Written Commentary
PRECIOUS METALS
Gold: Gold prices have once again hit record highs as rising tensions in Iran and concerns over Fed independence have fueled buying this week. Worries about US action against Iran have come after President Trump ramped up military threats in response to a deadly crackdown on public protests. The US will also be withdrawing personnel from key bases in the region as a precaution given heightened regional tensions, a US official told Reuters on Wednesday. Markets are also keeping an eye on a potential Supreme Court ruling on President Trump’s tariffs today. Prediction markets are placing an unfavorable outcome for the Trump administration. The central question is whether or not the IEEPA grants the President the legals means and authority to impose tariffs.
December’s CPI pointed to moderating but still sticky inflation. Headline prices rose 0.3% on the month and 2.7% year over year, while core inflation increased 0.2% m/m and 2.6% y/y. Shelter and services, particularly rent, lodging, recreation, and medical care, remained the primary drivers, while declines in goods prices and gasoline helped cap broader inflation pressures. For the Fed, the absence of an upside surprise is likely welcome, but the report is unlikely to materially shift the policy outlook. Officials have recently emphasized that policy is well positioned as they wait to see how economic conditions evolve.
Gold surged to fresh all-time highs on Monday as concerns over Federal Reserve independence resurfaced following reports that the Trump administration threatened Fed Chair Jerome Powell with a criminal indictment. In a video released Sunday night, Powell accused the administration of using the threat of prosecution to pressure the central bank into cutting rates, characterizing the move as a direct challenge to the Fed’s independence. By taking the issue public, Powell underscored the gravity of the situation; a criminal investigation into a sitting Fed chair would be unprecedented.
Silver: Silver prices cross the $90 mark for the first time, hitting a record high of $91.53 as futures prices rose 6.5%.
Platinum: Platinum is up 2.2% to $2,406. The metal is finding support from safe-haven demand and a recent pivot by the European Union on its 2035 combustion-engine ban, a tight supply backdrop, and rising investment demand. Platinum and palladium are both used in cars to reduce exhaust emissions. The EU’s extension regarding the delay of its engine ban is indefinite and will also require stricter emission standards, which could require higher platinum and palladium contents in exhaust systems.
BASE METALS
Copper: Copper prices hit a record high on Wednesday as strong demand from speculative funds provides strong momentum for the metal as supply concerns continue to drive prices higher. Benchmark three-month copper on the LME rose 0.6% to $13,240, after touching a record of $13,407. Copper’s rally has been fueled by supply disruptions, worries about deficits, and a strong flow of copper to the US ahead of potential tariffs, which has consequently tightened supply elsewhere. Available LME copper inventories, fell 22% to the lowest level in six months, LME data showed on Tuesday. That tightness is also appearing in the rising premium on LME cash copper over the three-month contract. The premium rose to $64 a ton on Tuesday for its highest in a month and up from $3 a week ago.
Customs data out of China on Wednesday showed that China’s unwrought copper imports in 2025 fell to the lowest level since 2020, as high prices weighed on demand. China imported 5.32 million metric tons of unwrought copper in 2025, down 6.4% from 2024, data from the General Administration of Customs showed, the lowest since record-high imports in 2020. December imports increased 2.3% to 437,000 tons compared with November, the data showed. Unwrought copper and copper product imports into China include anode, refined, alloy and semi-finished copper products.
China is reportedly preparing a new fiscal package to bolster demand and ensure a strong start to 2026. Policymakers have signaled increased support, with the cabinet—chaired by Premier Li Qiang—outlining measures to lift household consumption by expanding loan support for service providers, enhancing interest subsidies on personal consumer loans, and increasing the supply of high-quality services. Markets will be watching China’s trade data due Wednesday for confirmation of momentum.
Strong projected growth in AI and defense is expected to materially lift global copper demand, exacerbating supply constraints over the coming years. While electric vehicles have driven demand over the past decade, AI, defense, and robotics are set to become even larger consumers of the metal over the next 14 years, alongside steady demand from appliances such as air conditioners. With limited new mine approvals and ongoing disruptions, production is unlikely to meaningfully increase in 2026, reinforcing expectations of sustained copper tightness and elevated prices..
Zinc: Zinc climbed 1.5% to $3,249.
Aluminum: Aluminum edged up 0.2% at $3,204. Aluminum has found recent support following the shutdown of the Mozal smelter in Mozambique. Supply constraints have also been strained from the EU’s new carbon tax, which consequently has reduced the flow of the metal into the trade bloc. Additionally, China announced a 45 million-ton output cap, which has fueled some supply shortage concerns.
Tin: Tin jumped 6.4% to $52,700. Recent talk of a government clampdown on illegal tin mining in Indonesia have spurred supply worries. Tin has also gained support from market bets of rapid growth and demand for tin on the back of the artificial intelligence boom. However, Tom Langston at the International Tin Association said that the supply-demand metrics have not shifted, noting that fund interest for LME tin was at record levels.
Lead: Lead added 0.5% to $2,071.
Nickel: Nickel advanced 2.6% to $18,140. The Indonesian government refrained from disclosing its 2026 mining output quota, snapping a sharp rally that had sent the metal to its highest since mid-2024 on Wednesday at $18,800. LME nickel stocks climbed to 276,300 tons, the highest since June 2018, after 20,760 tons of inflows. Meanwhile, the discount of the cash LME nickel contract over the three-month forward widened to $224 a ton on Wednesday, implying no pressing need for near-term metal.
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