Written Commentary
PRECIOUS METALS
Gold: Gold prices are higher and back in record territory as a weaking dollar and geopolitical concerns continue to set up bullish conditions for the metal ahead of the Fed’s policy decision today. April COMEX contracts broke above $5,300 overnight; uncertainty around President Trump’s policymaking continues to drive safe-haven demand resulting in record prices in both gold and silver. Fed independence fears have also been supportive of prices and under the spotlight given the circumstance surrounding today’s meeting. The dollar struggled near four-year lows on Wednesday after Trump brushed off its recent weakness, making the dollar-priced metal more attractive to overseas buyers.
Gold prices are likely to continue to remain supported by geopolitical and economic uncertainty. Central bank demand also remains supportive of gold as banks across the globe as they look to reduce foreign exchange holdings and reduce reliance on the US dollar. President Trump threatened South Korea with a 25% tariff on autos and other goods late Monday. The move comes after the president threatened Canada with a 100% tariff over the weekend if the country followed through on its trade deal with China.
The Fed is expected to hold steady on rates when it announces its policy decision this afternoon. Inflation and labor data are likely to continue to serve as the main guideposts on policy. We expect Fed Chair Powell to emphasize that future policy moves will depend on how economic data evolves.
Central bank buying and a broader move away from the dollar have remained supportive of gold prices and is set to continue to provide structural support for the metal throughout 2026. Data showed that China extended its gold buying streak in December, marking the fourteenth consecutive month of central bank purchasing from the country. China’s gold holdings rose to 74.15 million fine troy ounces at the end of December, from 74.12 million in the previous month. The value of China’s gold reserves increased to $319.45 billion at the end of last month, from $310.65 billion a month earlier, according to the PBOC.
Silver: Silver futures are up over 7% at $113.87. Silver is benefitting from safe-haven flows and a structural supply-demand deficit thanks to its role in various technologies. Silver has also seen intense retail demand, with major silver ETFs seeing record volume in recent days as traders supported momentum-driven buying, adding to tightness in physical markets. However, record high prices could be poised to limit industrial demand.
Platinum: Platinum is 4.7% higher at $2,658.
BASE METALS
Copper: Copper prices moved higher. Benchmark three-month copper on the LME was up 0.6% at $13,087. Speculative traders continue to pile in to base metals, helping drive prices higher. Metal specific fundamentals remain supportive, but at large macro positioning from asset managers is likely responsible the recent rally across the metals space. The cash LME copper contract was trading at a $90 a ton discount to the three-month forward, suggesting little short-term demand, while the Yangshan premium, a measure of demand for copper imports in China, sank to an 18-month low of $20 a ton.
Concerns regarding supply disruptions over the past 12 months continue to provide underlying support for prices as forecasts of soaring AI datacenter growth points to elevated long-term demand. Demand prospects from China are also in focus in light of the country’s economic growth plans after a surge in investment was announced by the state grid earlier this month. China’s state grid said that it would spend four trillion yuan ($574 billion) to upgrade the country’s power grid between 2026 and 2030.
Zinc: Zinc was up 1.2% at $3,392.
Aluminum: Aluminum added 1.7% to $3,261, touching its highest since April 2022. Goldman Sachs raised its first-half average price forecast to $3,150 a ton, from $2,575, citing low inventories, doubts over power availability for new smelters in Indonesia and robust global demand growth from electric vehicle producers and power grids.
Tin: Tin climbed 2.5% to $56,250. Focus is on the SHFE, which imposed position restrictions on multiple clients for failing to disclose details relating to control over trading accounts.
Lead: Lead edged up 0.1% to $2,022.
Nickel: Nickel gained 1.3% to $18,400.
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