Written Commentary
BASE METALS
Copper: Copper prices are higher as supply concerns continue to drive prices higher and attract interest from speculative traders. Benchmark three-month copper on the LME rose 0.2% to $13,235, after hitting a record high of $13,387.50 earlier last week. Copper’s rally has been fueled by supply disruptions, worries about deficits, and a strong flow of copper to the US ahead of potential tariffs, which has consequently tightened supply elsewhere. Available LME copper inventories, fell 22% to the lowest level in six months, LME data showed on Tuesday. That tightness is also appearing in the rising premium on LME cash copper over the three-month contract. The premium rose to $64 a ton on Tuesday for its highest in a month and up from $3 a week ago.
China is reportedly set to roll out a package of fiscal policies to boost demand and ensure the economy gets off to a good start. Policymakers have pledged to step up support to ensure the economy gets off to a solid start in 2026. The cabinet, chaired by Premier Li Qiang, said the government will boost household consumption by strengthening loan support for services providers, enhancing interest‑subsidy policies for personal consumer loans, and expanding the supply of high‑quality services. Markets will be watching China’s latest trade data due Wednesday.
Projected growth in the AI and defense sectors is set to boost global copper demand, while supplies are expected to fall short over the coming years. 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. Expectations of shortages over coming years due to lack of new supplies will help keep copper prices elevated. Mine production is not expected to pick up much in 2026 given limited project approvals alongside current disruptions.
Zinc: Zinc added 1.2% to $3,177.
Aluminum: Aluminum shed 0.1% to $3,183. Aluminum has found recent support 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 was down 0.1% at $47,925. Recent talk of a government clampdown on illegal tin mining in Indonesia have spurred supply worries.
Lead: Lead added 0.4% to $2,060.
Nickel: Nickel dropped 0.5% to $17,800. 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.
PRECIOUS METALS
Gold: Gold prices rose slightly to start the session and held gains following December’s CPI inflation report, which saw the dollar lose early gains and yields drop. December CPI showed moderate but sticky inflation, with headline prices up 0.3% on the month and 2.7% year over year, while core inflation rose 0.2% on the month and 2.6% on the year. Shelter and services (rent, lodging, recreation, medical care) continued to drive inflation, while goods prices and gasoline fell, keeping overall inflation contained but still above the Fed’s target. For officials at the Fed, the downward surprise in the data, or lack of an upside surprise, is likely to be welcomed. However, the data is not very likely to shape opinions on how to move on monetary policy. Several officials have recently reiterated the policy remains in a good place, while the bank waits to see how current economic conditions play out.
Gold hit all-time highs on Monday as concerns over Federal Reserve independence ramped up again following news that the Trump Administration threatened Fed Chair Powell with a criminal indictment over the weekend. The bank released a video Sunday night, with Chair Powell accusing the administration of using the threat of criminal prosecution to pressure the central bank into lowering rates. Powell framed the move from the Justice Department as a head-on challenge to the central bank’s independence. Powell made clear by releasing the video that the situation would be well in the public spotlight. A criminal investigation of a sitting chair is without precedent.
Meanwhile, on the geopolitical front, tensions in Iran continue to simmer following recent protests against the regime. Iran’s parliament speaker warned the US and Israel against any intervention after President Trump threatened military action against the government amid widespread protests in Iran that have reportedly killed hundreds of people. President Trump said on Monday any country that does business with Iran will face a 25% tariff on trade with the US. Meanwhile, Russian forces launched the year’s most intense wave of missile attacks on Ukraine early on Tuesday, killing four people and injuring several others.
The Supreme Court’s ruling on Trump’s tariffs could potentially come this week after the Supreme Court did not rule on the issue on Friday. Prediction markets are placing an unfavorable outcome for the Trump administration. The central question is whether or not the IEEPA grants the President the legals means and authority to impose tariffs.
Silver: Silver future are up over 3.7% to $88.30.
Platinum: Platinum is up 1.3% to $2,411. The metal is finding support from safe-haven demand and 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.
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