Metals Position Clean-Up

PRECIOUS METALS

Gold: Gold prices repeated course from Wednesday, moving lower as traders took profits and cleaned up positions following a strong rally since the beginning of the holiday period. Additionally, a stronger dollar also weighed on prices, though in recent sessions, metals have moved in line with dollar strength. ISM Services PMI data for December increased for a third consecutive month to 54.4 in December from 52.6 in November, well above forecasts of 52.3. The reading pointed to the strongest growth in the services sector since October 2024, with all subindexes in expansion territory for the first time since February. Business reported a boost from the holiday season, while also reporting a rebound in employment and declining, yet elevated price pressures. Meanwhile, JOLTS data did little steer direction on the labor market other than pointing to a cooling, yet stable labor market as job openings decreased, while layoffs and new hires remain little changed from previous readings. The mixed bag of data only heightened anticipation for tomorrow’s nonfarm payrolls report, which could help shape expectations on Fed policy in 2026.

Gold prices enjoyed favorable conditions to start the week on Monday as safe-haven buying led prices higher, while the metals complex is broadly rallying on the theme of critical minerals and security of supply chains, which have come into focus following the events in Venezuela. Markets have largely shrugged off the US military action that saw the removal of longtime Venezuelan president Maduro. However, a lack of further escalation and cooperation between the US and Venezuela diplomatically limits any broader geopolitical risk.

Another potential notable event on Friday could be the Supreme Court’s ruling on Trump’s tariffs, for which prediction markets are placing an unfavorable outcome for the Trump administration. Polymarket odds are pricing a 70% chance of an unfavorable ruling for the administration in the case. The Supreme Court announced that it would issue a set of opinions on Friday, though it did not disclose what cases it would be ruling on. This has raised expectations that the administration’s case regarding the legality of the global tariffs imposed by the administration could be on the docket. An unfavorable ruling could lead to volatility in the bond market, as tariffs are expected to lower the national deficit by $3 trillion over the next ten years.

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.

Silver: Silver prices are down 4.3% to $74.24 as profit-taking pressured the metal. Silver has been benefitting from safe-haven buying and increased investor attention. The gold-silver ratio is hovering near 57 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 and 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 2.3% to $2,217. Recent support for the metal has come 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 continued their fall from record highs reached on Tuesday, which saw LME copper hit $13,387.50. Benchmark three-month copper on the LME fell 0.4% to $12,850, mirroring moves in precious metals in what is most likely a position clean-up and profit-taking move. S&P Global on Thursday said that growth in the AI and defense sectors will boost global copper demand 50% by 2040, while supplies are expected to fall short by more than 10 million metric tons annually without more recycling and mining. While the electric vehicle industry has lifted copper demand the past decade, the AI, defense and robotics industries will require even more of the metal during the next 14 years alongside traditional consumer appetite for air conditioners and other copper-hungry appliances.

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 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 has 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 300,000 – 400,00 ton deficit for the year. Many existing mines have been run 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 in place are hard to pass and likely to support prices for some time.

Zinc: Zinc eased 0.5% to $3,151.

Aluminum: Aluminum was steady at $3,089, still 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 added 0.1% to $44,350.

Lead: Lead lost 0.6% to $2,046.

Nickel: Nickel slid 4.3% to $17,125. The Indonesian government refrained from disclosing its 2026 mining output quota, snapping a sharp rally that had sent the metal to its highest since mid-2024 on Wednesday at $18,800.  LME nickel stocks climbed to 276,300 tons, the highest since June 2018, after 20,760 tons of inflows. Meanwhile, the discount of the cash LME nickel contract over the three-month forward widened to $224 a ton on Wednesday, implying no pressing need for near-term metal.

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