Written Commentary
PRECIOUS METALS
Gold: Gold prices are higher ahead of the release of the Fed’s January meeting minutes, where markets will look for any signals on the policy path, though the minutes are not expected to materially alter market expectations. Friday’s PCE data should offer clearer signals regarding the policy path. April contracts are still trading below $5,000 as traders continue to position themselves ahead of Friday’s data. Easing tensions between the US and Iran have dampened safe-haven demand, while many Asian markets are closed for the Lunar New Year holiday. Iran and the US reached an understanding on Tuesday on “guiding principles” for nuclear talks. However, that does not mean a deal is imminent, Iran’s foreign minister said.
Market-implied odds regarding Fed policy have been largely unchanged, with January’s inflation figures revealing 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.
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 up 4.5% to $76.87
Platinum: Platinum is up 3.4% to $2,087.
BASE METALS
Copper: Copper prices are higher on dip-buying amid thinner-liquidity conditions. Benchmark three-month copper on the LME was up 0.6% at $12,700. The SHFE is closed for the Lunar New Year until February 23 and traders in top metals consumer China are largely absent due to the holiday. Elsewhere, rising copper stocks offer short-term headwinds to prices, with stocks in LME-approved warehouses increasing for a 12th straight day to 224,625 tons, the highest level in 11 months, after inflows into New Orleans and Kaohsiung. The cash LME copper contract was trading at a $97 a ton discount to the three-month forward, suggesting no pressing need for near-term metal. Market attention will be focused on February 24, when Chinese markets open following the Lunar New Year, for any movements on inventory levels.
Zinc: Zinc climbed 0.6% to $3,305.
Aluminum: Aluminum rose 0.8% to $3,060.
Tin: Tin shed 0.1% to $45,900.
Lead: Lead gained 0.3% to $1,952.
Nickel: Nickel added 1.1% to $17,040.
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