Written Commentary
BASE METALS
Copper: Copper prices on the LME pulled back from two-week highs as fresh strikes between the US and Iran dented risk appetite, while the dollar rose. Benchmark three-month copper on the London Metal Exchange slipped 0.8% to $13,930, while COMEX copper fell 2.6% to $6.50. The OECD warned on Wednesday that a prolonged war could drag on global growth and push up inflation, which could also curb metals demand. Still, support for copper is coming from anticipation of 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 is around $635 a ton, 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 edged down 0.1% in official activity to $3,639.
Aluminum: Aluminum fell 0.8% to $3,721. LME warehouse stocks fell to 335,450 tons on Tuesday, 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 shed 1.3% to $57,200.
Lead: Lead gave up 0.5% to $2,034.
Nickel: Nickel dropped 1.3% to $18,990.
PRECIOUS METALS
Gold: Gold slipped overnight, with August contracts down 1.3% to $4,461 as a flare up in strikes between the US and Iran renewed inflation concerns and heightened demand for the dollar moving flows away from gold. Still, equity markets are largely treating an extension of the ceasefire as a done deal, which has been supportive of broader risk sentiment. For gold, yesterday’s JOLTS data was constructive of a hold in Fed policy, with jobs openings rising +731,000 to 7.618 million in April. That marked largest single-month increase since April 2021 and the highest level since November 2024, far past the consensus estimate of 6.88 million. However, hires fell -419,000 to 5.1 million, the second-largest monthly decline since July 2020, pushing the hire rate down 30bps to 3.2%. This “openings up, hiring down” dynamic suggests companies are posting positions but remaining cautious about actually filling them, consistent with elevated uncertainty amid the conflict.
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.
Silver: Silver futures are down 2.5% to $73.63.
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