Commodity markets traded cautiously on Friday, with oil prices retreating and gold essentially flat as traders positioned ahead of Federal Reserve Chair Kevin Warsh's Jackson Hole address later this morning. Brent crude futures fell 0.3%, or 25 cents, to $89.45 a barrel, while U.S. West Texas Intermediate slipped 22 cents, also 0.3%, to $83.31. Both benchmarks are on track to end the week lower — Brent down 5.3% and WTI off 4.3% — snapping a two-week winning streak.
Gold held steady near $4,600 an ounce, putting the metal on pace for its largest monthly gain since 1999. Silver added 0.1% to $69.28 an ounce, and platinum and palladium both edged higher. The dollar index sat at 99.12, up 0.3% on the week, as currency traders likewise waited for clarity from the Fed before committing to a direction.
Iran Keeps a Floor Under Oil
Friday's pullback in crude came a day after prices rose on a report that President Trump has told mediators he is not interested in returning to the terms of the ceasefire deal signed with Iran in June, casting fresh doubt on a durable increase in flows through the Strait of Hormuz. The on-again, off-again diplomacy has whipsawed oil all month: WTI plunged as much as 6% on Aug. 3 when Trump held off ordering a new strike on Iran in favor of talks, then climbed again as a 60-day negotiating window tied to the memorandum of understanding expired on Aug. 17 without a lasting agreement in place.
Gold's steadiness near record territory reflects a different calculation. The metal has benefited from safe-haven buying tied to the same Middle East uncertainty, but its more immediate driver now is the Fed: with the 30-year Treasury yield having touched a 19-year high this month before the Treasury Department's bond-buyback intervention, gold has traded largely as a bet on where real interest rates are headed. A more hawkish Warsh could pressure the metal by pushing real yields higher; a dovish tone would likely extend its monthly rally.
Both markets are effectively paused until Warsh speaks. Options desks have been pricing wider-than-normal moves for oil and gold today, and traders say the reaction could set the tone for commodities heading into the Fed's Sept. 16-17 policy meeting, when a rate decision that markets currently see as roughly a coin flip toward a hike will be decided.
