Written Commentary
BASE METALS
Copper: Copper prices rose to their highest level in three weeks as traders weighed prospects for increased demand in China ahead of today’s talks in Pakistan between the US and Iran. Benchmark three-month copper on the LME added 0.6% to $12,755. Still, given the high level of uncertainty regarding the shaky ceasefire, trader appetite to go long remains subdued. However, appetite for copper has improved in China. Warehouses monitored by SHFE fell 11.5% this week, having slid 37% since March 9. The Yangshan copper premium, which reflects demand for copper imported into China, jumped to $73 a ton, data showed on Friday, its strongest since June last year. Despite the concerns in Iran, demand in China remains well bid and supportive, especially if appetite persists.
However, rising warehouse stocks continue to act as a headwind to price gains. Warehouses registered with the LME and Comex are above 900,000 tons, double the level since the start of the year. Climbing inventories have created a large discount for the cash contracts over the three-month forward on the LME. However, the rise in warehouse inventories could be seen as more of a strategic reserve than an export-ready commodity, potentially reducing oversupply worries. Still, the low cancellation ratio points to muted western demand.
The broader near-term macro case for copper appears bearish as elevated energy prices and supply chain risks weigh on the outlook for industrial demand and global growth, though a material end to the conflict has the opportunity to unwind these risks. While the ceasefire may lead to a near-term easing in the energy risk premium, the agreement appears fragile and conditional, suggesting markets are likely to remain headline-driven rather than shifting to a sustained risk-on backdrop.
Zinc: Zinc dropped 0.5% to $3,311.
Aluminum: Aluminum rose 1.1% to $3,482. The continued closure of the Strait of Hormuz highlighted supply issues in the Gulf, which accounts for about 8% of global production.
Tin: Tin rose 0.7% to $48,000.
Lead: Lead slipped 0.3% to $1,921.
Nickel: Nickel gained 0.5% to $17,175.
PRECIOUS METALS
Gold: April COMEX contracts are down 0.45% to $4,797 ahead of today’s talks between the US and Iran. March’s inflation print was reassuring for prospects of potential Fed easing later in the year, with core inflation remaining stable amid the jump in headline inflation, confirming that the surge in energy prices has not found its way into the broader economy.
The 1-year/2-year inflation swap spread has widened to 33.77 bps, showing that markets are expecting the impact of higher energy prices to be short-lived. The NY Fed’s March 2026 Survey of Consumer Expectations showed 3-year inflation expectations rising only a modest 0.1 ppt despite the largest monthly gasoline spike on record, while the 5-year/5-year forward inflation expectation rate held at 2.12% as of April 9, below its long-run average and fully consistent with the Fed’s longer-run PCE target. With 2-year swaps anchored near 2.5–2.75% and no evidence of de-anchoring in longer-horizon measures, markets are not pricing a scenario that requires a policy response from the Fed. Meanwhile, PCE data for February showed both headline and core came in at +0.4% on the month, compared to January’s +0.3%/+0.4% prints and in line with expectations. Core PCE slipped to 3.0% YoY from 3.1%, though remains well above the Fed’s 2% target.
The energy-induced rise in inflation is expected to prove temporary. If the Strait reopens, the energy contribution to CPI will fade, and the March gasoline base effect will act as a powerful disinflationary tailwind. The March FOMC SEP already embeds this dynamic, projecting PCE at 2.7% for 2026 and returning to 2.2% in 2027, with the Fed projecting one rate cut this year. With core showing no re-acceleration and longer-run expectations firmly anchored, the Fed retains full optionality to treat today’s headline print as transitory. We maintain our outlook for one Fed rate cut in 2026.
Silver: Silver futures are little changed at $76.40.
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