Commodities on a Warpath as Oil Nears $100, Gold Defies Rate Shock

Global commodity markets entered another danger zone last week as war, inflation fears, interest-rate uncertainty and tightening supply conditions collide.

Crude oil has surged back towards $100 a barrel, gold held above $4,400 an ounce, while grain markets also showed renewed strength as geopolitical and weather risks threatened to squeeze global supplies.

The latest market moves underline a stark reality: the world economy is once again being forced to price in the cost of conflict.

ENERGY: Oil races towards $100 as Gulf risk premium returns
Oil prices extended their advance on Thursday, with Brent crude around $97 a barrel and WTI near $93, after renewed US-Iran military confrontation intensified fears over supplies through the Strait of Hormuz. Brent briefly reached about $97.3 and WTI about $92.9 during the session.

The latest surge has pushed crude more than 10% higher this week, reviving fears that a prolonged conflict could unleash another inflationary shock across the global economy.

 The Strait of Hormuz remains the market's biggest vulnerability. Any sustained disruption to the strategic waterway could threaten one of the world's most important oil and energy corridors, sending freight, insurance and fuel costs sharply higher.

Yet the rally is not without resistance. Washington's efforts to prevent the conflict from escalating and signs that some oil flows are continuing have limited the immediate shock. Reuters reported that oil prices edged lower at points on Thursday as investors assessed uncertainty surrounding the latest US-Iran strikes.

The market is nevertheless beginning to price in a prolonged disruption. Capital Economics now expects Brent to reach $100 a barrel by the end of 2026, arguing that restoration of Middle Eastern energy flows could be delayed until early 2027.

That would keep pressure on transport, manufacturing and food prices - a particularly dangerous prospect for import-dependent economies.

PRECIOUS METALS: Gold fights back above $4,400
Gold is proving far more resilient than many investors expected. Spot gold rose about 0.9% to $4,425.83 an ounce last week on Thursday, while US gold futures climbed 1.3% to $4,472. Silver also advanced, gaining about 0.5%.

The latest rebound came as the US dollar weakened and Treasury yields retreated from recent highs, restoring some of bullion's appeal ahead of Friday's crucial US non-farm payrolls report.
But gold remains trapped between two powerful forces. Geopolitical turmoil and central-bank demand are providing a strong safe-haven floor, while expectations of tighter US monetary policy are limiting the upside.

Traders are currently putting roughly a 60% probability on a Federal Reserve rate increase at its September meeting, according to Reuters. UBS analyst Giovanni Staunovo warned that gold remains particularly sensitive to any shift in expectations for Fed policy.

The longer-term picture, however, remains strikingly bullish.

Goldman Sachs has forecast gold at $5,400 an ounce by the end of 2026, citing continued diversification into bullion by private investors and emerging-market central banks. Other major institutions have also maintained targets around or above $5,000.

Recent forecasts compiled from major banks put year-end 2026 targets in a broad $4,500-$5,100 range, underscoring both the strength of the bullish case and the extraordinary uncertainty surrounding the metal.
Technical analysts are also watching the $4,422-$4,465 zone closely. A sustained break above that area could reinforce the recovery, while failure there would leave gold vulnerable to another pullback.

SILVER: Industrial demand adds fuel
Silver followed gold higher but had an additional source of support: industrial demand. Silver was trading around $65.7 an ounce on Thursday, according to market analysis, as a softer dollar and easing yields helped precious metals recover.

Unlike gold, silver is heavily exposed to industrial consumption, including electronics, vehicles, power-grid investment and artificial-intelligence infrastructure. That dual role gives it greater upside potential when monetary and industrial demand move in the same direction - but also leaves it more vulnerable if global growth deteriorates.

GRAINS: Wheat rally gathers momentum
Agricultural commodities are also flashing warning signals.

Wheat prices have strengthened sharply, with Chicago wheat recently reaching its highest level since February 2023. December 2026 Chicago wheat gained 12.1% in the week ended August 28, while December Paris wheat climbed 5.4%.

Black Sea tensions are emerging as a major market catalyst, with concerns over Russian military escalation threatening to constrain grain exports. At the same time, queues at Ukrainian Danube ports and restricted export flows are adding to supply anxiety.

The rally is being reinforced by weather risks. The Australian government has raised its 2026-27 wheat production forecast to 29.9 million tonnes following improved rainfall, but the crop is still projected to be 17% below the previous year's level.

For Bangladesh and other major food-importing countries, a sustained grain rally could quickly translate into higher import bills and renewed pressure on domestic food inflation.

CORN: Supply tightness keeps pressure on prices
Corn is also receiving support from tighter projected US inventories.

The US Department of Agriculture has cut its forecast for 2026-27 US corn ending stocks to 42 million tonnes, 3.5 million tonnes below its previous estimate, largely because of stronger expected usage and exports.

The market therefore faces an uncomfortable combination of stronger demand, geopolitical disruption and uncertain weather.

RESOURCE NATIONALISM: Indonesia moves to seize pricing power
A potentially major structural shift is also emerging in commodity trading.

Indonesia plans to launch a Strategic Mineral and Commodities Exchange on January 1, 2027, seeking to establish domestic reference prices and give the world's major producer greater influence over the valuation of strategic exports.

President Prabowo Subianto has said the exchange is intended to strengthen Indonesia's bargaining power over commodities including nickel, coal, palm oil and other strategic resources. The government wants an "Indonesia Reference Price" to become a national benchmark.

The move signals a wider trend towards resource nationalism - with major commodity producers increasingly seeking greater control over pricing, exports and strategic supply chains.

THE BIGGER PICTURE
The commodity market is no longer being driven by a single story.

Oil is pricing war. Gold is pricing fear. Silver is pricing both monetary uncertainty and industrial demand. Grains are pricing weather and geopolitical risk. And resource-rich nations are increasingly pricing their own strategic power.

For global consumers, that combination could prove explosive.

If Brent breaks decisively above $100, while food and precious-metal prices remain elevated, the world economy could face a fresh bout of imported inflation just as central banks are struggling to determine whether to prioritise growth or price stability.

The coming weeks will therefore be critical. Friday's US jobs report, the trajectory of the US Federal Reserve's interest-rate policy and the next moves in the US-Iran conflict could determine whether the current commodity surge becomes a temporary shock - or the beginning of another global inflationary wave.