Written Commentary
BASE METALS
Copper: Copper prices on the LME climbed to a three-month high after a report flagged that the Grasberg mine in Indonesia was facing delays in returning to production, tightening supply worries. Benchmark three-month copper on the London Metal Exchange moved up 1.3% to $13,558 following the news. Bloomberg News reported that Freeport-McMoRan is targeting a return to full production at Grasberg by early 2028. The company had initially expected the Indonesian mine to return to full production capacity by the end of 2027. LME copper is on course for over a 4% gain on the week, which would mark its best week of the year, in part due to higher risk sentiment over US-Iran talks, which have seen the dollar fall and risk assets rally.
Elsewhere, US copper futures continue to outperform global prices; COMEX copper futures are up 2% to $6.30 following April’s labor report, earlier trading 1.7% higher ahead of the release. COMEX copper is set to rise over 6% on the week, aided largely by the same factors as LME copper. Also supportive of US prices is speculation of further tariffs on US copper later in the year. Arbitrage and defensive purchasing is pulling metal to the US, with the Trump administration expected to decide in July whether to impose tariffs on refined copper. This has also partly insulated it from some global risk-off pressures in recent weeks. COMEX inventories have climbed to successive record highs, reaching 558,692 metric tons on Monday, more than doubling over the past eight months. As for the broader copper complex, increased risk sentiment will prove supportive of prices, while a formal peace agreement is likely to see investors adopt pre-war themes.
Copper stocks in warehouses monitored by the SHFE fell 5.6% from last week to 181,333 tons, the lowest since January. The Yangshan copper premium, a gauge of China’s appetite for importing copper, is up more than 60% since early March.
Zinc: Zinc dipped 0.7% to $3,432.
Aluminum: Aluminum gained 0.9% to $3,523.
Tin: Tin shed 0.7% to $54,205.
Lead: Lead lost 0.6% to $1,969. Large holdings of lead warrants alongside a 40% holding of lead contracts maturing in May are supportive of the gains. The concentration of holdings suggests that much of the LME’s deliverable lead is tied up ahead of the May expiry, heightening the risks of a supply squeeze.
Nickel: Nickel eased 0.3% to $19,080.
PRECIOUS METALS
Gold: June COMEX contracts are up 0.46% to $4,733, gaining following April’s labor report, which showed that nonfarm payrolls edged up by 115,000 jobs, exceeding the consensus forecast of 62,000-67,000. The unemployment rate remained unchanged at 4.3 percent with 7.4 million unemployed. Health care added 37,000 jobs, consistent with the 12-month average of 32,000, driven by nursing/residential care facilities (+15,000) and home health care services (+11,000). The Federal government lead job losses: employment declined by 9,000 in April, bringing total losses to 348,000 (down 11.5%) since the October 2024 peak.
The labor force participation rate held steady at 61.8 percent, while the employment-population ratio remained at 59.1 percent. Average hourly earnings for all private nonfarm employees rose 0.2%, with year-over-year growth of 3.6 percent. February’s payroll change was revised down by 23,000 (from -133,000 to -156,000), while March was revised up by 7,000 (from +178,000 to +185,000), resulting in a net downward revision of 16,000 jobs for the two-month period.
Optimism over a US-Iran resolution has seen inflation expectations fall, leading to a reduction in hawkish Fed expectations, a dynamic which has been supportive to gold. Market expectations for Fed policy are little changed following the Jobs figures. Markets are pricing a December hike at 11%, below Thursday’s 14%.
Gold is likely to remain sensitive to the geopolitical landscape, which in turn frames the global inflation outlook. The TIPS market has shown a meaningful break in the rising trend regarding inflation compensation, consistent with falling oil and the US–Iran de-escalation story. The 5y5y forward is near 2.26%, comfortably below the 2.50% de-anchoring threshold, giving the Fed full optionality to ease later in the year. Any credible news regarding a reopening of the Strait is likely to continue to pressure inflation concerns and lift gold.
Silver: Silver futures are up 2% to $81.85.
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