Chile Eyes Copper in Trade Talks

COPPER

Copper futures are higher ahead of talks between the US and China, where the world’s two largest economies are expected to extend the August 12 tariff deadline. Markets are also awaiting the official implementation of the 50% tariff on copper into the US, set to take effect on August 1. Some uncertainty also lingers over whether metals will be included in the recently announced US-EU trade deal, which imposes a 15% tariff on most European exports to the US. With the deadline approaching, vessels carrying copper are reportedly rushing to reach US ports before the tariff takes effect. However, analysts warn that prices could see a sharp pullback once the pre-tariff shipping surge subsides, potentially triggering a significant drop in US-bound demand. The US is expected to begin using up the stockpile of copper it built ahead of the tariff announcement before importing from abroad, which could make demand look a bit weaker for that period of inventory rundown.

Chile expects copper tariffs to be discussed within broader US trade talks in Washington this week, Finance Minister Mario Marcel said on Monday. He added that Chile would ask for any tariffs to be included within a broader trade agreement with the United States.

Peru is evaluating the authorization of 134 mining exploration and exploitation projects worth an estimated investment of $6 billion, President Dina Boluarte said on Monday, as her government looks to boost revenues from the key industry. Boluarte said in an address to Congress that by the end of this year she expected the formal small-scale mining sector to generate more than $5 billion in annual sales, and that $4.7 billion in formal projects should have started construction by 2026. Officials in Peru, the world’s third-biggest copper producer, are currently in talks with informal miners who launched protests late June that blocked a key transport corridor for major miners.

Long-term gains in copper could also be limited over concerns of surpluses in the market. The global refined copper market showed a 97,000 metric ton surplus in May, compared with an 80,000 metric ton deficit in April, the International Copper Study Group (ICSG) said in its latest monthly bulletin. For the first 5 months of the year, the market was in a 272,000 metric ton surplus compared with a 273,000 metric ton surplus in the same period a year earlier, the ICSG said.

SILVER

Silver futures edged higher, largely following moves in gold. Silver is up 36% this year, outperforming gold’s 31% growth and coming close to the key $40-per-ounce mark. Silver’s supply-demand fundamentals also remain favorable as the market is expected to remain in a deficit for the fifth straight year.

The long-term outlook for silver remains positive, driven by its essential role in semiconductors, solar panels, and other clean-energy technologies, sectors that continue to attract substantial global investment. That demand has remained robust despite broad headwinds faced in the last few months as a result of tariffs. South Korea’s exports rebounded in June largely on brisk semiconductor shipments, indicating the importance of and demand for the technology, despite challenges from higher US tariffs weighing on global trade. Recent data highlights this trend: China significantly increased its wind and solar capacity in the first quarter of 2025, while solar power generation in Europe surged 30% year-over-year during the same period.

GOLD

Gold futures are higher, gaining back some ground despite a stronger dollar as markets look ahead to the Fed decision Wednesday and the outcome of trade talks between China and the US. The dollar has gained strength following the trade deal with the EU, which sets a 15% baseline tariff for European goods, including automobiles. President Trump added that the EU would buy $750 billion of energy products from the US and invest an additional $600 in the US. Trump was also expected to iron out final details of the UK agreement in meetings with British Prime Minister Keir Starmer. That leaves some of the biggest outstanding deals with Mexico, Canada, and China. US and Chinese officials are expected to discuss extending their trade truce beyond the current August 12 expiration date.

The Fed will meet this week and is expected to hold rates steady; markets will watch for any clues on when rates could come down. Lower interest rates will be supportive of gold. Focus also turns to the release of the advance estimate of second-quarter US gross domestic product on Wednesday; PCE inflation data, the Fed’s preferred measure, on Wednesday; and nonfarm payrolls figures for July on Friday. Any signs of a slowing labor market, a weakening economy, and a decrease in consumer confidence could add to bets for a Fed rate cut in September or October. However, this will need to be balanced against expectations that tariffs will stoke inflation. S&P Composite PMI data pointed to rising wage costs and tariffs directly contributing to steeper input price inflation, which firms passed onto customers. As a result, output price inflation increased, reaching one of the highest levels recorded of the past three years.

Strong central bank demand will continue to support gold prices. A recent World Gold Council survey showed global central banks expect to increase their gold holdings and are on track to buy 1,000 metric tons of gold in 2025, well above the previous decade’s average of 400–500 tons. Several African nations, like Namibia, Rwanda, Uganda, and Madagascar, have also announced plans to expand their gold reserves.

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