Written Commentary
PRECIOUS METALS
Gold: August gold fell lower overnight, with as the Fed’s meeting resulted in a more hawkish outcome than markets were expectations. Rates were left unchanged as expected, though the dot-plot and SEP showed upside inflation risks and a possible move upwards in policy. Recent dynamics continue to show that gold is moderately correlated (negatively) with moves in the dollar; the dollar’s strength following the FOMC meeting being the main catalyst for the move lower in gold.
Nine of 18 participants now pencil in at least one rate hike by end-2026. The median fed funds rate projection for year-end 2026 moved to 3.8%, up from 3.4% in the March. Median PCE inflation for year-end 2026 was revised to 3.6% from 2.7% in March, a full 90 bps higher in just one quarter. Core PCE followed suit, moving from 2.7% to 3.3%.By characterizing the inflation overshoot as supply-driven rather than demand-driven, Warsh leaves analytical room for yields to eventually ease if the supply shocks dissipate. Money markets are now favorable to a rate hike come September and are fully priced in for a hike by the following meeting in October.
In a World Gold Council Survey, a record 45% of the reserve managers surveyed expect to increase their own institutions’ gold holdings over the next 12 months. With the inflation impulse from energy fading modestly and correlations with crude moderating, bullion’s near-term path is likely to be dictated by the trajectory of two-year real yields and the dollar, meaning a more durable recovery probably requires either softer inflation expectations and lower yields. For gold, reduced geopolitical uncertainty will direct risk-on flows away from the dollar, while lower oil prices should ease inflation fears.
Silver: Silver futures are down 4.8% to $67.37
BASE METALS
Copper: Copper prices were slipped on a firmer dollar, with benchmark three-month copper on the London Metal Exchange down 0.9% to $13,684; COMEX copper prices slid 1% to $6.43. Also weighing on copper is the outlook for the Fed, with markets significantly repricing expectations and front-end rates. Further downside pressure on metals could be sustained if bond markets remain unsettled and rates continue higher.
In China, copper slid 0.5% to $15,497 a ton. China’s top copper producers are looking to expand an industry price-setting group, according to a Reuters report. The China Smelters Purchase Team, a group of 16 producers that set floor prices for spot copper concentrate processing deals, added new members to attend its quarterly meeting. China’s move to broaden CSPT highlights that the bottleneck is still concentrate, not smelting capacity, and that miners retain significant pricing power over feed. With concentrate tight, any future moves from the group are likely to further tighten refined supply rather than loosening it. The dynamic cou7ld prove supportive of copper prices with supply risks skewed toward further upside.
Traders are still awaiting a sizeable reduction in energy prices, though recent moves in oil are supportive of a lower inflationary environment compared to the height of the war. Meanwhile, recent data out of China has raised some fears of weaker demand with retail sales falling 0.6% YoY, while fixed asset investment fell 4.1% YoY. Both figures came in below expectations. Among Chinese industries, investment growth slowed in the agricultures industry (5.9% vs 10.1%) and the industrial sector (0.1% vs 2.5%), while investment in the services sector fell further (-6.8% vs -4.2%). Excluding the property sector, fixed-asset investment decreased by 1.2% in the first five months of 2026, almost reversing a 1.3% increase in the January–April period.
Zinc: Zinc lost 0.4% to $3,575.
Aluminum: Aluminum slipped 0.3% to $3,400. The US-Iran agreement has improved prospects for deliveries from Gulf producers, even though shippers remain cautious on transit through the Strait. Still, damage to production facilities is likely to temper the amount of production in the coming weeks.
Tin: Tin slid 2.7% to $53,850.
Lead: Lead fell 0.3% to $1,973.
Nickel: Nickel shed 0.7% to $17,940.
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