Copper Retreats as Ceasefire Appears Shaky

BASE METALS

Copper: Copper prices slipped as doubts over the US-Iran ceasefire reinforced concerns that the conflict could weigh on global growth. Benchmark three-month copper on the LME fell 1.2% lower at $12,551. Rising warehouse stocks continue to act as a headwind to price gains. Warehouses registered with the LME and Comex are above 900,000 tons, double the level since the start of the year. Climbing inventories have created a large discount for the cash contracts over the three-month forward on the LME. However, the rise in warehouse inventories could be seen as more of a strategic reserve than an export-ready commodity, potentially reducing oversupply worries.

Still, the broader near-term macro case for copper appears bearish as elevated energy prices and supply chain risks weigh on the outlook for industrial demand and global growth, though a material end to the conflict has the opportunity to unwind these risks. While the ceasefire may lead to a near-term easing in the energy risk premium, the agreement appears fragile and conditional, suggesting markets are likely to remain headline-driven rather than shifting to a sustained risk-on backdrop.

Zinc: Zinc eased 0.3% to $3,283.

Aluminum: Aluminum was flat at $3,455.

Tin: Tin retreated 1.9% to $46,700.

Lead: Lead fell 0.8% to $1,925.

Nickel: Nickel ceded 0.6% to $17,200.

PRECIOUS METALS

Gold: April COMEX contacts up 0.5% to $4,800 as a weaker dollar supported prices despite a rise in energy prices overnight. The conflict in the Middle East continues to act as a headwind on prices, despite the ceasefire oil traffic through the Strait remains at a standstill, the catalyst for the rise in energy prices. Despite both sides declaring victory in the five-week-old war, key disputes remain unresolved, with President Trump warning of a major escalation if Iran refuses a deal. Israel bombed more targets in Lebanon on Thursday, putting the Middle East ceasefire in further jeopardy as Iran stated negotiations were contingent on an end to fighting in Lebanon. Minutes from the Fed’s March meeting showed that some policymakers felt rate hikes could be needed to counter inflation that continues to exceed the central bank’s targets, though it is an unlikely prospect.

Meanwhile, PCE data for February showed both headline and core came in at +0.4% on the month, compared to January’s +0.3%/+0.4% prints and in line with expectations. Core PCE slipped to 3.0% YoY from 3.1%, though remains well above the Fed’s 2% target. Elsewhere, Q4 GDP was revised lower from +0.7% to +0.5%. Q4’s preliminary reading was +1.4%, marking steep downward revisions resulting from declines in government spending and exports. The government shutdown was estimated to have subtracted roughly 1.0 percentage point from Q4 GDP growth on its own, a significant distortion in the headline number.

The spread between one- and two-year inflation swaps has widened to 32.3, reflecting sentiment that the impact of higher energy prices will be transitory, much like the impact of tariffs on prices. The latest New York Fed survey revealed that consumer expectations for inflation three years from now edged up only a modest 0.1% last month, while the five-year/five-year breakeven rate remains below 2.2%, broadly consistent with the Fed’s longer-run PCE target. With 2-year swaps holding near 2.5–2.75% and longer-run inflation expectations remaining well-anchored, the Fed has room to treat any near-term CPI acceleration as transitory without adjusting its current policy and leaving the path for rate cuts later in the year open. Markets are pricing a 30% chance of a rate cut at December’s meeting.

Silver: Silver futures are up 6.5% to $76.61.

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