark, rose 3.4 per cent to $70.71 a barrel on Thursday, its highest settle value since July 31 last year and 16.2 per cent higher since the start of the year.
Oil prices have been rising this week on concerns that the United States may carry out a military attack on Iran, a key Middle Eastern producer, and disrupt supply from the region.
Brent crude and West Texas intermediate, a US benchmark, are trading near their highest prices since last September. Iran is the fourth-largest producer among the Organisation of the Petroleum Exporting Countries, producing 3.2 million barrels a day.
Suvro Sarkar, energy sector specialist at DBS Bank, said: “The main driver of oil prices remains geopolitical risk premium surrounding Iran and the Middle East, though unplanned outages in Kazakhstan and the US … have had a temporary impact as well.”
Some analysts have been forecasting even higher prices because of the Iranian concerns. “The potential for Iran getting hit has escalated the geopolitical premium of oil prices by potentially $3 to $4 (per barrel),” analysts at Citigroup said in a note on Wednesday. The US investment bank said that further geopolitical escalation could push prices as high as $72 a barrel for Brent over the next three months.
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Gold, seen as a safe haven asset, was at the centre of particularly volatile trading, reaching $5,594.82 per troy ounce at one point before falling to $5,149.99 by mid-afternoon in London, then rebounding to end 0.3 per cent higher at a new record of $5,318.40.
Gold has gained more than 23 per cent so far this year amid investor concern over policymaking in the United States and declining confidence in the dollar. There has also been broader demand for precious metals amid demand from the technology industry, geopolitical tensions, investor speculation and expectations of interest rate cuts.
In its recent annual commodities outlook, Goldman Sachs said the gold rally would carry on this year thanks to “structurally high central bank demand and cyclical support from Federal Reserve cuts”, factors that also led prices higher in 2025.
Silver too touched new highs before settling 0.8 per cent up on the day at $114.04 a troy ounce, its second highest close, extending the rush by investors into precious metals. It has risen nearly 63 per cent so far this month.
Benchmark copper on the London Metal Exchange jumped 11 per cent to a record $14,527.50 a ton, the biggest one-day gain for LME copper since November 2008. Unlike gold, copper depends on industrial demand, which may begin to balk at the high prices.