Written Commentary
PRECIOUS METALS
Gold: Gold prices are lower but are on track for a gain of about 65% this year, its largest annual rise since 1979, with the rally underscoring the impact of US interest rate cuts and expectations of further monetary easing, geopolitical tensions, heavy central bank buying, and robust ETF inflows. However, a strong wave of profit taking alongside thinner trading conditions, which has amplified price movements, has seen the yellow metal knocked off its record peaks and remain below its 200 day MA. Pressuring prices today is a marginally stronger dollar and higher Treasury yields as a result of a better-than-expected jobless claims figure for the week ending December 27, although the figure was likely distorted by the holiday-shortened week.
The Fed’s December meeting minutes did little to offer clues on monetary policy other than that policymakers will likely want to hold on cutting rates until they see further, sustained evidence of cooling inflation and/or a labor market that is cooling faster than expected. However, policymakers do expect to cut rates again in 2026. November’s CPI inflation report was promising, showing that inflation cooled to 2.7% year-over-year, a steep drop from September’s 3.0%. However, the data required a technical fix to be applied to the data collection efforts, which likely biased the figures downwards. Upcoming reports could showcase a hotter inflation reading as data collection efforts resume to normalcy and price pressures are reflected more accurately.
Silver: Silver prices fell nearly 8% to $71.82, as a strong wave of profit-taking alongside thinner liquidity conditions have intensified price movements. Silver has experienced choppy trade in recent trading sessions as thin trading conditions as a result of the holidays has exacerbated price movements, as reflected in Monday’s sell off, which was a result of a wave of profit taking that overwhelmed markets. The gold-silver ratio has plummeted from 81 in late November to just under 60 before the New Year, hitting its lowest level since August of 2013. Since 2022, the gold-silver ratio has largely maintained a range between 75-95, but shot to as high as 105 in April as gold prices soared and silver remained relatively subdued, in part thanks to weak retail investor attention and global economic slowdown worries, which weighed on silver’s industrial demand side.
Platinum: Platinum is down 9% to $2,027 as a wave of profit-taking weighs on the metal. Prices have found support from 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 fell as traders took profits in thin liquidity conditions following a strong rally that drove the metal to a record-high. Benchmark three-month copper on the LME lost 0.7% to $12,465, after having hit a record of $12,960 on Monday. Copper is set for a 42% gain this year as mine disruptions underscored supply concerns.
Flows to COMEX-registered warehouses are continuing to take place ahead of an expected tariff announcement on coper in mid-2026, which has supported the COMEX premium against LME prices. Seasonality could provide short-term support for copper as the first quarter tends to be supportive for the industrial cycle, with broad inventory build-ups ahead of summer. Meanwhile, demand in China, the world’s biggest metal consumer, remains higher than originally expected, with January-November imports down only 3% year-over-year.
Zinc: Zinc fell 0.7% to $3,102.
Aluminum: Aluminum rose 0.3% to $2,988.
Tin: Tin slid 2.8% to $40,800.
Lead: Lead gained 0.2% to $2,006.
Nickel: Nickel lost 1.2% to $16,625.
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