Written Commentary
PRECIOUS METALS
Gold: August gold fell lower, looking to test the $4,000 level. Gold’s direction remains subject to the broader inflation and Fed outlook in which recent dynamics have been bearish. Tomorrow’s inflation data will be responsible for the next breakout move in gold. As for Fed policy, markets are priced for a move higher in October and see nearly 40 bps of tightening by year-end. For gold, focus on higher oil prices amid the low-liquidity summer period could see the metal break out of its recent consolidation range, especially if tomorrow’s core print comes in higher-than-expected. Renewed fighting in the Gulf amplifies inflation worries and raises the risk of further Fed tightening, adding to headwinds. CFTC data revealed traders reduced their net long positions by 1,964 contracts to 114,854, following three consecutive weeks of increases.
June’s Fed minutes leave the impression of a committee on hold but tilting hawkish, with the next move dependent on incoming PCE prints and geopolitical developments. We slightly favor a Fed rate hike in Q4, over a hold. However the outlook remains dependent upon inflation data rather than labor data in our view. HSBC cut its 2026 average gold price forecast to $4,560 per ounce from $4,864, while reducing its 2027 forecast to $4,925 from $5,000. HSBC expects greater official sector demand for gold later in the year based on long-term diversification.
Silver: September contracts are down 2% to $58.91.
BASE METALS
Copper: Copper prices were mixed in overnight trade as the metals complex looks to developments in the Middle East. Benchmark three-month copper on the London Metal Exchange was down 0.3% at $13,443, while COMEX copper prices are up 1.10% at $6.35. Inventories in LME-approved warehouses have dropped more than 20% since the end of May to a four-month low of 305,200 tons. Meanwhile, cancelled warrants represent nearly 43% of supply, indicating that over 130,000 tons area due to leave the LME system. Copper is heading toward the US in anticipation of potential tariffs on the metal, which had failed to materialize at the earlier June 30 deadline. Iran-related macro factors aside, the tariff dynamic in the US represents the greatest impact on price direction for the metal. Copper stocks in COMEX warehouses registered hit record highs of 613,741 metric tons, up nearly 600% since the initial news of the US investigation into copper imports. In warehouses monitored by the SHFE, copper stocks have fallen nearly 80% since March at 100,271 tons. Falling stocks are likely to offer support to a stronger price floor.
Zinc: Zinc fell 1.3% to $3,569. Recent disruptions have reinforced supply worries. Glencore’s smelter in Kazakhstan is operating at reduced capacity following an explosion, Nexa’s smelter in Peru is slowly restarting operations. Meanwhile, a seismic event at Boliden’s Garpenberg mine earlier this year has also raised the possibility of prolonged lower output. Inventories on the SHFE fell 2.2% from the previous week, highlighting tightening availability in the physical market.
Aluminum: Aluminum was little changed at $3,138. Emirates Global Aluminum said it had restarted its alumina refinery in the UAE, signaling that broader metal production in the Gulf is set to start again. Market sentiment is indicative that traders want to sell the recent rallies amid expectations that supply tightness will ease with greater-than-expected UAE production and a recovery in Indonesian supply. The Gulf region accounts for about 9% of global supply of aluminum.
Tin: Tin slipped 0.1% to $53,080.
Lead: Lead fell 1.1% to $1,876.
Nickel: Nickel was down 1.2% to $16,545.
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