Copper prices edged higher on Wednesday amid hopes that the Iran war may be nearing an end, while Chile, the world’s largest copper producer, lowered its production forecasts.

Benchmark three-month copper on the London Metal Exchange rose 0.4% to $13,470 per metric ton by 09:35 GMT, after earlier touching its lowest level since May 8 at $13,350.

LME copper had previously retreated from last week’s more than three-month high of $14,196.50, pressured by profit-taking, a stronger US dollar, and concerns over slowing demand in China, the world’s largest metals consumer.

“The limited gains we are seeing today are mainly driven by improved risk appetite across broader markets, supported by lower oil prices and declining bond yields,” said Ole Hansen, Head of Commodity Strategy at Saxo Bank in Copenhagen.

Oil prices fell around 1% on Wednesday after two Chinese oil tankers exited the Strait of Hormuz, while US President Donald Trump stated that the Iran war would “end very quickly.”

Copper also received additional support after Chile announced lower copper production forecasts, now expecting output to decline by 2% this year, compared with a February forecast that had projected 3.7% growth during 2026.

In other metals markets, nickel on the London Metal Exchange fell 0.3% to $18,745 per ton, as investors monitored Indonesia’s plans to impose greater centralized government control over commodity exports.

Indonesian President Prabowo Subianto said his government would introduce new regulations aimed at strengthening oversight of commodity exports.

Nickel had gained in London on Tuesday due to supply concerns, with the momentum extending into Chinese trading on Wednesday, where the most-active nickel contract on the Shanghai Futures Exchange rose 1.9% to close at 145,390 yuan ($21,368) per ton.

Among other metals, aluminum fell 0.3% to $3,593 per ton, zinc rose 0.5% to $3,530.50, lead was little changed near $1,963, while tin jumped 3.4% to $53,375 per ton.

Oil prices fell by nearly 3% on Wednesday after US President Donald Trump once again stated that the war with Iran would end “very quickly,” although investors remained cautious about the outcome of peace talks as supply disruptions from the Middle East continued.

Brent crude futures fell by $2.97, or 2.7%, to $108.31 per barrel by 10:59 GMT, while US West Texas Intermediate crude dropped by $2.69, or 2.6%, to $101.46 per barrel.

Both benchmarks are heading for their largest daily losses in both percentage and dollar terms in two weeks.

“Prices are likely to retain some upside potential even if an agreement is reached, because supplies will not immediately return to pre-war levels,” said Emril Jamil, research analyst at LSEG.

Both crude benchmarks had already declined by around $1 on Tuesday after US Vice President JD Vance said the United States and Iran had made progress in negotiations. However, Trump also stated that the United States may still need to launch another strike on Iran and that he had been only an hour away from ordering an attack before postponing it.

Citigroup analysts said on Tuesday they expect Brent crude to rise toward $120 per barrel in the near term, arguing that oil markets are still underpricing the risk of prolonged supply disruptions.

Wood Mackenzie also estimated that prices could approach $200 per barrel if the Strait of Hormuz remains largely closed through the end of the year.

Meanwhile, analysts at PVM warned that global oil inventories could fall to critically low levels.

“However, as has recently been observed, market participants still appear somewhat complacent or overly confident regarding the potential consequences of this conflict,” the firm added.

The price spread between Brent crude contracts for next-month delivery and contracts expiring six months later — a key indicator of how traders assess current supply tightness — currently stands near $20 per barrel, well below the levels above $35 seen last month.

Two supertankers exited the Strait of Hormuz on Wednesday, while another tanker continued its journey out after waiting more than two months carrying 6 million barrels of Middle Eastern crude oil.

Even so, the number of ships passing through the strait remains far below the pre-war average of 130 vessels per day.

To offset supply shortages, countries are increasingly relying on commercial and strategic inventories.

In the United States, data from the American Petroleum Institute — according to market sources — showed crude inventories declined for a fifth consecutive week last week, while fuel inventories also fell.

Official data from the US Energy Information Administration is expected later الأربعاء, with a Reuters survey forecasting a decline of around 3.4 million barrels in crude inventories.

In another sign of worsening supply pressures, Britain eased some sanctions to allow imports of diesel and jet fuel refined in third countries using Russian crude oil.

The US dollar climbed to its highest level in six weeks on Wednesday, as investors increasingly believed that interest rates may need to rise to counter inflation driven by the war with Iran.

Uncertainty over when the conflict may end has intensified inflation concerns and triggered a broad selloff across global bond markets, pushing the yield on 30-year US Treasury bonds to its highest level since 2007.

US President Donald Trump said the United States may have to launch another strike against Iran, though he also indicated that Tehran wants to reach an agreement to end the war, which has effectively shut down the vital Strait of Hormuz, sharply lifting energy prices and unsettling global markets.

The US Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.1% to its highest level since April 7 at 99.47 points. The index has gained more than 1.3% during May, supported by safe-haven demand and growing market pricing for a Federal Reserve rate hike before year-end.

Meanwhile, the euro fell to a six-week low of $1.158, down 0.16%, while the British pound declined 0.07% to $1.338, near the six-week low reached earlier this week.

The Australian dollar, often viewed as a proxy for global risk appetite, was little changed at $0.711 after dropping 0.9% on Tuesday.

Data from CME’s FedWatch Tool showed traders are now pricing in more than a 50% probability that the Federal Reserve will raise interest rates by December, marking a sharp reversal from pre-war expectations that had pointed to two rate cuts.

Investors are now awaiting the release of the latest Federal Reserve meeting minutes later today for additional clues on the outlook for monetary policy.

Analysts said rising US Treasury yields have been the main driver behind the dollar’s strength.

“There is room for yields to move higher,” said Derek Halpenny, Head of Research for Global Markets EMEA at MUFG.

He added: “While we still believe the Fed will tighten at a slower pace than many other G10 central banks, market pricing remains relatively low at this stage, especially with the risk of another spike in crude oil prices increasing.”

Brent crude futures fell 1.1% to around $110 per barrel, but prices remain more than 50% higher than levels seen in late February before the war began.

Renewed concerns over the Japanese yen

The dollar’s rally pushed the Japanese yen back toward the 160 yen-per-dollar level, the threshold that prompted Japanese authorities to intervene in currency markets last month for the first time in nearly two years.

Tokyo intervened several times in late April and early May to slow the yen’s decline, according to Reuters sources, though the impact of those interventions proved short-lived.

The yen was last trading at 159.01 per dollar, as investors digested comments from US Treasury Secretary Scott Bessent.

Bessent told Reuters on Tuesday that he was confident Bank of Japan Governor Kazuo Ueda would “do what is necessary” if granted sufficient independence from the Japanese government, signaling Washington’s desire to see further rate hikes from the BOJ.

“In the near term, excessive volatility remains the key factor, while the 160–161 level continues to be the line markets are watching,” said Christopher Wong, currency strategist at OCBC Bank.

He added: “Intervention risks may make markets more cautious about continuing to buy dollar-yen, but unless US Treasury yields and the broader dollar weaken, any official action would likely only slow the rally temporarily rather than reverse the trend entirely.”

Gold prices declined in European trading on Wednesday, deepening losses for a second consecutive session and hitting their lowest levels in nearly two months, pressured by the stronger US dollar and rising Treasury yields, which outweighed the impact of hopes for a peace agreement between the United States and Iran.

As inflationary pressures intensify once again for Federal Reserve policymakers, expectations have increased that the Fed could raise interest rates at least once this year. Investors are also awaiting the release of the minutes from the latest US monetary policy meeting later today for further clues on the rate outlook.

Price overview

• Gold prices today: Gold fell 0.65% to $4,453.60 per ounce, the lowest level since March 30, from an opening level of $4,482.19, after touching an intraday high of $4,508.87.

• At Tuesday’s settlement, gold lost 1.9%, marking its fifth loss in the past six sessions amid escalating tensions in the Middle East.

The US dollar

The US Dollar Index rose around 0.2% on Wednesday, extending gains for a second straight session and reflecting continued strength in the US currency against a basket of major and minor currencies.

As is well known, a stronger US dollar makes dollar-denominated gold bullion less attractive to holders of other currencies.

The dollar continues to receive clear support from higher US Treasury yields, as investors increasingly bet that the Federal Reserve will raise interest rates at least once this year.

The yield on benchmark 10-year US Treasury notes remained near its highest level in more than a year on Wednesday, increasing the opportunity cost of holding non-yielding gold.

Developments in the Iran war

• US President Donald Trump stated that he would “end the war with Iran very quickly,” expressing confidence in resolving the conflict.

• Vice President JD Vance announced that the United States and Iran had made “very significant progress” in their ongoing negotiations.

• The diplomatic progress comes after Trump officially revealed that a large-scale planned military attack on Tehran had been postponed following a direct request from leaders of Saudi Arabia, the UAE, and Qatar, in order to give mediation efforts a final “two or three day” window.

US interest rates

• Kevin Warsh will be sworn in as Chairman of the Federal Reserve on Friday.

• Philadelphia Federal Reserve President Anna Paulson said the current level of interest rates remains appropriate for now, helping push inflation lower while price pressures remain elevated.

• Paulson added that it is “healthy” for investors to begin considering scenarios that could require further interest rate hikes.

• According to the CME FedWatch Tool, markets are currently pricing in a 45% probability that the Federal Reserve will raise interest rates in December, up from just above 16% at the beginning of May.

• Markets are also pricing a 99% probability that rates will remain unchanged at the June meeting, while the probability of a 25-basis-point rate cut stands at just 1%.

• To reassess these expectations, investors are closely watching the release of the latest Federal Reserve meeting minutes at 18:00 GMT.

Gold outlook

Tim Waterer, Chief Market Analyst at KCM Trade, said gold is losing some momentum as yields rise and the dollar rebounds amid increasingly hawkish expectations for Federal Reserve policy.

SPDR Gold Trust

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2 metric tons on Tuesday, bringing total holdings down to 1,036.85 metric tons, the lowest level in a week.