A sharp sell-off has hit key commodities, with crude oil, gold, and silver prices all tumbling significantly.

On the evening of June 24th, Brent and WTI crude oil both fell by approximately 3%, retreating to levels seen before the outbreak of the Iran conflict.

Spot gold prices briefly fell below the $4,000 per ounce mark, a first since last November. The price has now dropped by about $1,600 from the all-time high of $5,596 per ounce reached earlier this year. Silver prices plunged by over 5%.

Key Drivers for the Crude Oil Decline

The primary catalyst for the oil price drop appears to be a statement from former U.S. President Trump. He stated on Wednesday that Iran had assured him that vessels passing through the strategically vital Strait of Hormuz would not be charged passage fees, insurance, or any other costs.

In a post on his social media platform, he added that the U.S. had not paid any funds to Iran, nor had it unfrozen and transferred any Iranian funds under its control. He indicated that a portion of Iranian funds fully controlled by the U.S. would be used to purchase products like corn, wheat, and soybeans from American farmers and ranchers, which would then be provided to Iran, which he described as being in urgent need of food.

Iran has not yet responded to these remarks.

Currently, vessels are transiting the Strait of Hormuz with their satellite signals activated, indicating growing confidence among shipowners regarding the safety of passage. The International Maritime Organization has also stated it has received relevant security assurances, allowing hundreds of ships to depart from the Persian Gulf.

Both Washington and Tehran have indicated that preliminary progress has been made in negotiations aimed at ending the conflict that erupted in late February, though the process may be protracted and the parties' accounts differ.

According to International Energy Agency estimates, the United Arab Emirates' current oil exports have nearly recovered to 85% of pre-conflict levels, reflecting a significant increase in oil shipments passing through the Strait of Hormuz in recent weeks.

Consequently, spot crude oil prices have plummeted. The Brent crude futures time spread, a key indicator of market supply conditions, has been signaling weakness in recent days. Simultaneously, the premium of crude from various regions, from the North Sea to West Africa, over benchmark prices is rapidly declining.

Compared to the peak during the most intense phase of the conflict, oil prices have now fallen by about 40%. The number of vessels transiting the Strait of Hormuz is steadily increasing, while alternative measures previously implemented to mitigate disruptions during the height of the conflict continue to function.

Oil has resumed shipping through the Strait of Hormuz. The UAE alone has sold approximately 60 million barrels of crude from inside the Persian Gulf in recent weeks.

Factors Behind the Gold and Silver Sell-Off

For gold and silver, the sustained strength of the U.S. dollar continues to exert downward pressure on prices. A stronger dollar makes dollar-denominated gold more expensive for buyers using other currencies.

Persistent inflation risks and the increased likelihood that central banks will hold interest rates steady or even raise them further have already been pressuring gold prices.

Higher borrowing costs are generally unfavorable for gold. Since gold itself does not yield interest, its appeal diminishes when the returns on income-generating assets like government bonds rise.

Macquarie Group has joined other banks in revising down its gold price forecasts, lowering its predictions for the third and fourth quarters of this year to $4,450 per ounce and $4,300 per ounce, respectively.

Analysts at Macquarie stated in a report, "With the Middle East conflict seemingly over and the Federal Reserve taking a more hawkish stance, gold prices have retreated as the metal's safe-haven appeal has diminished."