Early Thursday morning, a U.S. Navy drone was downed by Iranian forces, sending crude oil prices higher.
President Trump quickly hinted he was prepared to launch a retaliatory attack, which fueled a rally of nearly $3 per barrel as a larger military conflict was feared. By Friday morning, however, no such attack occurred, as Trump stated the drone downing may have been a mistake on the part of someone in the Iranian military.
The drone incident is one of many problems in the Gulf of Oman, which has caused the U.S. to deploy ships and warplanes to the region.
Crude oil for August delivery traded at $57.37 at midday on Friday.
Speculators put pedal to the metal
The drone attack drew the attention of precious metals “bulls” who were already celebrating continued signs from our Federal Reserve Board that U.S. interest rates will be held down and will very likely be lowered further at their next meeting in July.
Those two factors lured money from the sidelines as long-term investors sought gains from heated geopolitical uncertainty and worldwide lowering of interest rates. Some expect the value of the U.S. dollar may be in for a long-term slide, which could support metals further.
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Gold hit a 6-year high of $1,406 per ounce on Friday while silver spiked up to $15.55 before settling down midday.
Hogs fall on record pork production
The price of livestock took a tumble this week, led by hogs, which dropped due to slow sales to China.
Hogs hit the lowest level in many months and touched the permissible “limit down” on Friday’s crash.
African Swine Fever (not contagious to humans) continues to spread in Southeast Asia and could eventually help stabilize prices, but, for now, traders are focusing on the demand part of the formula.
Not only are packers killing more hogs than last year, the weights are heavier, which further exacerbates the supply problem. All this negative price talk could reverse upward if a trade deal is struck with China. Hogs for August delivery traded at 77.90 cents per pound at noon on Friday.