Written Commentary
BASE METALS
Copper: Copper prices on the LME rose 0.2% to $14,645. A marginally weaker dollar and a drop in visible inventories in China are the main catalysts for today’s move higher. In China, various smelters have announced reduced production schedules due to maintenance, which has lead to tightness in the Chinese market amid strong buying. The premium of the LME cash contract over the three-month forward widened to $107 on Thursday, the highest since early September, and a rebound from $0 a week ago, signaling tightness for nearby supply. Mining operations at BHP’s Escondida mine in Chile, the world’s largest copper mine, were suspended on Wednesday after a worker was killed in an accident. Also adding to the supply worries is a Reuters report that that unions representing workers at Antofagasta Minerals’ Centinela copper mine in Chile called on workers to hold a strike vote, adding to concerns amid ongoing contract negotiations with workers at Escondida.
Zinc: Zinc fell 0.1% to $3,950.
Aluminum: Aluminum rose 0.5% to $3,265.
Tin: Tin added 0.3% to $54,150.
Lead: Lead fell 0.3% to $1,928.
Nickel: Nickel slid 1.8% to $16,210.
PRECIOUS METALS
Gold: December gold contracts recovered some losses overnight as the dollar lost some ground and as oil prices retreated amid a report that US and Iranian negotiators could come to an agreement to reopen the Strait. The proposal reportedly involves Iran reopening the Strait of Hormuz in return for Washington lifting its economic blockade of Iran. Reuters described Iran’s reopening of the waterway and US sanctions relief as the potential first stage of a broader deal, although the parties remain reluctant to surrender their negotiating leverage. Fed expectations remain hawkish. Markets assigned a 69% probability of an October hike, up from around 50% earlier in the week. The repricing reflects both strong US activity and a more persistent energy-driven inflation concern. 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. 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 up 0.75% to $63.93.
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