Written Commentary
PRECIOUS METALS
Gold: Gold prices are little changed, recovering from overnight losses and stabilizing after Friday’s outsized moves in the precious metals space. The CME increased margin requirements for the metal, which did add to some selling pressure. Gold has lost about $900 since hitting an all-time high of $5,594.82 on January 29, erasing most of this year’s gains. The recovery in gold today is likely due to dip buying and a covering of short positions. The increased margin requirements have made speculative positions less appealing and are likely to force some retail traders to exit positions due to a lack of liquidity.
Still, structural support for gold persists as central banks continue diversifying away from the dollar, reducing FX reserves and increasing gold purchases—a trend expected to provide ongoing support through 2026. Investment demand remains strong as Tether’s CEO recently said the firm plans to allocate 10%–15% of its investment portfolio to physical gold, while SPDR Gold Trust holdings rose to a nearly four-year high this week, signaling renewed institutional and ETF inflows.
A firmer dollar has also weighed on the metal, which has found support following President Trump’s nomination of former Fed governor Kevin Warsh as Fed Chair. Warsh has been critical of central bank policy in recent years and favors a lower neutral policy rate. Warsh also has experience serving as a Fed governor from 2006 to 2011. That experience is likely offering the dollar support, alleviating some nervousness in the markets that the Fed Chair pick would be a lot more dovish. Additionally, government shutdown fears have eased after Republican and Democratic lawmakers hammered out a deal to stave off a looming government shutdown.
Silver: Silver futures are up 3% to $80.93 following Friday’s extreme selloff, which saw the metal fall 31% as profit-taking and a collapse of the FOMO rally created a frenzy. Friday’s selling was linked to an unwinding of ETF and options positions. Silver is up nearly 4.4% so far this year, after previously gaining 60% on the year last week, fueled by supply deficits and momentum buying. 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 up 1.6% to $2,156.
BASE METALS
Copper: Copper prices fell, pressured by a stronger dollar and profit-taking with prices hitting three-week lows as the recent surge in prices ran ahead of fundamentals. Weak demand, rising stockpiles, and the likelihood of higher supplies all suggested copper’s rally to record highs at $14,527.50 last Thursday was unsustainable. Benchmark three-month copper on the LME fell to $12,414.50, a drop of 9% in the two most recent trading sessions. The selloff in base metals has also been driven by a stronger dollar after President Trump named former Fed Governor Kevin Warsh to head the central bank when Powell’s term ends in May.
Metal specific fundamentals remain supportive despite weak spot physical demand in China, where the Yangshan copper premium stood at $27 a ton, recovering slightly from a drop to $20 middle last week. The cash LME copper contract was trading near a $90 a ton discount to the three-month forward, suggesting little short-term demand on the LME. Factory activity in some parts of the world expanded in January, offering policymakers some assurance the hit from higher tariffs has run its course for now, but the growth was from a low base and followed months of shrinking activity. China’s Lunar New Year holiday in mid-February will also bring industrial activity to a standstill in the country which consumes more than half of global copper production estimated at around 26 million tons this year.
Concerns regarding supply disruptions over the past 12 months continue to provide underlying support for prices as forecasts of soaring AI datacenter growth points to elevated long-term demand. Demand prospects from China are also in focus in light of the country’s economic growth plans after a surge in investment was announced by the state grid earlier this month. China’s state grid said that it would spend four trillion yuan ($574 billion) to upgrade the country’s power grid between 2026 and 2030.
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