Written Commentary
BASE METALS
Copper: Copper prices were little changed in a tight range overnight, as uncertainty over US tariffs and the rise in oil prices dented risk sentiment. LME copper was up 0.1% at $14,355, while US prices were little changed at $6.5725. Supportive of copper has been a tighter scrap market in China, which in turn has led the country to draw down in refined copper inventory, even as more copper continue to head to the US. The Yangshan copper premium, which gauges demand for imported copper, rose to $138 a ton, its highest level in almost four years.
US inventories are at a record high of 718,199 metric tons. The Trump administration has yet to decide on tariffs on refined copper, as the administration is likely grappling with affordability concerns ahead of November midterm elections. BHP Group and Anglo American reported respective declines of 19% and 5% in quarterly copper production due to disruptions in Chile, though both companies maintained their full-year output guidance.
Zinc: Zinc lost 0.6% to $3,693.
Aluminum: Aluminum fell 0.7% to $2,996.
Tin: Tin gained 0.2% to $50,950.
Lead: Lead eased 0.2% to $1,893.
Nickel: Nickel rose 0.2% to $15,565.
PRECIOUS METALS
Gold: December gold contracts eased as rising oil prices stoked inflation concerns, while traders continued to look ahead to next week’s Fed meeting after last week’s inflation data. Currently, money markets assign a 15% chance of a rate hike in October and remain fully priced for a move higher in December. Fed Chair Warsh voiced optimism about US economic strength but offered nothing new on policy in comments on Friday. Worries about AI companies’ heavy debt burdens have fueled demand for Treasuries, which has benefitted gold. Still, the broader macroeconomic outlook remains challenging for gold. Recent survey evidence has continued to support the idea that economic growth remains robust, which gives ample reason to expect yields will move modestly higher over the next couple of months following their rapid rise recently. Our base case is that the Fed will need to raise rates two to three times over the next 12 months to effectively combat inflation.
Silver: December contracts are up 0.25% to $57.43.
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