Written Commentary
PRECIOUS METALS
Gold: Gold prices slipped, with April COMEX contracts down 0.23% to $5,114, as a stronger dollar weighed, while oil prices remained elevated. An Axios report said President Trump told other government leaders in a virtual meeting Wednesday that Iran is “about to surrender.” Those reported comments came before Iran’s new supreme leader, Mojtaba Khamenei vowed to continue fighting Thursday and said his country will keep the Strait of Hormuz closed. However, India is in active talks with Iran to allow at least 23 tankers through the strait with the first crossings expected by the weekend, The Wall Street Journal reported Friday, citing Indian officials.
PCE data for January, which is the Fed’s preferred inflation gauge, showed prices rose 0.4% on the month to mark a 3.1% yearly rise. The reading marks the highest in almost two years as inflation picked up from the previous yearly reading of 3.0%. Money market pricing is no longer fully priced in for a rate cut this year from the Fed, though favorable to a cut in December. Markets are pricing in a total of 24 bps of easing by year end.
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.
Silver: Silver futures are down 1.25% to $84.09.
Platinum: Platinum is down 3.30 % to $2,094.
BASE METALS
Copper: Copper prices are lower, with benchmark three-month copper on the LME sliding 1% to $12,871 a ton and heading for a 3.6% weekly dip. Higher energy prices, as a result of the conflict in Iran, have spurred worries that they could weigh on economic growth and lower demand for copper near-term. Meanwhile, higher energy prices also increase upside inflation risks, with the potential that high prices will find their way into the broader economy. This dynamic has lead to a stronger dollar, which has further weighed on prices.
Weak demand from China alongside rising warehouse inventories are also pressuring prices. Copper inventories at the London Metal Exchange fell by 525 tons to 311,725 tons on Friday. 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 climbed 0.2% to $3,308.
Aluminum: Aluminum prices fell as the dollar strengthened, though the metal is on track for a weekly rise. Benchmark three-month aluminum on the LME was down 0.9% at $3,485. The metal is set to end the week up 1.3% after hitting a nearly four-year high on Thursday. The metal notched a 10% leap last week. LME aluminum stocks slipped to 445,300 tons, the lowest since July. The spread between the cash LME aluminum contract and the three-month forward was last in a $29 a ton backwardation, underscoring the near-term demand for the metal. In China, however, SHFE stocks rose 5.6% from last week to 416,425 tons, the most since April 2020.
The war in Iran has affected deliveries from aluminum producers in the region that account for around 9% of global aluminum supply and sparked fears of disrupted imports of raw materials such as alumina to these producers via the Strait of Hormuz.
Easing some of the immediate worries, Norsk Hydro on Thursday its Qatalum aluminum smelter in Qatar was halting the curtailment it began last week and would maintain production at around 60% capacity with reduced gas supplies.
Tin: Tin dropped 3.1% to $47,875.
Lead: Lead was down 0.9% at $1,929.
Nickel: Nickel fell 1.3% to $17,520.
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