MUFG: Commodities - FJElite

Oil eases amid renewed clashed and fragile ceasefire. Oil prices edged lower after a sharp rally, with Brent slipping toward USD113/b and WTI near USD104/b. as markets reacted to renewed US-lran clashes that cast doubt on the fragile ceasefire. Fighting intensified around the Strait of Hormuz, where US forces escorted vessels through the chokepoint while repelling Iranian attacks, and a strike hit facilities near Fujairah. President Trump warned the conflict could continue for several more weeks, underscoring ongoing geopolitical uncertainty. Despite signs of limited diplomatic progress, the dual blockade and near-total disruption of shipping have driven oil prices sharply higher this year, tightening global supply and fuelling inflation concerns. Rising energy costs are already impacting global markets, pushing bond yields higher and contributing to inflation pressures in oil-importing economies, highlighting the broader economic risks from prolonged instability in the region.

Gold edges up as dip buying emerges amid rising tensions. Gold prices ticked higher, rising by 0.6% toward USD4.550/oz, as investors stepped in to buy after a recent selloff triggered by renewed Middle East tensions. Escalation clashes between the US and Iran around the Strait of Hormuz, including attacks on vessels and strikes near Fujairah, have shaken a fragile ceasefire and reignited inflation concerns. The surge in oil prices and rising US Treasury yields, driven by expectations that the Fed may need to raise interest rates, continue to weigh on non-yielding gold. Despite this headwind, short-term buying interest has helped support gold, while investors remain focused on upcoming US economic data and Treasury borrowing plans for further direction on monetary policy.