Written Commentary
Gold: June COMEX contracts are up 0.37% to $4,841, despite a rise in oil prices overnight and a stronger dollar. Gold has rallied on improved risk appetite, and has sold off on periods of risk-aversion, counter to traditional dynamics, suggesting that traders are more focused on Fed implications and inflationary pressures. Longer-run inflation expectations at the time-being offer resistance to higher yields as the Fed should remain biased towards policy-easing given weakness in the labor market. The 1/2-year inflation swap spread rose to 37.63 bps, in line with expectations that markets are expecting the impact of higher energy prices to be short-lived.
De-escalation is likely to prove supportive for precious metals, particularly if it weighs on the dollar. March’s core CPI reading of 2.6% YoY confirms that energy-driven inflation has not yet penetrated underlying price pressures, though upside risks remain. Underlying fundamentals make the case for a resumption of the dollar’s downward trend once hostilities in the Middle East are officially over. Despite rising inflationary pressures driven by energy prices, the dollar has lost its interest rate differential support it once drew from hawkish Fed expectations, support that has since been repriced away. With the labor market softening materially, the underlying case for a Fed rate cut later in the year remains intact.
Silver: Silver futures are little changed at $79.64. The Silver Institute and consultancy Metals Focus on Wednesday said the silver market is heading for a sixth year of structural deficit. The global silver market deficit is expected to widen to 46.3 million ounces in 2026 from 40.3 million in 2025, even as total demand falls 2% due to weaker industrial and jewelry consumption, partly offset by stronger coin and bar demand. Industrial silver fabrication is forecast to fall 3% to a four-year low with the Iran war’s damage to global growth threatening further downside. By contrast, coin and bar demand is seen rising 18% supported by a recovery in the US buying.
BASE METALS
Copper: Benchmark three-month copper on the LME was down 0.1% at $13,235 as profit-taking and a stronger dollar weighed. Optimism about the possibility of US-Iran peace talks have proven favorable to the metal in recent days. Chinese demand has also been supportive of prices in recent days, highlighted by the Yangshan copper premium, a gauge of China’s appetite for importing copper, which rose to $74 a ton on Wednesday. It has gained 270% since the end of January and is at its highest since June last year. Additionally, inventories in SHFE warehouses have dropped in recent days, reflecting stronger demand inside China.
China’s economy expanded 5.0% YoY in Q1 2026, up from 4.5% in Q4 2025 and beating forecasts of 4.8%. It marked the fastest annual growth in three quarters, supported largely by resilient export performance although Beijing braces for potential fallout from the Iran conflict. However, the underlying momentum appeared uneven in March, as industrial output rose more than expected, but retail sales growth missed estimates. Exports slowed sharply in the month while imports surged. Fixed-asset investment in the January to March period continued to grow, albeit at a slower pace. Despite the stronger start, economists expect China’s growth momentum to weaken over the rest of the year, weighed down by mounting external headwinds, particularly if the Middle East crisis is prolonged.
Zinc: Zinc rose 0.8% to $3,424.
Aluminum: Aluminum rose 0.4% to a four-year high of $3,636. The global aluminum market is facing a supply deficit this year due to the Iran war, with one Gulf producer saying in early April that fully restoring production at one of its UAE smelters hit by an Iranian attack in late March could take up to a year. Despite elevated prices for the entire LME basket, signs of tightness for near-term delivery are visible only in aluminum, with the LME cash contract trading at a premium over the three-month benchmark.
Tin: Tin gained 0.6% to $49,900.
Lead: Lead fell 0.8% to $1,950.
Nickel: Nickel climbed 0.7% to $18,260.
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