Written Commentary
PRECIOUS METALS
Gold: December gold contracts are little changed at $4,443. A softer dollar and yields that are little changed are favorable to prices today, though Wednesday’s Fed minutes are likely to keep prices contained in a tight range as traders await policy clues. Traders have pushed back expectations of a September rate hike, though the recent inflation data did reveal that underlying inflationary pressures are remaining firm, which is likely to reinforce hawkish Fed members views that policy should move upwards. As such, and given the lack of forward guidance from the Fed, a September rate hike remains firmly on the table. For many, the reports continue to make the case for the Fed to hold on rates, which will leave further upside in precious metals contingent upon whether or not upcoming data can leave that narrative intact. Still, breakeven inflation remains well contained, suggesting that while underlying price pressures remain firm, markets continue to expect the Fed to ultimately bring inflation under control. That backdrop is supportive for gold over the longer term and, so long as inflation expectations remain anchored, could help keep the 10-year yield below 4.70%.
Silver: September contracts are up 0.70% to $65.57.
BASE METALS
Copper: Copper prices on the LME hit a six-month high overnight as worries over low LME stocks offset weak factory data in China. Benchmark three-month copper on the LME was up 1.1% at $14,310, while COMEX prices are down 0.35% at $6.59. LME warehouse stocks have fallen 50% since May as copper continues to flow to US warehouses ahead of expected tariffs on imports of copper. However, premiums for nearby copper contracts are expected to see some copper flow back to the LME system, with the cash/three-month premium closing at nearly a five year high of $416.29 on Friday. The LME’s cash copper contract hit a record high at $14,830 in trading this morning. COMEX warehouses sit at 667,207 tons, up nearly 700% since February 2025. SHFE warehouses have fallen over 80% since March to 69,731 tons. The Yangshan premium slipped to $90, though it is still up 350% since January, indicating solid demand.
While questions over the impact of the Iran war raise questions over the risks to the global economy and potential drag on demand, the structural factors remain supportive of copper prices. Lower production expectations in Chile and dwindling available copper stocks in LME warehouses keep the cash-to-three-month spread elevated. Falling inventories outside the US have been the main catalyst in setting up bullish conditions for the metal despite the uncertainty over the status of US-Iran negotiations. However, the uncertainty over those dynamics could leave copper vulnerable to a modest pullback if negotiations deteriorate.
Zinc: Zinc firmed 0.2% to $3,766.
Aluminum: Aluminum was up 0.5% at $3,270.
Tin: Tin added 0.5% to $56,450.
Lead: Lead was little changed at $1,896.
Nickel: Nickel was up 0.3% to $16,860.
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