Written Commentary
BASE METALS
Copper: Copper prices gained as fears of tighter supply outside of the US and strong demand lifted prices, while investors await further news regarding the US-Iran deal to extend a ceasefire as President Trump has yet to approve a final deal. Benchmark three-month copper on the London Metal Exchange was up 1.5% at $13,840. Chile’s copper output in April was the weakest 23 years, reinforcing supply worries, while comments from the newly appointed chairman of Codelco indicated that the company will prioritize profitability over maximizing production volumes. On the demand side, optimism around the expansion of AI data center buildouts continues to reinforce the metal’s demand outlook. Tariff expectations continue to pull copper into the US, which tightens availability elsewhere, adding a layer of distortion to the market. COMEX warehouse stocks are at 580,762 tons, which is up more than 550% President Trump ordered an investigation of copper import tariffs in February of 2025.
On the China front, the country’s central bank has instructed local banks to boost lending this month, reinforcing Beijing’s efforts to support its economy, which has been hurt by higher energy prices and weak domestic demand. The challenge for investors is balancing the potential of weaker demand for base metals against expectations of copper shortages due to mining issues and a lack of sulphuric acid.
Zinc: Zinc gained 1% to $3,576.
Aluminum: Aluminum traded 0.5% higher at $3,685. The premium of the cash LME contract over the three-month forward climbed above $100 a ton on Friday, the highest since February 2007, as worries about shortages from the war remain.
Tin: Tin advanced 2% to $56,590.
Lead: Lead firmed 0.2% to $2,021.
Nickel: Nickel was little changed at $19,275.
PRECIOUS METALS
Gold: June COMEX contracts moved lower overnight, as inflation fears and a stronger dollar pressured the metal following a flare up in strikes between the US and Iran overnight. Broadly, for gold expectations of higher-for-longer interest rates are likely to keep the metal under pressure, unless bond yields can maintain a move lower. Attention this week will be focused on a host of jobs data, with JOLTS data out on Tuesday and May’s nonfarm payrolls report due Friday. With recent data, including weekly claims and previous hiring figures suggesting a stable labor market, Friday’s data will need to see a serious drop in hiring to get the market excited about rate cuts this year. The Chicago Fed’s Real-Time Unemployment Rate Forecast for May is 4.32%, edging down from the prior BLS reading of 4.34%. The modest improvement is largely attributable to a slight decline in separations, as reflected in the Chicago Fed’s Layoffs and Other Separations Rate. PCE data has also reinforced the view that Fed policy is set to stand still for the time being, while a hawkish shift lingers among FOMC members and market participants.
For gold, reduced geopolitical uncertainty will direct risk-on flows away from the dollar, while lower oil prices should ease inflation fears. The larger macro environment remains challenging as inflationary concerns remain present amid supply chain issues related to the conflict.
Silver: Silver futures are down 0.8% to $75.25.
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