Metal Thematics in Play

PRECIOUS METALS

Gold: Gold prices moved higher despite a stronger dollar as safe-haven buying likely remains in place for some traders, while traders position themselves ahead of Friday’s labor report, which is likely to have strong implications on shaping Fed policy in 2026. Gold prices enjoyed favorable conditions to start the week on Monday as safe-haven buying led prices higher, while a dollar that weakened as the session continued helped cushion prices. In general, metals are rallying on the theme of critical minerals and security of supply chains, which have come more into focus following the latest events in Venezuela.

Equity and currency markets have largely shrugged off the US military action that saw the removal of longtime Venezuelan president Maduro. However, a lack of further escalation, alongside the decisiveness of the operation present minimal opportunities for a spillover in conflict and seem to present minimal downside risks in regard to geopolitics. Venezuela’s Maduro pleaded not guilty on Monday when he appeared in a New York court on charges of narco-terrorism and possession of machine guns and destructive devices.

December nonfarm payrolls report will come Friday and offer a solid assessment over the labor market in a report which should be free from any shutdown related impacts, giving markets a clear look into the health of the labor market. ISM Manufacturing PMI data was disappointing and showed continued weakness in the US Manufacturing sector, while price pressures remained elevated for companies, but below previous levels over the summer. Recent data and PMI surveys have suggested that price pressures in the economy are declining, although November’s CPI inflation report did little to reassure that trend given the downward bias of the data collection efforts.

Fed Funds futures are favorable to a rate cut from the Fed in April or June, followed by another reduction in September or October, while the Fed’s latest dot plot suggests that policymakers expect just one cut in 2026. The dot plot showed that policymakers are almost evenly split on how monetary policy should precede in 2026, but President Trump’s Fed nominee is expected to support further easing in the economy. The president said he would be announcing his nominee for the Fed in January, so markets will continue to keep an ear open for the announcement.

Silver: Silver prices are up 3% to $78.90 as the metal continues to enjoy a strong rally. Silver is benefitting from safe-haven buying and increased investor attention. Thin liquidity over the holiday period intensified price movements, which saw the metal experiencing choppy trade in recent trading. The gold-silver ratio has stabilized around 59 in recent days after plummeting from 81 in late November, 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 up 1.5% to $2,305. 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 on the LME hit all-time highs again on Tuesday as a mix of demand factors, supply worries, and shipments to the US have set up bullish conditions. Benchmark three-month copper on the rose as high as $13,387 earlier in today’s session. Mine disruptions including an accident at Freeport-McMoRan’s Grasberg mine in Indonesia in September and a strike at Capstone Copper’s Mantoverde copper and gold mine in northern Chile have reinforced the theme of shortages. However, the mine only produces between 29,000 and 32,000 metric tons of copper a year, which is a only a fraction of global mined output.

Still, for traders it reinforces recent worries over supply shortages as many copper mines have faced serious setbacks and delays in 2025, which stemmed production. Copper demand is expected to rise about 3% in 2026, thanks in part to AI data center infrastructure demand, which is likely to land copper in a 300,00 – 400,00 ton deficit for the year. Many existing mines have been rat at or well beyond their capacity for many years, which has consequently led to several mine failures as seen in 2025. Elevated copper prices are likely to spur investment in the industry to generate new production but the structural issues at place are hard to pass and likely to support prices for some time. However, the high prices have dented some appetite for copper in China. The Yangshan copper premium, a gauge of Chinese consumers’ appetite for imported copper, declined to $43 a ton on Monday, down from above $50 by the end of 2025.

Elsewhere, LME stocks stand at about 142,550 tons, which puts the figure down 55% since late August as flows of the metal head to the US in anticipation of expected tariffs on the metal. 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 gained 1.3%.

Aluminum: Aluminum was up 1%, holding above the $3,000 level for the first time in over three years 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 climbed 4%.

Lead: Lead rose 0.5%.

Nickel: Nickel gained 3.19% to $17,545. Nickel has found recent support following an announcement from the Indonesian government that proposed cutting nickel ore output by a third in 2026. Indonesia’s mining minister recently announced that the country would be reducing mining quotas in an effort to support prices.

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