Written Commentary
BASE METALS
Copper: Copper prices slid as the Strait of Hormuz closed once more and as the ceasefire between Iran and the US looked in jeopardy ahead of talks between the two sides, reigniting fears that higher oil prices will dampen economic growth. Benchmark three-month copper on the LME was down 0.8% at $13,235. Meanwhile, LME copper stocks remain near a 12-year high at almost 400,000 tonnes, offering headwinds to further price gains given the ample supply.
On the other hand, strong demand in China has helped limit the downside. Copper stocks in SHFE warehouses fell nearly 10% last week to 240,456 tonnes on Friday and are down almost 45% since March 13. The Yangshan copper premium, a gauge of China’s appetite for importing copper, which remains elevated, pointing to stronger demand conditions. It has gained around 270% since the end of January and is at its highest since June last year. China’s economy expanded 5.0% YoY in Q1 2026, up from 4.5% in Q4 2025 and beating forecasts of 4.8%. It marked the fastest annual growth in three quarters, supported largely by resilient export performance although Beijing braces for potential fallout from the Iran conflict. Despite the stronger start, economists expect China’s growth momentum to weaken over the rest of the year, weighed down by mounting external headwinds, particularly if the Middle East crisis is prolonged.
Zinc: Zinc eased 0.3% to $3,436.
Aluminum: Aluminum fell 0.4% to $3,552. Primary aluminum production in the Gulf last month fell by 6% from February, preliminary data from the International Aluminum Institute showed on Monday, with a warning that the fall could be even steeper when final numbers are in.
Tin: Tin was down 0.7% at $50,330.
Lead: Lead slipped by 0.3% to $1,957.
Nickel: Nickel rose 0.3% to $18,165. Fears over sulphuric acid shortages have hit local producers, who have warned that a new ore pricing formula will increase production costs significantly.
PRECIOUS METALS
Gold: June COMEX contracts are down 1.15% to $4,823, as a stronger dollar and renewed inflation fears weighed on the metal after another closure of the Strait of Hormuz pushed oil prices higher. The US said on Sunday that it had took over an Iranian cargo ship that tried to break through its blockade while Iran said it would retaliate, heightening fears of a resumption of hostilities. Oil prices jumped around 5% on fears that the ceasefire between the US and Iran could collapse and traffic through the Strait of Hormuz remained largely halted.
Still, restrained moves in the FX market and the second round of talks between the two warring countries suggest lingering optimism that a deal is still palpable. Meanwhile, Fed easing expectations remain favorable to gold prices over the longer-term given weakness in the labor market. Gold has rallied on improved risk appetite, and has sold off on periods of risk-aversion, counter to traditional dynamics, suggesting that traders are more focused on Fed implications and inflationary pressures. Longer-run inflation expectations at the time-being offer resistance to higher yields as the Fed should remain biased towards policy-easing.
De-escalation is likely to prove supportive for precious metals, particularly if it weighs on the dollar. Underlying fundamentals make the case for a resumption of the dollar’s downward trend once hostilities in the Middle East are officially over. Despite rising inflationary pressures driven by energy prices, the dollar has lost its interest rate differential support it once drew from hawkish Fed expectations, support that has since been repriced away. With the labor market softening materially, the underlying case for a Fed rate cut later in the year remains intact.
Silver: Silver futures are down 2.5% to $79.76.
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