Written Commentary
PRECIOUS METALS
Gold: December gold rose modestly, though remained rangebound as traders continue to look ahead to next week’s Fed meeting. Currently, money markets assign a 15% chance of a rate hike in October and remain fully priced for a move higher in December. That pricing has been little changed recently, reflecting the lack of a clear direction in gold as the broader Fed and macroeconomic outlook remains a challenging environment. In the short-term, gold is likely to remain stuck in its consolidation. While worries about AI companies’ heavy debt burdens have fueled demand for Treasuries and in turn lower yields, the broader macroeconomic outlook acts as a strong headwind. 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 down 0.50% to $57.715.
BASE METALS
Copper: Copper prices fell across the globe as an increase in warehouse inventories eased near-term supply worries. LME copper fell 0.8% to $14,310, while US prices fell 0.95% to $6.5405. LME data showed that inventories rose 11,475 tons, on Wednesday, approximating an 8% rise over the last week; available inventory in the LME system is also up 40% over the past week as well. Copper has traded sideways for several months but still remains near all-time highs despite today’s losses. Data-center investment, the energy transition, mine-supply challenges, and US stockpiling ahead of potential tariffs continue to underpin prices. Recently, uncertainty about whether US levies will actually be imposed has contributed to the recent range-bound trading. However, the potential tariffs present a key risk to prices if Democrats win big in midterm elections. Prices could fall steeply as a result of the Trump administration reconsidering tariffs in the event of a strong Democratic victory. On the other hand, prices could rise further if the administration announces tariffs. However, the reluctance from the administration to impose tariffs reflects the US’s inability to produce copper and existing concerns over cost-of-living pressures at home.
Zinc: Zinc edged down 0.1% to $3,722.
Aluminum: Aluminum rose 0.7% to $3,024.
Tin: Tin dipped 0.2% to $51,225.
Lead: Lead added 0.4% to $1,902.
Nickel: Nickel rose 2.4% to a three-week high of $16,035.
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