Oil Pullback to $80 Creates Entry Point, Central Banks Signal Return to Gold Buying

• Olive Resource Capital's Samuel Pelaez and Derek Macpherson note that the Strait of Hormuz situation remains fluid, with a US-brokered Iran term sheet easing tensions, but renewed disruption following Israeli action in Lebanon underscoring that the region's risk premium has not fully cleared.
• New Federal Reserve Chair Kevin Warsh has signalled a structural shift in monetary policy communication, removing forward guidance and dot-plot rate projections in favour of a more reactive, data-driven approach, which Pelaez links to closer coordination with the Treasury under Scott Bessent.
• Olive Resource Capital has been adding to oil and gas positions following the pullback in crude to around $80 a barrel, viewing the retracement as a buying opportunity supported by a resilient US economy and early-stage Chinese strength.
• Capital from recent takeovers is being redeployed primarily into small and mid-cap copper producers and copper exploration names, with the team citing copper's structural role in AI-related data centre build-out as a continuing demand driver.
• Gold fundamentals remain intact, supported by an expected return of central banks to net buying and persistent fiscal deficits globally; the team continues to favour late-stage gold developers and is maintaining a disciplined, entry-point-driven approach with above-average cash levels.

Commodity investors have had a busy few weeks to digest. A tentative de-escalation in the Strait of Hormuz, a notably different tone from a new US Federal Reserve chair, and shifting capital allocation among professional resource investors all carry implications for how gold, copper and the broader commodity complex are likely to perform in the months ahead. In a recent discussion, Samuel Pelaez, President, CEO and CIO of Olive Resource Capital, and Derek Macpherson, Executive Chairman of Olive Resource Capital, set out their current thinking on macro risk, monetary policy, and where they are positioning capital across oil, copper and gold. Their comments offer a useful lens for investors trying to separate near-term volatility from the underlying structural case for commodity exposure.

Geopolitical Risk Has Eased, But Not Disappeared

The conversation opened with an update on the Strait of Hormuz, a critical chokepoint for global oil flows that had been a source of market anxiety. The United States and Iran reportedly reached a term sheet, or memorandum of understanding providing a 60-day window to negotiate a fuller agreement. Pelaez was careful to frame this as a step rather than a resolution. He noted that the market's reaction had been measured rather than euphoric, consistent with the view that much of this risk had already been priced in ahead of the announcement.

Within days, the Strait was reportedly disrupted again amid continued Israeli military activity against Hezbollah in Lebanon, illustrating how quickly sentiment in the region can shift. Macpherson pointed out that the practical impact on oil flows had been less binary than headlines suggested. The US had reportedly continued to draw a substantial volume of crude through the Strait even during the most acute phase of the conflict, while Iranian oil continued to reach markets via alternative routes to Pakistan and India. For investors, the takeaway is that the geopolitical premium embedded in oil prices is unlikely to disappear quickly, and continued volatility around this chokepoint should be expected even as diplomatic progress continues.

A Federal Reserve in Transition

A second macro development drew significant attention: the first press conference held by new Fed Chair Kevin Warsh. Macpherson described a marked departure from prior Fed communication style, with Warsh removing forward guidance and declining to submit projections to the dot plot, the chart the Fed uses to signal anticipated rate paths. Warsh reportedly characterised monetary policy as loose when viewed through the lens of financial markets, but tight when viewed through the housing market and mortgage rates, an unusually candid acknowledgement of how unevenly current policy is being felt across the economy.

Pelaez placed this in a broader context, highlighting that Warsh and Treasury Secretary Scott Bessent both previously worked for Stanley Druckenmiller's investment firm, an organisation with deep expertise in tracking liquidity flows through financial markets.

As Pelaez explained, "[Fed is] going to be focused on many different parts of the economy and perhaps on fixing the transfer mechanisms. That should be very good for the US economy and by natural extension, if it's good for the largest economy on the planet, it should be naturally good for consumption and for commodities."

He added that this kind of approach, if it improves how monetary policy transmits through the broader economy with particular relevance to industrial sectors. This is a meaningful signal for commodity investors: a Fed more focused on economic transmission mechanisms, working in tandem with the Treasury, could support the kind of broad-based economic activity that underpins industrial commodity demand.

Oil: Buying the Pullback

On crude oil specifically, Pelaez noted that Olive Resource Capital entered the year with a constructive view on the global economy, supported by expansionary US manufacturing data and resilience in China, and had been adding to oil positions before the February 28th Strait of Hormuz disruption interrupted that strategy. With the announcement of the Iran term sheet, oil prices retreated toward the $80 per barrel level, which Pelaez described as a natural consequence of an anticipated peace dividend.

Pelaez cited a resilient US economy under the new Fed leadership, early-year strength in China, and ongoing geopolitical realignment as supportive factors, and confirmed that the firm has used the recent pullback in prices to add to its oil and gas exposure.

Copper: A Structural Demand Story Tied to AI

Macpherson observed that capital markets have become heavily focused on semiconductors and artificial intelligence, a dynamic he believes has, at least temporarily, distracted attention from the broader commodity complex. However, he was direct in linking the two: building the data centre infrastructure required to scale AI requires substantial copper input.

Macpherson states, "I don't think people seem to have forgotten that you need a lot of copper to  build all these these data centers that they need to hype to to scale up AI. So I think we'll keep looking at that copper."

Olive Resource Capital has been redeploying capital returned from recent takeovers primarily into small and mid-cap copper producers, as well as copper exploration names, continuing to add to positions on weakness. This combination of a structural demand tailwind from AI infrastructure build-out, alongside the firm's continued conviction in copper producers and explorers, supports copper's positioning as one of the more compelling industrial commodity opportunities currently available to investors.

Gold: Fundamentals Still Intact

On gold, Macpherson argued that the underlying fundamentals remain firmly in place. He pointed to recent central bank activity, noting that some central banks, including Turkey, had been selling gold reserves to help stabilise currencies amid energy-driven economic pressures. He expects this to reverse, with central banks returning to net buying as conditions stabilise. He also highlighted continued investor concern around the US dollar and the absence of any major government, anywhere in the world, credibly committing to balance its budget, both of which support the longer-term case for gold as a diversification and store-of-value asset. Olive IResource Capital has seen some of its gold holdings taken out via acquisition recently and has been redeploying that capital into other gold names, with a particular preference for late-stage developers.

Portfolio Discipline: Why Entry Points Matter

Beyond commodity-specific views, Macpherson and Pelaez turned to portfolio construction and the discipline Olive Resource Capital applies to entry points. The discussion explained that identifying a fundamentally strong company and identifying the right time to buy it are two largely independent decisions. The firm tracks specific price levels at which it is willing to initiate or add to positions, rather than buying simply because it likes a name.

As Macpherson put it, "You can't always choose when you're gonna exit. Like you know, you get a takeout or whatever, but you can choose when you enter. And I think you can protect your downside by being picky about entries. Just because you see a stock and you like it doesn't mean you shouldn't buy some that moment."

This patient, level-based approach has, according to Pelaez, contributed meaningfully to the firm's long-term performance, even though it occasionally means missing positions that move higher without a pullback. Macpherson noted the firm currently holds above-average cash levels, reflecting a view that broader risk has not yet sufficiently repriced, even as it continues to selectively add exposure in oil, copper and gold.

Investment Thesis

• Geopolitical risk around the Strait of Hormuz remains unresolved despite a term sheet between the US and Iran, suggesting continued volatility in oil markets that disciplined investors can use to build or add to positions on price weakness.
• A structurally different Federal Reserve under Kevin Warsh, focused on economic transmission mechanisms and closer Treasury coordination, may support broader economic activity and, by extension, industrial commodity demand; investors should monitor future Fed communications for confirmation of this shift.
• Copper's link to AI-driven data centre construction represents a durable, non-cyclical demand driver that is currently underappreciated relative to the market's focus on semiconductors; investors may consider exposure to copper producers and explorers, particularly small and mid-cap names, on pullbacks.
• Gold's fundamental case remains intact, supported by an anticipated return to central bank net buying, persistent global fiscal deficits, and ongoing diversification away from the US dollar; late-stage gold developers may offer a favourable risk/reward profile within the sector.
• Entry-point discipline matters: rather than chasing strength, investors should identify target price levels in advance for companies they have fundamental conviction in, and be prepared to wait for those levels rather than buying into overbought conditions.
• Maintaining a degree of cash flexibility allows investors to respond to volatility-driven opportunities as they arise, rather than being fully committed during periods when broader risk has not yet adequately repriced.

Macro Thematic Analysis

The current macro backdrop reflects a market attempting to reconcile geopolitical de-escalation with genuine structural uncertainty. The tentative Iran term sheet has reduced acute supply-shock risk in the Strait of Hormuz, yet renewed disruption tied to the Israel-Hezbollah conflict in Lebanon demonstrates that the underlying risk has not been eliminated, only deferred. For commodity investors, this suggests a "loose peace" environment in which volatility, rather than directional certainty, is the dominant feature, with global oil inventories having already declined to levels that limit the room for further drawdown without price consequences.

Simultaneously, a structural shift is underway at the Federal Reserve. New Chair Kevin Warsh's departure from forward guidance and dot-plot projections, combined with his professional ties to Treasury Secretary Scott Bessent through a shared background at a major macro investment firm, points toward closer coordination between monetary and fiscal authorities. Olive Resource Capital views this as a potentially powerful and underappreciated development, one that could improve how policy transmits through the real economy rather than being narrowly focused on headline financial market indicators.

Layered on top of these macro shifts is a commodity-specific dynamic: capital markets have become highly concentrated on AI and semiconductor exposure, leaving traditional industrial commodities, particularly copper, comparatively overlooked despite copper's essential role in the physical infrastructure that AI computing depends on.

Pelaez summarised the opportunity:

"We continue to believe that the underlying fundamentals for a commodity bull market remain, fully intact and in place [..] Tthe idea to identify good opportunities and continue to add on weakness reflects our view that the commodity bull market is still in place and strong. So we have more cash today than we usually have."

Copper market demand combined with gold's traditional role as a hedge against currency debasement and unresolved global fiscal imbalances, the broader thematic supports continued, if selective, accumulation across the commodity complex.

TL;DR

Olive Resource Capital is positioning for a commodity bull market it believes remains intact despite near-term volatility. The firm is buying oil on the recent pullback to around $80 a barrel, redeploying takeover proceeds into small and mid-cap copper producers on the back of AI-driven data centre demand, and maintaining gold exposure through late-stage developers as central banks are expected to return to net buying. A new, more reactive US Federal Reserve under Kevin Warsh, working closely with the Treasury, is seen as a further tailwind for industrial commodities. The firm's approach remains disciplined: it holds above-average cash and waits for specific entry levels rather than chasing strength.

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