Written Commentary
PRECIOUS METALS
Gold: Gold prices are little changed, paring earlier losses as US-Iran tensions supported the safe-haven bid as markets await PCE inflation data out on Friday. The White House said some progress was made in this week’s Iran talks in Geneva, though significant gaps remained. US officials met at the White House on Wednesday to discuss Iran and were told all US forces deployed to the region should be in place by mid-March.
Elsewhere, January’s Fed meeting minutes revealed that policymakers were divided over the path of interest rates, though most viewed inflation as the most prudent factor affecting policy. The vast majority of participants viewed that downside risks to employment had fallen, while the risks of more persistent inflation remained. Some policymakers noted that if inflation continues to rest above target, a move upwards in policy could be necessary. Attention shifts to tomorrow’s PCE data, which is expected to show inflation continuing to rest at 2.8%.
Market-implied odds regarding Fed policy have been largely unchanged, with January’s inflation figures revealing pockets of sticky inflation amid a lower headline figure. Prices rose 0.2% month-over-month, while the annual rate eased to 2.4%. Core inflation held at 2.5% year-over-year.
Structural support for gold remains intact as central banks continue to diversify reserves away from the dollar and increase bullion purchases, a trend expected to provide a steady underlying bid through 2026.
Silver: Silver futures are up 0.15% to $77.63
Platinum: Platinum is down 2.4% to $2,060.
BASE METALS
Copper: Copper prices slipped as subdued demand and high warehouse inventories provide headwinds to prices. Benchmark three-month copper on the LME was down 1.4% at $12,725 following a 2.3% jump on Wednesday. The SHFE is closed for the Lunar New Year until February 24 and traders in top metals consumer China are largely absent due to the holiday. Price direction during the holiday will not accurately reflect copper fundamentals and demand given the absence of China.
Copper stocks continue to rise in LME-approved warehouses, which has seen inflows for 13 straight days to 225,575 tons, the highest level in 11 months. The cash LME copper contract was trading at a $97 a ton discount to the three-month forward, suggesting no pressing need for near-term metal.
Zinc: Zinc fell 0.9% to $3,323.
Aluminum: Aluminum shed 1.1% to $3,055.
Tin: Tin edged down 0.1% to $45,875.
Lead: Lead lost 0.4% to $1,956.
Nickel: Nickel slid 0.8% to $17,140.
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