Crude oil prices rally 7% this week; gold and silver fall amid West Asia tensions, fading rate cut bets

With no signs of de-escalation in sight, key energy infrastructure in the Gulf being struck in attacks, along with the closure of the Strait of Hormuz, crude oil has seen a massive spike in prices.

From boiling crude oil prices to a sell-off in safe-haven metals, here is everything that happened with commodities this week.

Crude oil

In the international market, Brent Crude oil futures (for delivery in April) gained as much as 2.36% to hit an intraday high of $111.22 per barrel (bbl) in a volatile session on Friday, March 20.

On Thursday, March 19, the contract briefly hovered close to its 52-week high at $119.13 per bbl, amid attacks on key Gulf energy infrastructure, with Israel attacking the South Pars gas field, which is jointly operated by Iran and Qatar, on Wednesday.

Following the attack, Iran retaliated with a barrage of missiles and drone strikes on key energy infrastructure in the Gulf region, raising concerns about the deepening energy crisis.

Over the week, the Brent Crude has risen more than 7%. It hovered above the $100 per bbl mark throughout the week, after falling to a weekly low of $99.54 per bbl on Monday.

West Texas Index (WTI) futures for expiry in April rose as much as 1.24% to an intraday high of $97.33 per bbl on Friday. Over the week, however, it has fallen 2%.

Domestically, crude oil futures for delivery in May surged as much as 1.74% to the day’s peak of ₹9,155 per bbl on the Multi-Commodity Exchange (MCX). It has advanced 2% over the week.

As per the Fox Business Network, the US Treasury Secretary Scott Bessent said that the United States might lift sanctions on Iranian crude stored aboard tankers.

Meanwhile, Saudi Arabian oil officials are modelling scenarios in which crude prices could surge beyond $180 a barrel if supply disruptions linked to the Iran war continue into late April, according to a Wall Street Journal report.

Gold

Globally, COMEX gold for April delivery declined as much as 1.38% to hit an intraday low of $4,542.10 per ounce on March 20. It had surged as much as 2.88% to the day’s peak of $4,738.20 per ounce, before slipping into the red.

Over the week, the contract slumped by 10%, marking its third consecutive weekly fall. On the MCX, gold futures have slipped 9% over the week, marking its worst weekly decline in six years, as the ongoing conflict curbed rate cut bets.

The yellow metal faced selling pressure throughout the week, especially leading up to the US Federal Reserve policy rate meeting on Wednesday.

All key central banks, including the US Federal Reserve, the European Central Bank (ECB), the Bank of Japan, and the Bank of England, kept their policy rates unchanged, as surging crude oil prices raised inflation concerns.

Furthermore, rising energy costs and mounting inflationary pressures, amid the ongoing conflict in the Middle East, have prompted investors to shift towards the US dollar and Treasury bond yields, thereby reducing the appeal of the safe-haven asset.

Silver

COMEX silver for May delivery has fallen 14% over the week, on the back of a strong US dollar.

On the MCX, white metal contracts for expiry in May declined as much as ₹8,155 or 3.52% to touch an intraday low of ₹2,23,305 per kilogram on Friday. Earlier in the day, it had advanced as much as ₹8,540 or 3.69% to the session’s high of ₹2,40,000 per kilogram.

The contract faced selling pressure throughout the week, falling more than 12%.