Metals Complex Focuses on US-Iran Talks

BASE METALS

Copper: Copper prices were mixed, with benchmark three-month copper on the London Metal Exchange up 0.9% at $13,723; COMEX copper prices slid 0.16% to $6.37. US-Iran talks are the main catalyst for price action in the metals complex; optimism that US-Iran talks could result in an end to the war and a full reopening of the Strait are largely favorable to prices, with the exception being aluminum. Limiting the upside on copper is the outlook for the Fed, with markets significantly repricing expectations and front-end rates. Further downside pressure on metals could be sustained if bond markets remain unsettled and rates continue higher.

Traders are still awaiting a sizeable reduction in energy prices, though recent moves in oil are supportive of a lower inflationary environment compared to the height of the war. Meanwhile, recent data out of China has raised some fears of weaker demand with retail sales falling 0.6% YoY, while fixed asset investment fell 4.1% YoY. Both figures came in below expectations. Among Chinese industries, investment growth slowed in the agricultures industry (5.9% vs 10.1%) and the industrial sector (0.1% vs 2.5%), while investment in the services sector fell further (-6.8% vs -4.2%). Excluding the property sector, fixed-asset investment decreased by 1.2% in the first five months of 2026, almost reversing a 1.3% increase in the January–April period.

Zinc: Zinc gained 1.1% to $3,595.

Aluminum: Aluminum added 0.3% to $3,406. The US-Iran agreement has improved prospects for deliveries from Gulf producers. Aluminum prices are likely to come under further pressure on expectations of rising shipments from the Middle East, which houses 9% of global smelting capacity. Still, damage to production facilities is likely to temper the amount of production in the coming weeks.

Tin: Tin climbed 3.2% to $55,000.

Lead: Lead firmed 0.1% to $1,956.

Nickel: Nickel rose 1.2% to $17,800.

PRECIOUS METALS

Gold: August gold fell lower overnight, as a hawkish repricing in Fed policy led rates higher, while also offering the dollar firm support despite the drop in oil prices. Recent dynamics continue to show that gold is moderately correlated (negatively) with moves in the dollar; the dollar’s strength following the FOMC meeting being the main catalyst for the move lower in gold. Money markets are now favorable to a rate hike come September and are fully priced in for a hike by the following meeting in October.

Warsh’s post-FOMC statement explicitly attributed elevated inflation to “supply shocks that have driven price increases in certain sectors, including energy”. However, with Brent and WTI both continuing a decline that began when the deal was first announced, it directly undermines the primary inflation driver Warsh cited, which in turn could reduce the probability of the hikes and offer support for gold.

In a World Gold Council Survey, a record 45% of the reserve managers surveyed expect to increase their own institutions’ gold holdings over the next 12 months. With the inflation impulse from energy fading modestly and correlations with crude moderating, bullion’s near-term path is likely to be dictated by the trajectory of two-year real yields and the dollar, meaning a more durable recovery probably requires either softer inflation expectations and lower yields. For gold, reduced geopolitical uncertainty will direct risk-on flows away from the dollar, while lower oil prices should ease inflation fears.

Silver: July Silver is up 0.6% to $66.68

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