Gold Headed Lower Amid Macro Environment

PRECIOUS METALS

Gold: June COMEX contracts fell overnight, though still find support at the psychological $4,500 level. Gold is heading for its second consecutive weekly drop, reflecting the larger macro environment, which remains challenging for gold. On the geopolitical front, there are conflicting reports that the Iranian supreme leader has drawn a hard line, insisting enriched uranium must stay in Iran, which is a non-starter for the US. With US attack deadlines spanning today through early next week, the weekend is presents a massive gap risk at Monday’s open. A resumption of US strikes would spark further oil price gains, extend the inflation shock, and trigger a broad risk-off selloff amid the retaliatory strikes from Iran, while a deal or framework peace agreement would reverse the recent trends across equities, treasuries, metals, and currencies.

April’s FOMC meeting minutes confirmed that “many” policymakers are now leaning toward further tightening—a signal just shy of a majority that still points to growing internal support for hikes and diminishing odds of a near-term easing pivot under Warsh. Expectations that the Fed will raise rates, higher yields, and a stronger dollar reinforce the challenging environment for gains. Spiraling inflation concerns are prompting the aggressive selling rather than the classic flight-to-quality buying one would expect given the geopolitical backdrop. Recent trends have shown that gold is now positively correlated with equity performance.

Still, structural support for gold remains intact with central bank purchasing expected to offer underlying support amid lower prices and elevated yields. Several large banks have trimmed their near-term price forecast for gold amid softer investor demand. The main driver for gold remains oil, the dollar, and yields.

Silver: Silver futures are little changed at $74.95.

BASE METALS

Copper: Copper prices rose overnight as falling inventories outweigh expectations of weaker future demand in China and uncertainty over US-Iran peace talks. Benchmark three-month copper on the London Metal Exchange was up 0.6% at $13,599. Available copper stocks in LME-registered warehouses fell to a 10-week low, LME daily data showed, after 53,325 tons were earmarked for delivery. More than half of those cancellations were in LME warehouses in the US, where COMEX copper continues to trade at a premium over LME prices as traders await Washington’s decision on whether to impose import tariffs. If the administration decides not to tariff the metal, a massive return of copper back to the broader market risks sending prices lower.

Still for China, the Yangshan copper premium, a gauge of China’s appetite for importing copper, remained at $73 a ton this week, its highest since mid-April. However, demand is expected to weaken as the country enters an off-season. Copper stocks in warehouses monitored by the SHFE this week rose for the first time since mid-March, gaining 1.6%.

Chile is auditing seven executives at its state mining company for allegedly tampering with and overstating 2025 copper production figures, with at least one executive already fired. This presents the risks that actual Chilean supply may have been even weaker than previously reported, compounding the prior week’s downward revision to 2026 production forecasts. Chile recently announced that copper production would fall 2% this year, after initially estimating 3.7% growth back in February.

Freeport’s Grasberg mine in Indonesia is taking longer than expected to fully restore operations, but should approach full capacity by the end of 2027, it told Reuters on Wednesday. The mine is currently running at 50% capacity and is expected to reach 65% capacity by the end of the year.

Zinc: Zinc rose 0.7% to $3,547. An incident at Nexa Resources Cajamarquilla zinc smelter in Peru has put supply worries back into the picture. The smelter is responsible for producing around 344,400 tons of zinc per year and is the largest in Latin America. The global zinc market surplus narrowed to 32,700 metric tons in March from a surplus of 58,700 tons in February, data from the International Lead and Zinc Study Group showed on Wednesday.  There was a surplus of 89,000 tons in the global refined zinc market during the first three months of the year, compared with a 44,000-ton surplus in the same period of 2025, the data showed.

Aluminum: Aluminum rose 0.1% to $3,641. The conflict in the Gulf has removed roughly 4% of global aluminum supply, while damage to production facilities has exacerbated further supply worries.

Tin: Tin gained 1.3% to $53,955.

Lead: Lead fell 0.4% to $1,997. The global lead market swung to a deficit of 19,300 metric tons in March from a surplus of 17,500 tons in February, data from the International Lead and Zinc Study Group showed on Wednesday. There was a global surplus of refined lead metal amounting to 38,000 tons during the first three months of 2026, compared with a surplus of 33,000 tons in the same period last year.

Nickel: Nickel was steady at $18,730. Indonesia announced that it would exempt nickel pig iron from its planned centralization of commodity exports.

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