Gold Faces Structural Support Test

PRECIOUS METALS

Gold: June COMEX contracts are up 0.22% to $4,572, reversing overnight losses amid a marginally weaker dollar and dip in Treasury yields. For gold, expectations that the Fed will raise rates and materially higher yields and dollar are providing strong headwinds to gains. Spiraling inflation concerns are prompting the aggressive selling rather than the classic flight-to-quality buying one would expect given the geopolitical backdrop – gold is now positively correlated with equity performance. Still, structural support for gold remains intact with central bank purchasing expected to offer underlying support amid lower prices and elevated yields. Several large banks have trimmed their near-term price forecast for gold amid softer investor demand; JP Morgan cut its average price forecast to $5,243 from $5,708.

It was reported that Pakistan had received a revised peace proposal from Iran to which it shared with the US. Any positive developments regarding the conflict will likely pressure inflation concerns and lift gold, though that scenario does not seem probable in the near future. Elsewhere, India raised tariffs on gold and silver to 15% from 6%, in an effort to ease pressure on its foreign exchange reserves. India is the world’s second-largest consumer of precious metals.

Silver: Silver futures are up 0.73% to $78.11. Silver has been silver outperforming gold recently. Silver reached its highest level since March 10th, while gold has been stuck in sideways consolidation. HSBC raised its silver price forecast from $68.25 to $75.00 citing ongoing supply tightness.

BASE METALS

Copper: Copper prices moved lower overnight as demand worries pressured prices over weaker-than-expected data from China. China’s industrial production rose 4.1% YoY in April, down from 5.7% growth in March and below forecasts for 5.9%. The reading also marked the slowest growth since July 2023. Chinese traders reported that the data triggered an unwinding of long positions. Benchmark three-month copper on the London Metal Exchange traded 0.6% lower at $13,470, recovering modestly from an earlier low of $13,394. Front-month copper has fallen 5% since hitting over a 3-month high of $14,196 last week. Meanwhile, last week’s SHFE weekly warehouse stock decline of only 690 tons was deeply disappointing for bulls, undermining the recent narrative of stronger Chinese demand. The geopolitical overhang from aggressive China/Taiwan rhetoric has also raised tail-risk concerns for Chinese copper demand broadly.

Still, supply risks persist, Chile’s Q1 2026 copper production hit a nine-year low, down 6% year-over-year to just 1.22 million tons; Chile represents 25% of global supply. Production declines were concentrated at the world’s largest mines, suggesting the Grasberg-related problems are not isolated. Meanwhile, continued worries over sulphuric acid shortages affecting copper producers also remains supportive of prices. Still, fading hopes of a peace deal in the near future between the US and Iran would otherwise create a challenging environment for copper, as elevated energy prices could dampen economic growth and demand for the metal.

Zinc: Zinc rose 0.1% to $3,537. An incident at Nexa Resources Cajamarquilla zinc smelter in Peru has put supply worries back into the picture. The smelter is responsible for producing around 344,400 tons of zinc per year and is the largest in Latin America. Supply worries have been a theme in the market for some time, with the International Lead and Zinc Study Group previously announcing there to be a 19,000 ton deficit this year.

Aluminum: Aluminum was flat at $3,563.

Tin: Tin gained 0.4% to $52,550.

Lead: Lead firmed 0.2% to $1,982.

Nickel: Nickel slipped 0.2% to $18,450.

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