Written Commentary
PRECIOUS METALS
Gold: June COMEX contracts fell 0.71% to $4,695 as inflation concerns continue to weigh on Fed easing prospects, reinforcing a challenging macro-environment for gold. April’s CPI report saw a +0.6% MoM headline reading and +0.4% MoM core reading, which are beginning to challenge that narrative by impacting Fed expectations more materially. The energy component rose +3.8% MoM and accounting for over 40% of the total monthly increase. Money markets are now more favorable to rate hikes instead of cuts in the coming months.
Recent optimism that a US-Iran resolution would take place soon has waned; the US is reportedly weighing limited strikes against Iran in an effort to break the negotiation stalemate after President Trump called Iran’s counteroffer a “piece of garbage.” Those dynamics are likely to favor higher yields and a stronger dollar, while also reinforcing the Fed’s current stance, creating a challenging environment for gold in the near future. Still, any credible news regarding a reopening of the Strait is likely to pressure inflation concerns and lift gold. We maintain our expectation that the Fed will lower rates in the fourth quarter this year.
Silver: Silver futures are down 0.6% to $85.41.
BASE METALS
Copper: Copper prices held steady on the LME as large-fund buying was supportive of the metal. Funds are betting on current technical signals and expectations that supply issues will persist, mainly related to the Grasberg mine in Indonesia. Benchmark three-month copper on the London Metal Exchange was down 0.1% at $13,936. Fading hopes of a peace deal in the near future between the US and Iran are also contributing to a challenging environment for copper, as elevated energy prices continue to impact sentiment and expectations that it will dampen economic growth and demand for the metal. Still, expectations that an expansion of data centers across the globe increase demand for copper remain supportive and are partially offsetting the current sentiment from the US-Iran conflict.
Freeports’ Grasberg mine in Indonesia is facing delays in returning to production. Freeport announced they are targeting a return to full production at Grasberg by early 2028 after initially expecting the mine to return to full production capacity by the end of 2027. Meanwhile, in China, coppers prices on the SHFE closed 2.1% higher at $15,528. There is also speculation that China’s refined copper imports could rise this quarter, helping support prices.
US copper futures continue to outperform global prices; COMEX copper futures are up 0.46% to $6.4885. Speculation of further tariffs on US copper later in the year have supported arbitrage and defensive purchasing to the US. The Trump administration expected to decide in July whether to impose tariffs on refined copper. This has also partly insulated it from some global risk-off pressures in recent weeks. COMEX inventories have climbed to successive record highs, reaching over 558,000 metric tons, more than doubling over the past eight months. As for the broader copper complex, increased risk sentiment will prove supportive of prices, while a formal peace agreement is likely to see investors adopt pre-war themes.
Zinc: Zinc gained 0.6% to $3,502.
Aluminum: Aluminum lost 0.4% to $3,565.
Tin: Tin slipped 0.6% to $55,400.
Lead: Lead added 0.3% to $1,993.
Nickel: Nickel shed 1.8% to $18,900.
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