Written Commentary
PRECIOUS METALS
Gold: December gold contracts moved higher toward $4,500, and its 200 day MA at $4,617. July’s CPI report saw headline CPI rise 0.1%, while core rose 0.2%, both matching consensus forecasts and offering somewhat of a favorable near-term inflation outcome leading traders to reduce near-term Fed tightening expectations. As a result, the dollar weakened and Treasury yields fell, offering near-term relief despite the overall inflation picture remaining favorable to a hawkish Fed stance. Underlying inflationary pressures continued to mount, with services-ex energy up 0.2% MoM at 3.0% YoY, suggesting that the overall profile of inflation is remaining sticky, regardless of energy prices. The CPI print does offer a useful guide to the potential timing of disinflation once the Iran war ends and if energy-related price pressures begin to fade more sustainably. However, next month’s reading will likely reflect the rebound in energy prices and the backdrop of an unresolved Strait of Hormuz disruption leaves a material risk that the energy shock re-accelerates headline inflation and feeds into expectations. Breakeven inflation remains well contained, suggesting that while underlying price pressures remain firm, markets continue to expect the Fed to ultimately bring inflation under control. That backdrop is supportive for gold over the longer term and, so long as inflation expectations remain anchored, could help keep the 10-year yield below 4.70%.
Silver: September contracts are up 1.6% to $65.99.
BASE METALS
Copper: Copper prices on the LME rose 0.3% to $14,200, while COMEX prices are up 0.20% at $6.64. Supply worries continue to put upward pressure on prices. Freeport said on Wednesday that smelter operations at its Smelting Gresik subsidiary in Indonesia have been stopped for furnace repairs, though the company expects the repairs to be finished by the end of the month. Elsewhere, lower production expectations in Chile are also adding to worries over already tight inventory levels. Total available copper stocks in LME warehouses are at their lowest levels since January, as flows to the US continue on worries of possible import tariffs. The cash-to-three-month spread remains in backwardation at $196 a ton, its highest level since October 2025, highlighting the tightness of supply ion the market.
Falling inventories outside the US have been the main catalyst in setting up bullish conditions for the metal despite the uncertainty over the status of US-Iran negotiations. However, the uncertainty over those dynamics could leave copper vulnerable to a modest pullback if negotiations deteriorate. Strong demand for AI infrastructure buildout and supportive Q2 results from several large AI-names have also lifted sentiment and expectations that the new technology will support longer-term demand prospects.
Zinc: Zinc climbed 1.4% to $3,779.
Aluminum: Aluminum was down 1.7% at $3,308. Emirates Global Aluminum announced it would resume full-scale production in the first quarter of 2027, after it was damaged in strikes during the US-Iran war, easing concerns over future supply deficits.
Tin: Tin rose 0.6% to $56,250.
Lead: Lead rose 0.6% to $1,918.
Nickel: Nickel added 0.4% to reach $16,900.
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