Written Commentary
BASE METALS
Copper: Copper prices fell as a stronger dollar weighed on the metals complex, while traders also sat on the sidelines ahead of tomorrow’s Fed decision. Benchmark copper on the LME was down 0.9% at $13,605, finding support at the 50-day moving average around $13,570. COMEX prices are down 1.17% to $6.30. The inflationary outlook and elevated oil prices remain bearish for copper prices, while low inventories underpin prices. Those dynamics are likely to keep copper rangebound ahead of any US decision on potential tariffs. Available LME inventory was at 113,450 tons on Friday, rising modestly from Thursday after flows into warehouses in South Korea and Taiwan. On the SHFE, inventories fell almost 13% from last week to 69,610 tons to hit their lowest level since February 2024. US stocks at COMEX warehouse continue to hit record highs at 639,147 tons as traders continue to anticipate a possible tariff on the metal. The Trump administration on Friday imposed new tariffs of 10% and 12.5% on goods from 60 trading partners over allegations of lax enforcement of forced labor bans, but the move had been anticipated from some time and had little impact on markets.
Zinc: Zinc shed 1% to $3,575.
Aluminum: Aluminum slipped 0.8% to $3,143.
Tin: Tin lost 1.4% to $53,600.
Lead: Lead edged down 0.1% to $1,890.
Nickel: Nickel eased 0.8% to $17,070.
PRECIOUS METALS
Gold: August gold contracts fell sharply as the dollar firmed, though found support at the $4,000 level. Money markets have not repriced Fed policy expectations significantly despite the recent pause in fighting as underlying fundamentals remain structurally bearish for gold. Money markets are fully priced for a rate hike by the Fed at its September meeting, while pricing a 32% chance of a hike for tomorrow’s outcome. Given Warsh’s preference for little-to-none forward guidance, the risk of a 25bp hike should not be discounted. The theory that escalation could lead to deescalation looks to have proven correct, although the at-large geopolitical risk remains present, limiting any near-term upside in gold without any credible reduction to inflation risks.
Silver: September contracts are down 2.8% to $57.05.
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