Written Commentary
PRECIOUS METALS
Gold: December gold contracts moved lower overnight as dollar strength and hawkish Fed commentary reinforced tightening expectations and dampened the outlook for the metal. Recent trading patterns suggest that gold has established a $4,300-$4,400 range, with Fed commentary and dollar strength playing an outsized role in determining price direction. Boston Fed President Susan Collins also said she supported last week’s rate hike amid concerns that future inflation could remain above the 2% target. Richmond Fed President Tom Barkin said on Tuesday that inflationary shocks could take time to fade and that elevated price pressures risk becoming entrenched. St. Louis Fed President Musalem said that the Fed will need to raise rates further to combat inflation resulting from strong demand as well as the commodity price shock, which has moved beyond oil. Gold’s future upside is likely to remain under pressure as long as a hawkish Fed is priced in and as dollar strength remains.
Silver: December contracts are down 0.94% to $65.31.
BASE METALS
Copper: Copper prices on the LME dipped 0.6% at $14,655 on a wave of profit-taking. Also weighing on copper was a Reuters report that the White House still has yet to decide on copper tariffs, with the administration’s main concern being affordability. COMEX inventories have once again began to record daily inflows as the premium on US copper over LME prices moved higher. COMEX warehouses now hold roughly 70% of all copper held in exchange warehouses, which has underpinned tightness in markets outside the US. The LME cash contract also increased its premium over the three-month forward to $76 after falling earlier this week. Demand in China has underpinned prices among expectations of a wave of seasonal buying in the country; physical buying has moved the Yangshan copper premium up nearly 70% in September to $119 a ton, easing from Friday’s $124
Zinc: Zinc eased by 0.5% to $3,892.
Aluminum: Aluminum slipped by 0.2% to $3,258.
Tin: Tin was steady at $54,200.
Lead: Lead slipped 0.5% to $1,926.
Nickel: Nickel lost 0.2% to $16,595.
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