Failure of Talks Negative to Gold

PRECIOUS METALS

Gold: April COMEX contracts are down 0.70% to $4,762 as oil prices remain elevated, while safe haven demand lifts the dollar. While March’s core CPI reading of 2.6% YoY confirms that energy-driven inflation has not yet penetrated underlying price pressures, the escalatory trajectory of the conflict creates upside risks to inflation and Fed policy, creating headwinds for gold. Markets are unlikely to find durable footing until a material breakthrough in hostilities materializes. Still, we expect the Fed to maintain its easing bias and expect a rate cut later in the year.

VP Vance and envoys Witkoff and Kushner concluded the marathon session in Pakistan with no deal. Vance said Iran “chose not to accept our conditions,” while Iran’s Vice President Mohajerani countered that “the worse news is for the United States.” Iran refused to halt uranium enrichment, dismantle nuclear facilities, or end support for proxies — all core US demands. Iran’s Fars News Agency reported Tehran has “no plan for a next round of negotiations.” Hours after the talks failed, Trump declared the US Navy would begin the process of blockading any and all Ships trying to enter, or leave, the Strait of Hormuz. However, CENTCOM clarified that the blockade targets vessels entering or departing Iranian ports and coastal areas, but will still allow ships transiting between non-Iranian ports through the Strait. Oil prices have risen 7%-8% in response, reigniting fears that the sustained rise in energy prices could make its way into the broader economy.

Silver: Silver futures are 3% lower at $74.18.

BASE METALS

Copper: Copper prices rose on the LME to start the trading day with benchmark three-month copper on the LME up 0.3% to $12,880. The macro backdrop for copper remains caught between a drag on demand from higher energy prices and firmed demand in top consumer China. The Yangshan copper premium, a gauge of China’s appetite for importing the metal, jumped to $74 a ton, the highest since June 2025 and up 76% in one week. Meanwhile, warehouse inventories monitored by SHFE fell 11.5% last week, and are down 37% since March 9.

Still, given the high level of uncertainty regarding the shaky ceasefire, trader appetite to go long remains subdued. 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 an easing in the energy risk premium – if both sides meet at the table once again, 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 slipped 0.6% to $3,333.

Aluminum: Aluminum 2% to $3,570. The continued closure of the Strait of Hormuz highlighted supply issues in the Gulf, which accounts for about 8% of global production. EGA said earlier this month that fully restoring production at its Al Taweelah smelter, which produced 1.6 million tons of cast metal in 2025, could take up to a year. Supply worries continue to be reflected in the premium of the LME cash contract over the three-month future, which surged 32% to $88 a ton, the highest since February 2007.

Tin: Tin lost 0.6% to $47,700.

Lead: Lead dipped 0.1% to $1,921.

Nickel: Nickel advanced 2.3% to $17,640.

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