Written Commentary
PRECIOUS METALS
Gold: Gold prices bounced higher alongside a rise in silver. Markets should expect continued volatility in the precious metals space due to an increase in retail investor demand and a drop in open interest. Investors who sold on profit-taking in recent days have likely found prices to be attractive again after dipping below $5,000. The January jobs report will not be released on Friday because of the partial government shutdown the Bureau of Labor Statistics said on Monday. Data collection is already finished, but the shutdown has nonetheless forced a delay in the schedule. The report will be rescheduled when funding resumes. Markets are friendly to a July cut and are fully priced in for a cut in September, after expectations shifted slightly to later in the year following the strong ISM manufacturing data. Geopolitical developments also remained in focus, with US-Iran talks scheduled for Friday and Ukraine preparing for renewed peace negotiations after fresh Russian strikes.
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Friday’s volatility was brought on after the CME increased margin requirements for the metal, which forced selling among retail investors due to a lack of liquidity to maintain margins. Additionally, strong selling in China initially triggered institutional selling as banks were forced to protect gains. Still, structural support for gold persists as central banks continue diversifying away from the dollar, reducing FX reserves and increasing gold purchases—a trend expected to provide ongoing support through 2026. Investment demand remains strong as Tether’s CEO recently said the firm plans to allocate 10%–15% of its investment portfolio to physical gold, while SPDR Gold Trust holdings rose to a nearly four-year high this week, signaling renewed institutional and ETF inflows.
Silver: Silver futures are up nearly 13% to $86.97, continuing its rapid price swings from Monday. Friday’s extreme selloff saw the metal fall 31% as profit-taking and a collapse of the FOMO rally created a frenzy. Friday’s selling was linked to an unwinding of ETF and options positions. The silver, platinum and palladium markets are small relative to gold, making them vulnerable to speculative inflows. This dynamic has presented the risk that prices have become detached from physical demand conditions. Additionally, record high prices could be poised to limit industrial demand.
Platinum: Platinum is up 6.5% to $2,240.
BASE METALS
Copper: Copper is higher, with prices rebounding after news that China is planning to boost stockpiles of the red metal and as a broader risk sentiment took place across markets. Benchmark three-month copper on the LME gained 3.6% to $13,360. China’s Nonferrous Metals Industry Association said it will expand its strategic copper reserves and explore creating a commercial stockpiling system led by state-owned enterprises. Currently, there are no details on the planned size of the reserves, scale of purchases, or timeline. China’s Lunar New Year holiday in mid-February will also bring industrial activity to a standstill in the country which consumes more than half of global copper production estimated at around 26 million tons this year.
In the US, ISM Manufacturing PMI data surprised to the upside, with the index rising to 52.6 in January from 47.9 the previous month to mark the fastest pace of growth in the manufacturing sector since 2022. The reading also marked the first time the sector experienced an expansion in growth in 12 months. New orders, production, employment, supplier deliveries, and inventories all expanded, though employment remained in contraction. Despite the positive reading, the increase in activity is attributed to cyclical factors regarding the start of the year. January is a reorder month, and the buying was likely an effort to get ahead of expected price increases. Factory activity in some parts of the world expanded in January, offering policymakers some assurance the hit from higher tariffs has run its course for now, but the growth was from a low base and followed months of shrinking activity.
Zinc: Zinc dipped 0.1% to $3,320.
Aluminum: Aluminum gained 1.9% to $3,112.
Tin: Tin jumped 4.5% to $48,700.
Lead: Lead was up 0.7% at $1,976.
Nickel: Nickel climbed 3.6% to $17,430.
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