Written Commentary
PRECIOUS METALS
Gold: August gold contracts fell lower, looking to test the $4,000 once again, as the dollar rose amid the pickup in oil prices. Underlying fundamentals remain bearish for gold as recent US-Iran strikes reinforce a hawkish inflationary backdrop, while Fed rate expectations have moved higher in recent days. A Reuters poll showed that economists are expecting the Fed to keep rates on hold for the remainder of the year, while a majority of those who answered a separate question about the chance of a rate hike this year now described the likelihood as “high”, a reversal from last month when most saw it as “low.” Markets are pricing in a October rate hike and see 45 bps of tightening before year end.
Silver: September contracts are down 3.6% to $58.10.
BASE METALS
Copper: Copper prices fell as rising oil prices have dampened the near-term economic outlook and risk sentiment. Benchmark three-month copper on the LME was down 0.5% at $13,739; COMEX prices are down 1.5% to $6.39. However, support for prices is coming from low inventories, with LME stocks at 107,850 tons, a seven-month low. The cash LME copper contract was trading at a $9 premium over the three-month, nearly double its $4.70 on Wednesday. Traders appear hesitant to bet on copper’s downside, while upside resistance has come in strong at the $14,000 level.
In China, the Yangshan copper premium was at $115 a ton on Wednesday, the highest since November 2022. Smelter maintenance and stockpiling are weighing on warehouse supply in China, while the scrap market remains tight due to demand for copper cathode. Copper stocks in SHFE-monitored warehouses have declined by 82% since May; copper in LME-registered warehouses are down by around 30% in the same period, with much of the LME material moving to the US. Tariff anxiety is helping to underpin prices, while concerns over sulphuric acid availability have reinforced supply worries outside of tariff dynamics.
Zinc: Zinc rose 0.5% to $3,610.
Aluminum: Aluminum fell 0.3% to $3,181.
Tin: Tin edged up 0.3% to $54,095.
Lead: Lead also added 0.3% to $1,902.
Nickel: Nickel gained 1% to $17,410.
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