Since Israel launched attacks on Iran late last week, both WTI crude oil, the US benchmark, and Brent crude oil, the global benchmark, have experienced significant volatility. One indicator might help illustrate just how serious investors' concerns are about the potential scope of this conflict... Rebecca Babin, Senior Energy Trader and Managing Director at CIBC Private Wealth, said that the CBOE Crude Oil ETF Volatility Index hit its highest closing level in over three years on Tuesday, indicating that "the market is pricing in multiple tail risks." "This is a clear signal that traders are increasingly concerned about how the situation might evolve—not just short-term supply disruptions, but broader regional instability," Babin noted. According to Dow Jones Market Data, the index surged by 26% on Tuesday, closing at $71.56, its highest closing level since March 2022. Described as an estimate of the 30-day expected volatility of crude oil priced by the United States Oil Fund (USO), the index has "doubled" in the past five trading days, rising by 104%. It's worth noting that the index has also surged after key geopolitical events in the past, but none have been as dramatic as this one. For example, after Hamas attacked Israel on October 7, 2023, the index rose by 11.7% the following Monday, closing at $39.85, its highest closing level since June of that year. On the day after Trump's April 2 "Liberation Day" tariff announcement, the index rose by 18%, closing at $35.45. Fawad Razaqzada, Market Analyst at GAIN Capital, said that the situation between Israel and Iran this time is "quite different." "US President Trump stated in a social media post that 'we now have complete control of Iranian airspace,' indicating that the US is engaging in the conflict," he said. According to multiple media reports, US President Trump is considering a range of options, including joining Israel in air strikes against Iran. He also posted on social media on Tuesday demanding Iran's "unconditional surrender." This has raised questions about whether the US might take action to deepen its involvement in the conflict. Market data shows that the price of the most-traded July WTI crude oil futures contract in the US rose by $3.07, or 4.3%, on Tuesday, closing at $74.84 per barrel, its highest closing level for the most-traded contract since January this year. The most-traded August Brent crude oil futures contract, the global benchmark, also rose by $3.22, or 4.4%, closing at $76.45 per barrel, its highest closing level since February. Matt Polyak, managing partner at Hummingbird Capital, said that a key factor driving market volatility is the potential impact on global supply from Iran's export of approximately 1.5 million barrels of oil per day. According to data from the US Energy Information Administration (EIA), around 20 million barrels of crude oil and condensate were transported through the Strait of Hormuz to global markets each day in 2024, accounting for roughly one-third of global oil trade. From the perspective of market positioning, Polyak of Hummingbird noted that CFTC data showed that the net managed money position in crude oil on the New York Mercantile Exchange (NYMEX) was in line with the average over the past three years but below the five-year average, suggesting there is still room for long positions to increase. Meanwhile, Denton Cinquegrana, chief oil analyst at Oil Price Information Service, pointed out that the open interest in WTI contracts is in "free fall, so short positions are undoubtedly being covered." Short positions refer to bets on falling oil prices, and covering refers to investors buying back the oil they previously sold short. For example, FactSet data showed that the open interest in the most-traded July WTI crude oil futures contract was around 81,660 lots in Tuesday's trading, down from 144,493 lots on Friday. Regarding how high oil prices could rise from current levels, CIBC's Babin said that if the situation is limited to Iran-Israel tensions, "some of the gains may already be priced in by the market—especially since the spare capacity of Saudi Arabia and the UAE provides some cushion." However, she stated, "if there are signs that the situation is escalating into a full-blown regional conflict with direct strikes on infrastructure, then there is still significant upside risk for oil prices."

Precious metal traders at top-tier banks, including JPMorgan Chase and Morgan Stanley, have just achieved their best performance in five years in the first quarter, partly due to arbitrage opportunities that triggered a significant influx of gold bars into the US. According to data compiled by Crisil Coalition Greenwich, 12 major banks in the industry collectively generated $500 million in revenue from precious metals businesses in Q1 2025, the second-highest figure in a decade. The market intelligence firm stated that this figure is roughly double the average quarterly earnings over the past decade. Part of this windfall came from the high premium on gold in the US market during Q1, as concerns about potential US tariffs on precious metals led traders to rush large quantities of gold and silver into the US in advance. As previously reported by Caixin, in Q1, the prices of gold and silver futures on the New York Mercantile Exchange (Comex) surged to levels significantly higher than those of London gold, the international benchmark. This meant that traders could purchase gold bars in trading centers such as London, Switzerland, or Hong Kong, China, and then ship them to the US to profit before tariffs took effect. This even led to weeks-long queues for gold bar withdrawals from the Bank of England's vaults. Officials overseeing the London gold market received anxious calls from many bankers and traders, urging for streamlined processes. A similar situation occurred in 2020, when the COVID-19 pandemic grounded commercial flights, creating sustained arbitrage opportunities for banks seeking ways to transport gold bars to New York. According to exchange data, Morgan Stanley delivered more gold than any other bank when settling its proprietary Comex positions, delivering a total of 67 mt of gold. At current market prices, this batch of precious metals is valued at approximately $7 billion. In addition, JPMorgan Chase, as a major trader of precious metals, once delivered gold worth over $4 billion to settle gold futures contracts in February, marking the largest single-day delivery notice in Comex history. Arbitrage trading only came to an abrupt halt in April after gold was excluded from Trump's reciprocal tariff plan. Many banks engaged in gold and silver trading—particularly JPMorgan Chase—have historically excelled at profiting from transatlantic price dislocations. Five years ago, unprecedented arbitrage opportunities helped JPMorgan's metals trading division achieve record revenues of $1 billion in 2020. Angad Chhatwal, Head of Fixed Income, Currencies, and Commodities (FICC) at Coalition, stated that the volatility triggered by Trump's tariff plan also generated revenue for these 12 major banks. In recent years, amid the astonishing surge in gold prices, which have doubled since the end of 2022, trading volumes in the London market have also been growing.

After falling to a low slightly above $3,100 last week, international gold prices staged another strong rebound this week amid escalating geopolitical tensions in the Middle East and the impact of Moody's downgrade of the US's Aaa sovereign credit rating, with overnight prices rebounding above the 3,300 integer mark once again. In response, Adam Gillard, an FICC analyst at Goldman Sachs, believes there is a clear logical support behind this trend: the buying power from China is returning once again. Specifically, gold buying initiated in the Chinese domestic market during the night session of the Shanghai Futures Exchange (SHFE) triggered a follow-up rally in the New York Mercantile Exchange (COMEX) market. The total open interest in COMEX increased by 3% (4% for silver), while the arbitrage spread between the two major markets, SHFE/CMX, widened significantly. Gillard particularly emphasized that despite gold prices having pulled back 8% from their highs, what impressed him was that the scale of gold holdings in China remained stable at a high level. This indicated that, unlike the typical behavior pattern of domestic momentum traders who tend to rush to buy amid continuous price rise and sell amid continuous price decline, the pullback in gold prices did not trigger a massive wave of selling. As shown in the chart below, the open interest in gold futures on the SHFE is now returning to high levels, having once again reached the highest level since Q4 2019. Meanwhile, the overall gold holdings in the Chinese market (ETF + Shanghai Gold Exchange + SHFE) also remain high. Note: Light blue represents gold prices, and dark blue represents overall gold holdings. Previously, Chinese customs data released on Tuesday showed that China's total gold imports last month reached 127.5 mt, hitting an 11-month high. Despite gold prices hitting record highs in April, touching $3,500 per ounce at one point, this import figure still surged 73% from March. Some institutions have suggested that the central bank's move to allocate new import quotas to some commercial banks in April may have been a key factor driving the surge in imports. In response, Goldman Sachs pointed out that China's gold imports (excluding central bank purchases) rebounded to a one-year high in April, likely related to arbitrage activities triggered by the pricing advantage of the Shanghai Gold Exchange over the London Bullion Market Association (LBMA). It is worth noting that despite gold prices remaining high overall, physical gold demand remains strong. This also explains, to some extent, why the premium level of gold prices on the Shanghai Gold Exchange has remained resilient—even as the precious metals market is currently facing a high-price environment. Note: Premium of gold prices on the Shanghai Gold Exchange. In fact, when gold prices surged last month, many market participants noticed the leading role of the Chinese market in the gold bull market. Goldman Sachs said at the time that the new highs and sharp corrections in gold prices over the past month "almost all occurred around the opening of the Chinese market" , and pointed out that the impact of capital flows through the Shanghai Gold Exchange and the Shanghai Futures Exchange on gold price trends was more significant than that of futures and options on the US New York Mercantile Exchange.

According to media reports, copper scrap that had been piling up for weeks in Salt Lake City, US, has finally started to clear, largely due to progress in the China-US trade negotiations. Affected by the previous trade disputes, copper scrap exports from the US had almost ground to a halt, resulting in up to 300,000 pounds of copper scrap being forced to accumulate in the yard of Utah Metal Works Inc. This copper scrap came from old air conditioners, demolished buildings, and rusty cars. Now, with the US and China temporarily reducing each other's tariffs, US scrap metal merchants are striving to resume copper scrap exports to China. Due to its durability, malleability, and electrical conductivity, copper has long been widely used in the construction, transportation, and power industries. In recent years, it has also been used in the manufacturing of EVs, green energy plants, and data centers. In recent years, as copper demand continues to rise while copper mine production becomes increasingly tight, copper scrap has played a crucial role in the global supply, accounting for about one-third of the total. For a long time, US copper scrap exports to China have been a vital part of the global copper supply chain. Last year, one-fifth of the copper scrap imports by Asian smelters came from the US. China is the world's largest producer of copper cathode, accounting for more than half of global production. As a major exporter of copper scrap, the US exported 600,000 mt of copper scrap last year, a scale comparable to some of the world's largest copper mines, with more than half of it sold to China. Although tariffs have temporarily decreased, it is still unclear whether this will be enough to prompt US merchants to re-export the accumulated copper scrap. Analysts point out that the profit margins for copper scrap import businesses are very thin, making it difficult to import copper at any tariff level. The trade disputes have disrupted the entire copper scrap market. Data shows that the price of No. 2 copper scrap supplied by the US has seen a discount of 92.5¢ per pound compared to futures prices, the largest price spread ever recorded. In addition to trade restrictions, the price structure of US copper scrap has also dampened the purchase willingness of international buyers. Due to previous threats by US President Trump to impose import tariffs on copper, US copper prices have been significantly higher than those in other parts of the world this year. Some commodity giants have taken advantage of this to export copper to the US from around the world, profiting from the price difference. The pricing of US copper scrap relies on the futures prices of the New York Mercantile Exchange (Comex). Faced with the relatively high prices, overseas buyers are generally deterred. Some traders have tried to shift their focus to other regions, such as Japan, but these markets are not enough to fill the gap left by China.

In just two months, international copper prices experienced a roller-coaster ride from a sharp rise to a steep fall, potentially posing a "crisis" for the lithium battery industry.

During the New York session on Friday, April 11, spot gold continued its recent strong performance, reaching a daily high of $3,245.47 per ounce, marking the second consecutive day of setting a new historical record. Spot Gold Price Daily Chart As of press time, spot gold prices have pulled back slightly, currently trading at $3,238 per ounce, with a cumulative increase of over 23% since the beginning of the year. Spot silver rose more than 3% to $32.25 per ounce, with a year-to-date increase of 11%. During the day, the main futures contract for gold on the New York Mercantile Exchange also showed significant strength, reaching a high of $3,263 per ounce, surpassing the previous historical high set on April 2. US Gold Futures Main Contract Daily Chart WisdomTree commodity strategist Nitesh Shah stated, "In a world disrupted by Trump's trade war, gold has been regarded as the most favored safe-haven asset." Shah added, "The US dollar is depreciating, and US Treasury bonds are being heavily sold off as confidence in the US as a reliable trading partner weakens." Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany, commented that the increasing risk of a US recession, the surge in US Treasury yields, and the continued weakening of the US dollar—all these factors reinforce gold's role as a crisis hedge and inflation shield. UBS analyst Giovanni Staunovo believes that gold prices have further room to rise, "Our more optimistic forecast shows that gold prices are expected to target between $3,400 and $3,500 per ounce in the coming months." In addition to tariffs, Trump has been pushing the US Fed to lower the benchmark interest rate. Traders are now betting that the US Fed will cut interest rates in June, with a total reduction of about 90 basis points throughout 2025. Metal trader Tai Wong said, "As CPI and PPI provide the US Fed with more room to cut interest rates and will continue to exert downward pressure on the US dollar, the future trend for gold is upward."