Written Commentary
BASE METALS
Copper: Copper prices are higher, with benchmark three-month copper on the LME up 0.2% at $12,220 as signs of stronger demand in China lifted prices ahead of Chinese PMI data on Tuesday. Forecasts expect Chinese factory activity to have expanded in March, ending a two-month contraction, though supply chain shocks from the Iran war cloud the outlook. Still, elevated inventory levels and macroeconomic concerns related to the Iran conflict are likely to continue to act as headwinds on prices and contribute to volatility. Ultimately, copper is lacking near-term fundamental support, unless Chinese demand substantially rises.
Copper remains a market caught between structural bulls and cyclical sceptics. On one side, investors focused on grid build‑out, renewables and data‑center demand continue to view pullbacks as opportunities to maintain exposure to a constrained supply story. On the other, rising inventories, uneven Chinese property activity and slower factory growth in several major economies are encouraging macro funds to fade rallies and keep overall risk light.
Zinc: Zinc gained 1.4% to $3,158.
Aluminum: Aluminum prices rose 3.9% to a four-year high of $3,424 as Iranian airstrikes on two major Middle East producers over the weekend raised the risk of a prolonged supply shock. Aluminum Bahrain, which runs the world’s largest single-site smelter, said it was assessing the damage from the Iranian strikes. Emirates Global Aluminum, meanwhile, said its plant sustained “significant damage”. Stocks of aluminum in LME-approved warehouses have dropped more than 60% since last May to 418,675 tons.
Tin: Tin climbed 2.2% to $46,800.
Lead: Lead firmed 0.7% to $1,910.
Nickel: Nickel advanced 0.4% to $17,260.
PRECIOUS METALS
Gold: Gold prices rose overnight, with April COMEX contracts up 1.60% to $4,597, even as oil prices also rose. President Trump said that Iran’s new leaders have been “very reasonable” in a social media post Monday morning, as more US troops arrived in the region, while Tehran warned it will not accept humiliation. Meanwhile, Iran-backed Houthi militants in Yemen joined the conflict after targeting Israel over the weekend.
March’s jobs data on Friday will be closely watched for clarity on how hiring has held up in the face of higher energy prices after last month’s poor hiring figures. Elsewhere, JOLTS and ADP figures are also likely to impact Fed expectations. Weak labor figures this week could nullify any market expectations of Fed tightening despite the impact to inflation from higher energy prices.
Markets are now pricing an 11% chance of a December rate hike, down from 50% on Friday. Still, the Fed looks more likely to cut rates than to raise them given its dual mandate and the possibility of the bank looking through an energy price shock in an effort to support the labor market.
Gold is likely to continue to experience strong headwinds in the face of higher energy prices and risks that monetary policy could stay higher for longer. Like the equities, a sustained moved higher in gold will require material evidence of a de-escalation and a reopening of the Strait of Hormuz. Until then, inflation expectations will play an outsized role in the metal’s direction.
Still, ongoing geopolitical risks and central‑bank reserve diversification continue to underpin longer‑term demand for bullion as a macro hedge, suggesting that while the near‑term balance of risks is tilted toward volatility around US data and Fed‑speak, structural support from official‑sector buying and strategic investors remains in place on deeper dips.
Silver: Silver futures are up 1.7% to $71.00.
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