Written Commentary
BASE METALS
Copper: Copper prices are lower as rising warehouse inventories pressured prices amid thin-trading conditions during the start of the Lunar New Year. Benchmark three-month copper on the LME was down 1.4% at $12,673. Record-high prices recorded earlier in the year muted have demand in China, stockpiling in the US have driven combined copper stocks of the LME, SHFE, and COMEX to more than one million tons for the first time in more than two decades. Copper inventories in the LME system reached an 11-month high of 221,625 tons after 9,975 tons were delivered to LME-registered warehouses in the US, South Korea, and Taiwan, LME data showed.
Market attention will be focused on February 24, when Chinese markets open following the Lunar New Year, for any movements on inventory levels. The discount on the LME cash copper contract to the three-month contract widened to $114 a ton on Monday, its highest level in a year, indicating ample nearby supply. This marks a sharp reversal from a premium of $102 on January 20.
Zinc: Zinc eased 0.3% to $3,281.
Aluminum: Aluminum edged 0.2% lower to $3,046
Tin: Tin was down 0.1% at $45,650.
Lead: Lead lost 0.6% to $1,946. LME stocks jumped to 287,125 tons, highest since June, as 54,675 tons were delivered to warehouses in Singapore ahead of settlement or rollover of maturing contracts on the LME on Wednesday.
Nickel: Nickel slid 1.4% to $16,870.
PRECIOUS METALS
Gold: Gold prices are lower as a stronger dollar pressured prices, while investors await updates on US-Iran nuclear talks and PCE inflation data out later in the week. April contracts fell below $5,000, pressured by a stronger dollar and as selling in the equities results in broad-based prompting investors to trim metal holdings to meet margin calls elsewhere. The declines also come amid a drop in Treasury yields, signaling that the moves are driven by liquidity stress and position unwinding. Meanwhile, Ukrainian and Russian representatives will meet in Geneva on Tuesday and Wednesday for US-mediated peace talks.
Markets await FOMC meeting minutes from the Fed’s latest meeting and Friday’s PCE inflation figures for signals on Fed policy following January’s inflation figures, which revealed pockets of sticky inflation amid a lower headline figure. Prices rose 0.2% month-over-month, while the annual rate eased to 2.4%. Core inflation held at 2.5% year-over-year. Paired with the recent strength in labor data, a patience Fed stance is expected, with markets centered on policy easing in the summer rather than in the near term. Elsewhere, Chinese, Hong Kong, Singapore, Taiwan and South Korean markets are closed for the Lunar New Year holidays.
Structural support for gold remains intact as central banks continue to diversify reserves away from the dollar and increase bullion purchases, a trend expected to provide a steady underlying bid through 2026.
Silver: Silver futures are down over 5% to $73.77 as a stronger dollar and equity weakness force traders to unwind positions. Silver is likely to continue to face volatility in both directions in the near term. The silver, platinum and palladium markets are small relative to gold, making them vulnerable to speculative inflows. This dynamic has presented the risk that prices have become detached from physical demand conditions. Additionally, record high prices could be poised to limit industrial demand.
Platinum: Platinum is down 2% to $2,033.
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