Aluminum prices climbed to their highest levels in more than four years on Tuesday, driven by rising alumina prices — the key raw material — alongside persistent concerns over tightening supply due to reduced shipments from Gulf producers.

Three-month aluminum on the London Metal Exchange rose 0.8% to $3,680 per ton during official trading after touching $3,707.5, its highest level since March 24, 2022.

The metal had previously reached a record high of $4,073.5 per ton on March 7, 2022, when markets were dealing with the immediate fallout from Russia’s invasion of Ukraine.

The main support for aluminum prices on Tuesday came from a 5% jump in September alumina futures on the Shanghai Futures Exchange, which climbed to their highest levels since early May amid concerns over bauxite supplies from Guinea.

Guinea, the world’s largest producer of bauxite, is considering imposing export quotas on mining companies as rising shipping costs weigh on state revenues. Bloomberg reported, citing a government official, that Guinea expects to finalize the new policy during June.

These concerns added to pressure already stemming from declining supplies from producers in the Gulf region due to the war with Iran, which kept the premium for cash aluminum contracts on the London Metal Exchange above the benchmark price at $71 per ton last week, signaling tight spot supply conditions.

Analysts at Citigroup said in a note last week that the Middle East conflict has caused the biggest shock to aluminum supplies in at least 50 years, accelerating inventory drawdowns by around 3 million tons this year, despite stocks already being at historically low levels, while also prompting investors to intensify purchases of futures contracts.

In other metals trading on the London Metal Exchange, copper fell 0.4% to $13,610 per ton during official trading. According to data from an industry body, the global refined copper market recorded a surplus of 396,000 tons during the January-March period.

Zinc also rose 1% to $3,577 per ton, lead gained 0.2% to $2,015, tin climbed 0.5% to $54,450, while nickel fell 0.8% to $18,760 per ton.

Earlier in the session, copper, zinc, and tin prices on the London Metal Exchange reached their highest levels since mid-May, while lead touched its highest level since late January.

The US dollar stabilized during Tuesday’s trading after investor hopes for a near-term agreement to reopen the Strait of Hormuz and end the war with Iran weakened, following new US attacks on Iranian targets and comments suggesting negotiations may take longer.

Expectations for a peace agreement had pushed oil prices below $100 per barrel, eased pressure on emerging market currencies, and supported risk appetite in global markets this week.

However, remarks from US Secretary of State Marco Rubio on Tuesday that negotiations with Iran could “take a few days” came after US forces carried out strikes in southern Iran a day earlier that Washington described as defensive, limiting market optimism.

The euro edged slightly lower to $1.163 after rising 0.3% on Monday, while the British pound fell 0.2% to $1.347 after gaining 0.6% in the previous session.

The dollar index, which measures the US currency against a basket of major currencies, rose marginally to 99.08 points after falling 0.3% the previous day.

Charu Chanana said markets are justified in pricing in some optimism, because merely having a path toward reopening the Strait of Hormuz reduces major risks tied to oil, inflation, and global growth.

She added: “Positive signals around negotiations should not be confused with lasting and stable de-escalation. The real test is not in the headlines, but in the ability of oil tankers to move freely, lower insurance costs, and the normalization of energy flows.”

The shift in sentiment pressured the Japanese yen, with the dollar rising 0.2% to ¥159.21, approaching the ¥160 level that traders are watching closely for potential intervention by Japanese authorities to support the currency.

Sources previously said Japanese authorities intervened in late April to support the yen when it approached that level.

The Australian dollar, often viewed as a gauge of risk appetite, also fell 0.2% to $0.716 after rising 0.6% on Monday.

US Treasury yields fell sharply on Tuesday as US markets reopened after the holiday, reflecting declines in global bond yields driven by expectations for a peace agreement.

Meanwhile, oil prices recovered part of their losses following reports of the US strikes, with Brent crude futures rising 1.5% to $97.76 per barrel after dropping 7% on Monday.

Analysts believe energy prices are unlikely to return quickly to pre-war levels even if a settlement is reached soon, as supply chains will need time to normalize, keeping inflation and interest rate concerns elevated.

Analysts at OCBC said in a note that they expect a “gradual decline” in oil prices even if they remain below $100 per barrel during the second half of 2026, meaning the support the dollar receives from elevated energy prices will not disappear quickly.

They added: “There are no strong reasons to adopt a bearish outlook on the US dollar,” citing the continued strength of the US economy alongside inflationary pressures driven by developments in artificial intelligence, which have pushed the Federal Reserve toward a more hawkish stance.

Gold prices lost more than 1% in European trading on Tuesday, resuming losses that were temporarily halted yesterday, under pressure from a stronger US dollar and rising global oil prices after the United States launched military strikes on Iranian sites, raising doubts about peace negotiations between Washington and Tehran.

The renewed rise in oil prices has revived inflation concerns in the United States, placing additional pressure on Federal Reserve policymakers and strengthening expectations of a US interest rate hike before the end of this year.

Price Overview

• Gold prices today: Gold prices fell 1.15% to $4,518.36, from the opening level at $4,570.55, and recorded a high of $4,580.36.

• At Monday’s settlement, gold prices rose 1.35%, marking the first gain in the past three sessions, supported by growing rapprochement between the United States and Iran.

US dollar

The dollar index rose around 0.2% on Tuesday, resuming gains that had paused in the previous session, and moving once again toward its highest level in six weeks, reflecting the rise of the US currency against a basket of major and minor currencies.

Demand for the dollar as a safe haven resumed after new US attacks on Iran increased doubts over the possibility of reaching an agreement to reopen the vital Strait of Hormuz and end the three-month-long Iranian war.

Global oil prices

Global oil prices rose by more than 3% on Tuesday, beginning to recover from five-week lows, amid renewed concerns that the Strait of Hormuz could remain closed to oil tankers, especially after the US military carried out strikes inside Iran.

Latest developments in the Iranian war

• The United States launched defensive strikes on boats and missile sites in Iran.

• US Central Command (CENTCOM) announced that the strikes came after monitoring Iranian movements to deploy boats intended to plant new naval mines in the Strait of Hormuz to threaten shipping, as well as missile sites that could target US warplanes.

• Iranian news agencies acknowledged hearing powerful explosions in Bandar Abbas and coastal areas.

• Iranian authorities confirmed that “the situation is fully under control,” signaling their commitment to the truce despite the US violations.

• The Iranian Foreign Ministry spokesman said that a US-Iran agreement is not imminent.

• An Iranian delegation led by chief negotiator Mohammad Bagher Ghalibaf and Foreign Minister Abbas Araghchi is visiting Doha for further talks regarding the potential peace agreement with the United States.

US interest rates

• According to the CME Group’s FedWatch tool, markets are currently pricing in a 56% probability that the Federal Reserve will raise interest rates in December, compared to just over 16% at the beginning of May.

• Markets are currently pricing a 99% probability that US interest rates will remain unchanged at the June meeting, while the probability of a 25 basis point rate hike stands at 1%.

• Investors are closely monitoring additional US economic data, along with comments from Federal Reserve officials, in order to reassess those expectations.

Gold outlook

Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: “Even if a peace agreement is reached between the United States and Iran, the damage inflicted on oil production facilities in the Middle East may prevent oil flows from the region to the rest of the world from returning to normal quickly.”

SPDR Fund

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained virtually unchanged on Monday, keeping total holdings at 1,034.85 metric tons, the lowest level since May 8.

The euro declined in European trading on Tuesday against a basket of global currencies, resuming its losses that were temporarily halted yesterday against the US dollar, and moving lower toward its weakest levels in six weeks, under negative pressure after the United States launched defensive attacks on Iranian boats and missile sites.

Following media reports, the probability of the European Central Bank raising interest rates at its next June meeting increased. Investors are awaiting further economic data from the eurozone in order to reassess those expectations.

Price Overview

• Euro exchange rate today: The euro fell against the dollar by 0.1% to $1.1630, from today’s opening level at $1.1640, and recorded a high of $1.1643.

• The euro ended Monday’s trading up around 0.35% against the dollar, marking its first gain in the past three sessions, as part of recovery attempts from a six-week low at $1.1576.

• Aside from buying activity from lower levels, the euro recovered amid optimism that the United States and Iran may be nearing a peace agreement to end the war in the Middle East.

US dollar

The dollar index rose 0.1% on Tuesday, resuming gains that had paused in the previous session, and moving once again toward its highest level in six weeks, reflecting the rise of the US currency against a basket of global currencies.

Demand for the dollar as a safe haven resumed after new US attacks on Iran increased doubts over the possibility of reaching an agreement to reopen the vital Strait of Hormuz and end the three-month-long Iranian war.

Global oil prices

Global oil prices rebounded by more than 2% on Tuesday, beginning to recover from five-week lows, amid renewed fears that the Strait of Hormuz could remain closed to oil tankers, especially after the US military targeted Iranian boats and missile launch sites.

Latest developments in the Iranian war

• The United States launched defensive strikes on boats and missile sites in Iran.

• US Central Command (CENTCOM) announced that the strikes came after monitoring Iranian movements to deploy boats intended to plant new naval mines in the Strait of Hormuz to threaten shipping, as well as missile sites that could target US warplanes.

• Iranian news agencies acknowledged hearing powerful explosions in Bandar Abbas and coastal areas.

• Iranian authorities confirmed that “the situation is fully under control,” signaling their commitment to the truce despite the US violations.

• The Iranian Foreign Ministry spokesman said that a US-Iran agreement is not imminent.

• An Iranian delegation led by chief negotiator Mohammad Bagher Ghalibaf and Foreign Minister Abbas Araghchi is visiting Doha for further talks regarding the potential peace agreement with the United States.

Opinions and analysis

Charu Chanana, chief investment strategist at Saxo in Singapore, said: “Markets are justified in reflecting some optimism, because even the mere possibility of reopening the Strait of Hormuz reduces major risks related to oil, inflation, and global growth.”

Chanana added: “Optimism surrounding negotiations should not be confused with permanent de-escalation. The real test is not the main agreement itself, but whether oil tankers can sail freely, insurance premiums decline, and energy flows return to normal.”

European interest rates

• Reuters sources last week: The European Central Bank is highly likely to raise interest rates in June, given inflation expectations that are moving toward an undesirable scenario.

• Money markets are currently pricing the probability of the European Central Bank raising interest rates by 25 basis points next June at around 60%.

• Investors are awaiting further economic data from the eurozone on inflation, unemployment, and wages in order to reassess the above expectations.