Written Commentary
BASE METALS
Copper: Copper prices were largely muted in overnight trade as the metals complex looks to developments in the Middle East. Benchmark three-month copper on the London Metal Exchange slipped 0.3% to $13,453, while COMEX copper prices are up 0.10% at $6.27. The cash LME copper contract was trading at a $68 ton discount to the three-month forward Wednesday, suggesting no pressing need for near-term metal. Copper is likely to remain driven by broader macro sentiment. Before the outbreak of renewed strikes, copper had been trading in a narrow range as the market is still awaiting a possible decision from Washington over tariffs on refined copper as outflows from LME warehouses to the US continue. The Trump administration had originally set a June 30 deadline to announce potential tariffs on the metal. Still, tariff risk is still present and should not be discounted.
Zinc: Zinc shed 1.1% to $3,586. Recent disruptions have reinforced supply worries. Glencore’s smelter in Kazakhstan is operating at reduced capacity following an explosion, Nexa’s smelter in Peru is slowly restarting operations. Meanwhile, a seismic event at Boliden’s Garpenberg mine earlier this year has also raised the possibility of prolonged lower output. Inventories on the SHFE fell 2.2% from the previous week, highlighting tightening availability in the physical market.
Aluminum: Aluminum was down 1.5% at $3,152. Emirates Global Aluminum said it had restarted its alumina refinery in the UAE, signaling that broader metal production in the Gulf is set to start again. Market sentiment is indicative that traders want to sell the recent rallies amid expectations that supply tightness will ease with greater-than-expected UAE production and a recovery in Indonesian supply. The Gulf region accounts for about 9% of global supply of aluminum.
Tin: Tin dipped 0.4% to $52,900.
Lead: Lead added 0.4% to $1,899.
Nickel: Nickel was flat at $16,590.
PRECIOUS METALS
Gold: August gold fell lower to trade near $4,100. Gold’s direction remains subject to the broader inflation and Fed outlook in which recent dynamics have been bearish. August contracts look to test the psychological $4,000 level for support should tensions in the Middle East continue to rise. Upcoming inflation data will be responsible for the next breakout move in gold. As for Fed policy, markets are priced for a move higher in December and see a total of 33 bps of tightening by year-end. June’s Fed minutes revealed rising concerns over inflation, with some policymakers eyeing a case to raise rates. Notably, policymakers see price pressures as becoming increasingly broad-based across goods and services. The labor market was assessed largely a non-factor in the inflation debate. Ultimately, the minutes leave the impression of a committee on hold but tilting hawkish, with the next move dependent on incoming PCE prints and geopolitical developments.
We slightly favor a Fed rate hike in Q4, over a hold. However the outlook remains dependent upon inflation data rather than labor data in our view. HSBC cut its 2026 average gold price forecast to $4,560 per ounce from $4,864, while reducing its 2027 forecast to $4,925 from $5,000. HSBC expects greater official sector demand for gold later in the year based on long-term diversification.
Silver: September contracts are down 1% to $60.14.
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