Written Commentary
BASE METALS
Copper: Copper prices on the LME slipped on disappointing economic data out China, while prices in the US benefited from a weaker-than-expected PPI print. Benchmark three-month copper on the London Metal Exchange lost 0.4% to $13,583, while COMEX copper prices are up 0.3% at $6.39. 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 dropped 1.4% to $3,549.
Aluminum: Aluminum fell 0.9% in official activity to $3,150.
Tin: Tin shed 1.6% to $52,950.
Lead: Lead lost 1.3% to $1,842.50.
Nickel: Nickel dipped 0.3% to $16,715.
PRECIOUS METALS
Gold: August gold contracts are little changed in response to June’s PPI inflation data, which is offering a similar story to yesterday’s CPI data. On a headline basis the June print is supportive, but the disinflation story is still incomplete. Producer prices declined -0.3% MoM in June, following a downwardly revised 0.6% rise in May. Meanwhile, prices of services rose 0.2%, with half of the gain coming from a 13% surge in margins for fuels and lubricants retailing. YoY, producer prices increased 5.5%; core producer prices rose 0.2%, below forecasts of 0.3 % and the annual core rate came in at 4.7%, below expectations of 5.2%. Warsh has explicitly signaled concern about the multi-year overshoot of the 2% target, meaning a single soft month is unlikely to shift the policy calculus materially.
The US launched a new wave of strikes against Iran overnight after reimposing a naval blockade on Iranian ports. Iran’s IRGC says it has struck US military targets in Bahrain, Kuwait, and Jordan in response to the latest strikes. The IRGC is now threatening to “shut off” more regional energy exports, warning that the US should “brace for the closure of all other export corridors that benefit the US and its allies,” implying the Bab el-Madeb off Yemen. Renewed fighting in the Gulf amplifies inflation worries and raises the risk of further Fed tightening, adding to headwinds. The scale of the increase in fighting an rise in oil prices will be a dominant driver for gold. Those dynamics are likely to continue to play an outsized role in Fed policy expectations.
Silver: September contracts are down 0.6% to $58.72.
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