The State of Affairs in the Commodity Market
On this Saturday, June 13, 2026, the global commodity market is in a state of heightened alert. The past seven days have been marked by an explosive cocktail of geopolitical escalations in the Middle East, ongoing tightness in industrial metals, and a surprising shift in monetary sentiment. For commodity investors, the landscape has fundamentally changed: we are seeing a shift from pure inflation fears to a focus on physical delivery security.
Gold: Recovery After Technical Liquidation
The gold price (XAU/USD) experienced a tumultuous week. After the precious metal came under pressure at the beginning of the month due to stronger-than-expected U.S. labor market figures—where non-farm payrolls increased by 172,000 jobs—we saw a drop towards $4,000 per troy ounce. This triggered a wave of technical selling as the price dipped below the 200-day moving average.
However, the past 48 hours showed a strong recovery on the COMEX, with gold bouncing back by more than 2%. This recovery is driven by two main factors:
- Central Banks: The People’s Bank of China (PBoC) has continued its buying spree, purchasing gold for the 19th consecutive month despite price volatility. Central banks worldwide continue to prefer gold over U.S. Treasuries as a strategic reserve.
- Geopolitical Premium: Ongoing hostilities between Israel and Iran, and the effective blockade of the Strait of Hormuz, are forcing investors back into safe havens.
Energy: Oil and the Closure of Hormuz
The oil market is currently fully focused on the logistical nightmare in the Persian Gulf. Brent Crude is currently trading around $97 per barrel, after a volatile week where hopes for a peace agreement between Washington and Tehran briefly caused a 3% drop. However, those hopes evaporated quickly after new incidents in the region.
The most critical point is the Strait of Hormuz, through which 20% of the world's oil supply usually passes. The current restrictions in this waterway mean that the physical delivery of crude oil to Asia and Europe is severely disrupted. Although OPEC+ has announced an increase in production by 188,000 barrels per day from July, analysts at Rystad Energy warn that these 'paper quotas' have little effect if the barrels cannot physically reach the market.
Industrial Metals: The 'Copper Squeeze' from AI
Copper remains the absolute standout in the base metals sector. While oil and gold react to geopolitics and interest rates, copper is driven by a structural shortage. The price of copper on the LME is currently fluctuating between $13,500 and $14,000 per metric ton.
The driving force behind these record prices is threefold:
- AI Data Centers: The exponential growth of AI infrastructure requires vast amounts of copper for power transmission and cooling systems.
- Energy Transition: Wind turbines and electric vehicles (EVs) continue to drive basic demand, while supply from countries like Chile has decreased by about 6% due to a shortage of sulfuric acid (a byproduct of disrupted global trade).
- Supply Shortage: The International Energy Agency (IEA) warns of a supply gap of 30% by 2035. In the short term, we see that stocks in LME-registered warehouses are critically low, setting the stage for further price increases.
Educational Takeaway: Backwardation and Supply Shocks
For the active trader, it is essential to understand the concept of backwardation in the current market. This phenomenon, where the spot price is higher than future futures contracts, indicates extreme scarcity in the short term. We currently see this reflected in both the oil and copper markets, suggesting that the market is willing to pay a premium for immediate delivery.
Investors should also consider the impact of the U.S. dollar (DXY), which is currently hovering around the 99-point mark. A strong dollar generally makes commodities more expensive for buyers with other currencies, but the current supply shocks prove to be a much stronger driver than currency dynamics alone.
This article is for educational purposes only and does not constitute financial advice.