Written Commentary
Precious Metals
Gold: Gold prices are sharply lower, reversing much of yesterday’s gains as a wave of profit-taking overtook markets and as the dollar strengthened. Gold surged over 2% to a record high above $4,345 per ounce on Monday, driven by expectations of further Fed rate cuts and strong safe-haven demand amid ongoing uncertainty from the government shutdown. However, White House economic adviser Kevin Hasset suggested that the shutdown could be resolved this week. Investors will closely watch trade talks between the US and China this week following last week’s flare in tensions. President Trump confirmed that he would meet President Xi in South Korea later this month.
The economic calendar this week will center around PMI data on services and manufacturing activity out Friday alongside September’s CPI inflation data. Markets are nearly priced in for a rate cut from the Fed next week and for another 25 bps cut in December. Regarding Friday’s PMI data, markets will look to clues on the labor market, given the absence of official US data and remarks from Fed officials that the Fed’s focus is more on employment, than inflation. Continued strong central bank purchasing of gold is likely to provide a floor for gold prices, while retail demand from gold-backed ETFs will also lend support.
Silver: Silver futures fell more than 5% following a strong wave of profit-taking. Large flows of silver from the US and China to London are helping ease a liquidity squeeze in London that triggered a scramble for physical supply.
Platinum: Platinum futures are down mor than 5% to $1,558.2.
Base Metals
Copper: Copper prices fell as pressure from a stronger dollar weighed on the metal. Benchmark three-month copper on the LME was 0.5% lower at $10,635 a ton. Weak demand from China also weighed on prices as Chinese buyers appear to be on the sidelines ahead of US-China trade talks this week and a meeting between President Trump and President Xi in South Korea. High prices have also dented demand from Chinese markets as the Yangshan copper premium, which reflects demand for China’s imports, has fallen 38% over the past month to $36 a ton, its lowest since July. Supportive of the metal was LME data, which showed that available copper stocks in the LME-registered warehouses fell to 127,350 tons, the lowest since July, after 2,000 of fresh cancellations in South Korea. Mining disruptions also offer support for copper, although recent disruptions have been largely priced in.
On the data front, industrial output in China grew 6.5% on an annualized basis in September, beating expectations of 5.0% growth despite GDP growing at its slowest pace in a year during the third-quarter. Markets are also closely watching this week’s meeting between top Chinese Communist Party officials, where they will review a proposed five-year plan for the country.
Zinc: Zinc gained 0.5% to $2,992. The premium of the cash LME zinc contract over the three-month forward rose to a record high of $323 a ton as tight near-term supply grips the LME system. LME zinc stocks are at 37,275 tons, the lowest since early 2023 despite the global market remaining on track to hit a surplus this year.
Aluminum: Aluminum rose 0.2% to $2,782 a ton. A US-Canada trade deal on aluminum, steel and energy could be ready for approval at a summit in South Korea this month, Canada’s Globe and Mail newspaper reported.
Tin: Tin climbed 0.4% to $35,440.
Lead: Lead was steady at $1,988.
Nickel: Nickel fell 0.3% to $15,175.
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