Written Commentary
PRECIOUS METALS
Gold: August gold contracts are lower as a pick up in the dollar weighed on the metal. Ongoing tensions in the Middle East continue to stoke inflation worries despite a pullback in near-term Fed tightening expectations this week. The two-year yield at 4.17% is the greatest indicator that Fed policy could move higher later in the year despite a pullback in near-term tightening expectations. Money markets are priced for a hike in December but have pulled back on bets of near-term tightening after this week’s inflation data. While PPI and CPI prints for June came in weaker-than-expected, the data still supports a hawkish bias from the Fed.
Geopolitical headwinds are giving investors reason for caution today: Tehran has asked Yemen’s Houthi movement to stand ready to close the Red Sea oil route if the US attacks Iranian power infrastructure, according to multiple regional and Iranian sources. With Iran’s closure of the Strait of Hormuz, a substantial amount of Gulf oil has been rerouted to the Red Sea via Saudi pipelines; the Red Sea now carries around 7% of global energy supplies, and is the main alternative route for regional exports.
Silver: September contracts are down 1.4% to $56.62.
BASE METALS
Copper: Copper prices on the LME were little changed as investors continue to digest economic data out China and the ongoing geopolitical developments. The risk of sulphur shortages is bullish for prices, as threats to a key input in copper production could compound existing production delays. Rio Tinto posted a 7% drop in copper output in the Q2 and said a furnace outage at its Kennecott mine is expected to affect production in the second half of the year. Meanwhile, copper output at Antofagasta fell 9.5% in 1H 2026.
China’s Q2 GDP slowed to 4.3% YoY, down from 5.0% in Q1 and below the lower end of the official 4.5–5.0% full‑year target. China’s slower, more unbalanced growth profile is mildly negative for copper and base metals demand in the near term, but the strong export/manufacturing engine and potential for later domestic stimulus prevent a purely bearish read. June data shows an unbalanced mix: industrial output rose 5.3% while retail sales grew just 1.0%, underscoring an over-reliance on external demand for manufactured goods. Weak household consumption, a prolonged property downturn and shrinking fixed-asset investment all point to softer domestic demand for copper and other base metals for domestic purposes. However, export growth is currently offsetting domestic weakness; exports jumped 27% year-on-year, riding the global AI and electronics boom and some front-loading by US retailers ahead of expected tariff hikes. If exports slow under heavier tariffs, Beijing is more likely to pivot to domestic-demand support; that could eventually re‑energize metals-intensive investment, but only after an interim period of weaker export-driven metals demand.
Zinc: Zinc lost 0.7%.
Aluminum: Aluminum gained 0.7%.
Tin: Tin rose 1.3%.
Lead: Lead rose 1.2%. Inflows into LME-registered warehouses have surged by over 58% to their highest level since 1970.
Nickel: Nickel rose 2.5% to $17,235, a three-week high, as concerns over shipping through the Strait and Red Sea raised sulphur supply shortage fears. Sulphur supply tightness points to upside cost expectations for the acid leaching process to extract nickel from ore. Indonesia, the world’s biggest nickel producer, sources about 75% of its sulphur used in acid leaching from the Middle East.
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