Stronger Dollar Moves Metals Lower

PRECIOUS METALS

Gold: August gold contracts moved 0.82% lower to $4,466 in response to today’s labor data. Total nonfarm payrolls rose +172,000 in May, essentially in line with the upwardly revised April gain of +179,000. The unemployment rate held steady at 4.3%, unchanged from April and within the narrow 4.3%–4.5% range it has occupied since July 2025. The labor force participation rate was flat at 61.8%, and the employment-population ratio was little changed at 59.2%. The report included meaningful upward revisions: March was revised up +29,000 (from +185K to +214K) and April up +64,000 (from +115K to +179K), adding a combined +93,000 jobs to the prior two months. This is a significant catch-up and materially improves the picture of spring labor market momentum. Following the string of strong payrolls data, the Fed remains well positioned to combat the surge in inflation, perhaps having more room to hike rates if necessary. Gold looks set to finish the week lower as Middle East tensions continue to fuel the inflationary outlook with seemingly no progress made regarding a US-Iran deal to open the Strait. Brent crude oil prices have risen 2.8% so far this week, while spot gold has fallen roughly 16% since the Iran conflict began.

The World Gold Council released their May report, which noted that modest ETF outflows weighed on returns, with COMEX managed money positioning remaining neutral. Looking ahead, the market is focused on the possibility of Fed rate hikes later this year, a dynamic we see reflected in inflation expectations. The US dollar’s trajectory remains the more critical variable for gold than the rate move itself. Key near-term risks to monitor include a potential oil-driven yield spike stemming from the Hormuz Strait standoff, softening physical demand in India and South. For gold, reduced geopolitical uncertainty will direct risk-on flows away from the dollar, while lower oil prices should ease inflation fears. The larger macro environment remains challenging as inflationary concerns remain present amid supply chain issues related to the conflict. However, gold looks to maintain support around the $4,500 level, which could present a solid buying opportunity with structural support expected to come from central bank purchasing amid lower prices.

Silver: Silver futures are down 1.7% to $72.73.

BASE METALS

Copper: Copper prices on the LME and COMEX fell as risk sentiment was pressured by fading hopes of a swift US-Iran deal, while the dollar rose in response to the strong payrolls data out of the US. Benchmark three-month copper on the London Metal Exchange was down 1.2% at $13,762; COMEX copper fell 1.5% to $6.43.While today’s mood and data are pressuring copper, potential US tariffs and declining LME inventory levels offer underlying support for the metal. Available stocks in LME-registered warehouses are at 240,050 tons, the lowest since February 24, while cancelled stocks represent 37% of the total. The discount for the LME cash copper contract to the benchmark was last at $17 a ton, compared with $58 a month ago. Meanwhile, the COMEX premium continues to attract copper flows to the US, with US warehouses sitting at 583,055. In China, the Yangshan copper premium, a gauge of Chinese appetite for imported copper, fell 9% this week to a five-week low of $64 a ton. High copper prices are likely testing Chinese demand for copper, where buyers have historically shown sensitivity to higher prices. Copper inventories in warehouses monitored by the SHFE fell 4% this week to 169,512 tons, the lowest since December.

The Department of Commerce is due to make a recommendation to President Trump on copper tariffs by the end of the month, potentially opening the door for more shipments to the US, which would raise prices further if the tariffs do take effect. However, no policy action could see prices and premiums come under pressure.

Zinc: Zinc added 0.2% to $3,594.

Aluminum: Aluminum gained 0.1% to $3,669. LME warehouse stocks fell to 335,450 tons on Tuesday, the lowest level in nearly four years. The cash LME aluminum contract traded at a $116.50 per ton premium over the three-month forward, the highest level in at least 17 years, highlighting the tightness of supply in the global market. Exports of aluminum from China have slowed, which as in part exacerbated the loss of supply from the Gulf.

Tin: Tin slid 3.1% to $54,000.

Lead: Lead lost 0.3% to $2,011.

Nickel: Nickel rose 0.1% to $18,700.

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