Written Commentary
Precious Metals
Gold: Gold prices slipped, falling from fresh records recorded on Tuesday as the yellow metal continues to catch strong tailwinds from expectations of future rate cuts from the Fed and as geopolitical uncertainty sparked safe-haven demand. Fed Chair Powell struck a cautious tone in remarks yesterday, saying the Fed would need to balance concerns over labor market weakness against worries about an increase in inflation. Focus shifts to Friday’s PCE inflation figures for August, as markets will keenly gauge the extent to which tariffs have caused inflation. A stable reading could reinforce expectations of continued easing out of the Fed, while signs of sticky inflation could dent expectations and act as a short-term headwind for bullion prices.
On the geopolitical front, NATO warned Russia on Tuesday that it would use “all necessary military and non-military tools” to defend itself, as President Trump shifted rhetoric by asserting that Ukraine could recover all territory occupied by Russia with support from the EU and NATO.
Persistent central bank and ETF demand continues to support gold prices, with SPDR Gold Trust holdings reaching a three-year high and China extending its buying streak to ten months. Despite elevated bullion prices and rising input costs, resilient official sector purchases, especially from China and Poland, are helping establish a price floor, with potential upside if US interest rates ease, bolstering gold’s appeal as a reserve asset and inflation hedge.
Silver: Silver futures slipped on a stronger dollar, although are still hovering above $44 per ounce. Silver continues to see sustained support from strong fundamentals, with tight supply underpinning prices and a solid demand picture from solar, electric vehicle, and other tech industries.
Platinum: Platinum fell 1.4%, pressured by a stronger dollar. Platinum is gaining support amid a persistent supply gap caused by weak mine output and stagnant recycling. The World Platinum Investment Council expects South Africa’s mine supply to fall 6% this year. Although recycled platinum supply is improving modestly, it remains at historically low levels.
Base Metals
Copper: Benchmark three-month copper on the London Metal Exchange was down 0.2% at $9,936 a metric ton while US copper futures rose, drawing support from the better than expected building permits data, which saw permits revised higher. Building permits fell by 2.3% to a seasonally adjusted annualized rate of 1.330 million in August, revised up from a preliminary estimate of a 3.7% decline or 1.312 million permits. US PMI data saw manufacturing activity slow in September, although remain in expansion territory. Businesses also reported higher confidence about future economic conditions.
On the supply front, the International Copper Study Group showed the copper market was in a 57,000 metric tons surplus in July, compared with a 14,000 metric tons deficit in June. For the first 7 months of the year, the market was in a 101,000 metric tons surplus compared with a 401,000 metric tons surplus in the same period a year earlier, the ICSG said. World refined copper output in July was 2.50 million metric tons , while consumption was 2.44 million metric tons. When adjusted for changes in inventory in Chinese bonded warehouses, There was a 69,000 metric tons surplus in July compared with a 8,000 metric tons deficit in June, the ICSG said.
Zinc: Zinc dropped 0.4% to $2,876a ton. LME zinc stocks fell to 44,400 tons, the lowest since April 2023.
Aluminum: Aluminum slipped 0.5% to $2,624 per ton. In the US, the premium to buy aluminum on the physical market over the LME price is at a record high of $0.74 per lb/$1,631 a ton. The premium has doubled since President Trump raised the tariffs on imports from 25% to 50%. It is likely the market has used up much of the 150,000 ton inventory build ahead of the tariffs, resulting in the price impact the market is seeing now.
Tin: Tin slipped 0.3%.
Lead: Lead was flat in trading.
Nickel: Nickel fell 0.5%.
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