Written Commentary
BASE METALS
Copper: Copper prices on the LME broke above the $14,000 level, with benchmark LME copper up 1.4% at $14,065; COMEX prices are up 1.8% at $6.66. Falling inventories outside the US and hopes that US-Iran talks will open the Strait are setting up bullish conditions for the metal despite the uncertainty over the status of negotiations. LME warehouse available inventory fell to 94,200 tons, which is just above the average daily global consumption of copper. Low inventories levels continue to push the premium of cash prices over the three-month forward to $105, which is the strongest premium since January as market tightness continues to be reflected in pricing. The premium of COMEX copper to LME copper continues to support coppers movement into US warehouses. COMEX warehouses sit at over 650,000 metric tons, double LME and SHFE levels combined. Strong demand for AI infrastructure buildout and supportive Q2 results from several large AI-names have also lifted sentiment and expectations that the new technology will support longer-term demand prospects. However, that leaves the market susceptible to shifts in demand and performance in the tech sector.
Zinc: Zinc rose 0.9% to $3,672.
Aluminum: Aluminum added 0.5% to $3,236.
Tin: Tin rose 0.8% to $55,900.
Lead: Lead gained 1.3% to $1,890.
Nickel: Nickel rebounded by 1.4% to $17,300.
PRECIOUS METALS
Gold: December gold moved higher overnight, spot gold is little changed at just over $4,000 a level it has continued to find support at. Gold has maintained a narrow range over recent weeks as uncertainty over the Fed outlook and US-Iran negotiations has kept the well bid and Treasury yields elevated. Markets will look to labor market data today and later in the week: JOLTS data today, ADP employment report on Wednesday, and nonfarm payrolls on Friday. Traders currently price in a 63% chance of a rate hike in and remain fully priced for a move higher in December. NY Fed President Williams said he was optimistic that inflation pressures will ease gradually, though will not hesitate to respond with rate hikes if they prove stubborn. Gold has struggled to find momentum amid the current macro backdrop, remaining in a corrective phase of what is a structural bull market. A weaker jobs report would allow the Fed to keep rates on hold this year, and likely prove supportive of gold.
Silver: September contracts are up 2.7% to $59.46.
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