Traders Eye Fed Expectations for Gold

PRECIOUS METALS

Gold: Gold moved higher overnight, with August contracts up 0.9% to $4,547 as a softer dollar, lower yields, and a decline in oil prices overnight supported buying conditions while traders took profits in the equities. President Trump said on Monday that talks with Iran were ongoing, which prompted a drop in oil prices, after Tehran had suspended indirect negotiations with the US over the conflict in Lebanon. The apparent ceasefire in Lebanon has offered some relief to oil prices and currency traders, which has kept the dollar in check. Still, gold remains in a short-term downtrend as the macro environment stays challenging with money markets biased toward a Fed rate hike by the end of the year, with odds of a hike at a coin flip.

Attention today will be focused on JOLTS data for April, which is expected to show a slight decline in job openings from March. The most Fed-relevant metric is the openings to unemployed ratio, which currently stands at 0.97 (6.87M openings vs. 7.1 million unemployed), nearly at parity with pre-pandemic norms. If openings tick up meaningfully above 7M, it signals labor demand is reaccelerating, which would be bearish for gold. A drop toward 6.5M is a bull scenario and could give the Fed room to ease despite the energy-driven CPI surge, though we find that as unlikely. Layoffs held at 1.2% in March. The Fed would be watching for a break above ~1.4–1.5%, which could signal a genuine decline in demand rather than just a soft patch. May’s nonfarm payrolls report due Friday, which will be the main event of the week. While this week’s labor data could impact Fed policy expectations, the base case for policy is a continuation of the status quo in our opinion. With recent data, including weekly claims and previous hiring figures suggesting a stable labor market, Today’s and Friday’s data will need to see a serious drop in hiring to get the market excited about rate cuts this year.

For gold, reduced geopolitical uncertainty will direct risk-on flows away from the dollar, while lower oil prices should ease inflation fears. The larger macro environment remains challenging as inflationary concerns remain present amid supply chain issues related to the conflict. However, gold looks to maintain support around the $4,500 level, which could present a solid buying opportunity with structural support expected to come from central bank purchasing amid lower prices.

BASE METALS

Copper: Copper prices on the LME rose to a two-week high as tight supply outside the US continues to support prices. Benchmark three-month copper on the London Metal Exchange was up 1.5% at $13,840, while COMEX copper rose 1.6% to $6.66. The market is awaiting a report from the US Department of Commerce at the end of June for possible tariffs on imports of refined copper. The prospect of these tariffs last year spurred a strong rise in prices though it ultimately did not materialize. The White House on Monday amended tariffs on some copper, aluminum and iron imports, but did not resolve questions over refined copper, which has been responsible for the massive inflows to the US that has created a distortion in global warehouse stocks. Meanwhile, COMEX copper’s premium over LME price widened, further supporting shipments to US warehouses.

Chile’s copper output in April was the weakest 23 years, reinforcing supply worries, while comments from the newly appointed chairman of Codelco indicated that the company will prioritize profitability over maximizing production volumes. On the demand side, optimism around the expansion of AI data center buildouts continues to reinforce the metal’s demand outlook. COMEX warehouse stocks are at 580,762 tons, which is up more than 550% President Trump ordered an investigation of copper import tariffs in February of 2025.

On the China front, the country’s central bank has instructed local banks to boost lending this month, reinforcing Beijing’s efforts to support its economy, which has been hurt by higher energy prices and weak domestic demand. The challenge for investors is balancing the potential of weaker demand for base metals against expectations of copper shortages due to mining issues and a lack of sulphuric acid.

Zinc: Zinc firmed 1.3% to $3,626.

Aluminum: Aluminum was up 1% at $3,752. LME warehouse stocks fell to 335,450 tons, the lowest level in nearly four years. The cash LME aluminum contract traded at a $116.50 per ton premium over the three-month forward, the highest level in at least 17 years, highlighting the tightness of supply in the global market. Exports of aluminum from China have slowed, which as in part exacerbated the loss of supply from the Gulf.

Tin: Tin added 1.9% to $57,725.

Lead: Lead was up 1.2% at $2,029.

Nickel: Nickel gained 0.4% to $19,325.

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