Written Commentary
PRECIOUS METALS
Gold: August gold contracts are little changed, appearing to find support at the psychological $4,000 level. Underlying fundamentals continue to remain bearish for gold amid a rise in Fed rate hike odds and as recent US-Iran strikes reinforce a hawkish inflationary backdrop. Money markets are now fully priced for a rate hike by the Fed at its September meeting. Policymakers at the Fed are in their pre-meeting blackout period. As long as oil prices trade within the $70-$90 range, a resumption of peace talks appears unlikely. With oil now about that level, the theory that escalation could lead to deescalation is set to be tested as both Iran and the US remain conditioned by oil prices. Oil inventories in the US and elsewhere are at their lowest in decade, which would add incentive for the US to negotiate the start of flow of oil through the strait again.
Silver: September contracts are up 0.45% to $58.33.
BASE METALS
Copper: Copper prices on the LME edged higher, with three-month copper up 0.2% at $13,615; COMEX prices are little changed at $6.34. Prices are underpinned from low inventories, with available LME inventory at 113,450 tons, rising modestly from Thursday after flows into warehouses in South Korea and Taiwan. On the SHFE, inventories fell almost 13% from last week to 69,610 tons to hit their lowest level since February 2024. US stocks at COMEX warehouse continue to hit record highs at 639,147 tons as traders continue to anticipate a possible tariff on the metal. The Trump administration on Friday imposed new tariffs of 10% and 12.5% on goods from 60 trading partners over allegations of lax enforcement of forced labor bans, but the move had been anticipated from some time and had little impact on markets.
In China, the Yangshan copper premium was at $115 a ton on Wednesday, the highest since November 2022. Smelter maintenance and stockpiling are weighing on warehouse supply in China, while the scrap market remains tight due to demand for copper cathode. Copper stocks in SHFE-monitored warehouses have declined by 82% since May; copper in LME-registered warehouses are down by around 30% in the same period, with much of the LME material moving to the US. Tariff anxiety is helping to underpin prices, while concerns over sulphuric acid availability have reinforced supply worries outside of tariff dynamics.
Zinc: Zinc rose 0.2% to $3,591.
Aluminum: Aluminum fell 0.9% to $3,160.
Tin: Tin climbed 0.2% to $53,450.
Lead: Lead added 0.3% to $1,900.
Nickel: Nickel jumped 1.1% to $17,420.
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