Written Commentary
PRECIOUS METALS
Gold: August gold contracts are up 3.4% to $4,383, as oil fell on the US-Iran news. While still a framework, the deal is the most significant breakthrough and would see the Strait reopen. Oil prices have moved sharply lower in response, alleviating inflationary fears. Markets are expecting a hold from the Fed this week, but expectations of a hike later in the year have been priced out, with markets now pricing a hike for March of 2027. However, the two-year remains above 4%, a key signal that the bond market is not totally relieved from the recent news. Recent inflation data has reinforced a hawkish-leaning hold, but removed any immediate urgency to move rates higher. For now, price pressures have proven relatively transitory without presenting a durable second-round impulse.
Gold is trading as a pure macro asset, with an unusually tight inverse relationship to the dollar and US real yields, which should support the metal if they continue to fall further. 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.
Silver: Silver futures are up 4.6% to $71.12
BASE METALS
Copper: Copper prices rose on the US-Iran news. Benchmark three-month copper on the London Metal Exchange rose 0.4% to $13,748; COMEX copper prices are up 1% to $6.50. Traders are still awaiting a sizeable reduction in energy prices, though recent moves in oil have led traders across developed markets to scale back policy rate expectations over the next twelve months. Meanwhile, the dollar’s drop today is supportive of the broader metals complex.
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 fell 0.1% to $3,580.
Aluminum: Aluminum was down 3.0% at $3,430. The US-Iran agreement has improved prospects for deliveries from Gulf producers, even though shippers remain cautious on transit through the Strait.
Tin: Tin gained 2.1% to $54,875.
Lead: Lead rose 0.4% to $1,973.
Nickel: Nickel added 0.8% to $17,975.
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