Written Commentary
PRECIOUS METALS
Gold: August gold contracts remained under pressure, breaking below the psychological $4,000 level as the dollar maintained its recent range while the inflation outlook – based on US-Iran fighting remained. 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 4.15% is the greatest indicator that Fed policy could move higher later in the year. 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: Iran has announced fresh attacks on US facilities in the Gulf after a sixth straight night of US strikes, reviving concerns about energy flows through the Strait. On top of that, new accusations from President Trump that China meddled in US elections risk complicating the fragile truce with Xi ahead of a planned summit, adding an extra layer of US–China uncertainty to the story. 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 1.5% to $55.32.
BASE METALS
Copper: Copper prices fell across the board as Gulf tensions weighed on the demand outlook for industrial metals. Benchmark three-month copper on the LME was down 1.4% to $13,410; COMEX copper is down 2.16% to $6.20. LME copper is on course to end the week down 0.5%. With oil prices up over 13% this week, fuel costs for producers have risen, weighing on potential demand for the metal, which is historically high in price. Without a clear understanding of the US tariff position, copper is likely to face headwinds in the face of continued US-Iran fighting despite concerns over sulphuric acid availability. Still, supply concerns have kept a floor on prices with LME stocks at 296,625 tons, a three-month low, while cancelled warrants make up 56% of that. In China, SHFE copper stocks fell 20.3% from last week to 79,909 tons, the lowest since August 2025. The Yangshan premium, remained at $95 a ton on Thursday, its highest in over a year suggesting solid demand for copper imports. 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 slipped 1.8% to $3,528.
Aluminum: Aluminum fell 1.2% to $3,146.
Tin: Tin shed 1.5% to $52,350.
Lead: Lead edged down 0.1% at $1,870.
Nickel: Nickel lost 1.7% to $16,860.
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