Written Commentary
PRECIOUS METALS
Gold: Gold prices are lower, with April COMEX contracts down 1.00% to $5,105, as investors continue to favor dollar liquidity while rising energy prices push back expectations for Federal Reserve easing. With crude oil trading above $100 a barrel, higher inflation expectations are lifting bond yields and increasing the opportunity cost of holding non-yielding assets such as gold.
Energy markets remain the primary driver of sentiment. The conflict in Iran has disrupted roughly one-fifth of global crude and natural gas supply as Tehran targets shipping in the Strait of Hormuz and attacks on regional energy infrastructure continue. Qatar’s energy minister warned that Gulf producers could shut down exports within weeks if the conflict escalates further, a scenario that could push oil toward $150 per barrel. Meanwhile, the Financial Times reported that G7 finance ministers may discuss a coordinated release of strategic petroleum reserves to stabilize energy markets.
On the macro front, February’s weak payroll report reinforced expectations for Fed easing later in the year, though rising energy prices have complicated the outlook by increasing inflation risks. Markets have shifted expectations toward easing in the fall, with September now favored as the likely starting point. Total easing priced for year-end has fallen to roughly 38 basis points from 46 basis points last week. Attention now turns to Wednesday’s inflation report, which will provide a clearer gauge of price pressures before the latest escalation in Middle East tensions.
Still, the broader fundamental backdrop remains supportive. Persistent geopolitical tensions, central bank demand, and macro uncertainty continue to underpin structural demand for bullion, suggesting the recent pullback reflects position adjustment rather than a material shift in underlying fundamentals.
Silver: Silver futures are little changed at $84.32
Platinum: Platinum is up 0.30% to $2,148.
BASE METALS
Copper: Copper prices are lower, with benchmark three-month copper on the LME falling 0.6% to $12,789, facing continued pressure from rising warehouse inventories and negative sentiment stemming from the conflict in Iran. Weaker growth prospects out of China have pressured the metal.
Copper inventories at the London Metal Exchange climbed by 9,925 tons overnight to 294,250 tons, the most since October 2024. The increase reflects a pricing dynamic between exchanges. LME copper currently trades at a premium to COMEX prices, incentivizing traders to move metal into LME storage locations. As a result, US inventories now account for roughly 24% of total copper held in the LME warehousing network, the largest share since April 2024. Meanwhile, the large build in COMEX inventories seen last year, driven by concerns about potential US import tariffs, has stabilized, with stocks hovering around 545,000 tons.
Zinc: Zinc 1.8% to $3,357.
Aluminum: Aluminum prices hit a four-year high of $3,544 before falling 1.7% to $3,386. Shipping disruptions from the Middle East continue to fuel supply concerns for the metal, while production from Gulf countries has dropped following force majeures from Mideast smelters Qatalum and Aluminum Bahrain. The Gulf region produced 8% of the world’s aluminum last year. The shutdown of Qatari smelter Qatalum is expected to be completed by the end of March and could take six-to-twelve months to restart. Worries about supplies have flipped the discount for the cash aluminum contract over the three-month forward into a premium or backwardation. It climbed to $47.4 a ton on Friday, the highest since February 2022 and was last around $32 a ton.
Aluminum stocks in the LME-registered warehouses fell to 456,875 tons on Friday, the lowest since July last year. Meanwhile, SHFE stocks rose 10.8% last week to 394,498 tons, their highest level since April of 2020.
Tin: Tin fell 3.3% to $48,426.
Lead: Lead was down 0.8% to $1,937.
Nickel: Nickel ceded 0.6% to $17,360.
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