Written Commentary
BASE METALS
Copper: Copper prices fell lower as Middle East worries and higher interest rates prompted fund selling. Benchmark three-month copper on the London Metal Exchange fell 0.4% to $13,456; COMEX copper prices fell 0.3% to $6.25. LME copper has shed about 6% since May 13, when it hit its highest in 3-1/2 months as funds piled into the market on supply issues and bullish technical signals. For now, copper is being pressured by macro headwinds, similar to gold. Without a reduction in energy prices and higher policy rate expectations, copper is likely to continue to endure near-term pressure. Elsewhere, the Yangshan copper premium has fallen roughly 19% over the past two weeks, highlight weaker demand signals from China. On the SHFE, copper lost 1.3% to $15,223.
LME warehouse levels continue to fall, as traders continue to look ahead to the end of June for the Trump administration’s decision over a potential tariff on copper. COMEX prices continue to trade at a premium to LME prices, which also offers some support to prices, as traders move copper from global warehouses to the US. Available stocks in LME-registered warehouses are at 226,975 tons. Falling inventories also continue to lower the discount of the LME cash copper contract to the three-month benchmark. Morgan Stanley recently noted that 15% tariff would continue to drive both COMEX and LME prices higher, with about 2.5% of annual copper demand going toward US stockpiling. The Department of Commerce is due to make a recommendation to President Trump on copper tariffs by the end of the month. However, no policy action could see prices and premiums come under pressure.
Zinc: Zinc lost 0.2% to $3,482.
Aluminum: Aluminum gained 0.8% in official activity to $3,495.
Tin: Tin advanced 1.2% to $52,600.
Lead: Lead dipped 0.1% to $1,961.
Nickel: Nickel shed 0.2% to $17,650.
PRECIOUS METALS
Gold: August gold contracts fell 0.8% to $4,100, as pressure from a stronger dollar and May’s PPI and CPI data weighed on the metal. Meanwhile, May’s nonfarm payrolls figures have bolstered the Fed’s position to raise rates, though are unlikely to shift the FOMC’s calculus significantly. While May’s core CPI was relatively benign, at 2.9% YoY remains well above the 2% target. May’s headline PPI rose +1.1% MoM, with the 12-month rate climbing to +6.5% YoY, the largest annual gain since November 2022. Core PPI advanced +0.8% MoM. Markets price near-certainty on a June hold, but expectations of a hike later in the year remain unchanged from Friday. For now, price pressures have proven relatively transitory without presenting a durable second-round impulse. If core CPI prints above 3.0% annualized in coming readings, that argument becomes hard to sustain, particularly given that intermediate-stage pipeline pressures remain intense, with processed goods up +13.3% YoY and unprocessed goods up +22.2% YoY, the hottest upstream readings since 2022.
Gold is still trading as a pure macro asset, with an unusually tight inverse relationship to the dollar and US real yields keeping a firm lid on prices. With the inflation impulse from energy fading modestly and correlations with crude moderating, bullion’s near-term path is likely to be dictated by the trajectory of real yields and the dollar, meaning a more durable recovery probably requires either softer inflation expectations, lower yields, or a renewed bout of growth anxiety that revives safe-haven demand. For gold, reduced geopolitical uncertainty will direct risk-on flows away from the dollar, while lower oil prices should ease inflation fears. Gold has broken support from the $4,300-$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 1.60% to $653.63
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