Written Commentary
PRECIOUS METALS
Gold: December gold contracts remained in a tight range ahead of Wednesday’s Fed decision. A stronger dollar, inflation concerns, and still-elevated oil prices remain key in dulling the longer-term outlook for gold. Meanwhile, PCE data will be out on Thursday and is expected to show prices rise 3.6% y/y, while Q3 GDP is expected to rise 3.2% y/y. Those figures would reinforce the current narrative around gold, that it is likely to remain stuck in its consolidation. Big tech earnings are also in play for gold direction this week. Strong results could further dampen gold’s appeal, potentially reversing the recent trend of investors piling into duration amid volatility and growth concerns around AI. Those concerns had seen Treasuries find solid support and has seen long-end yields drop as traders looked for safe haven plays. An unwinding of these concerns will lift long-end yields and further cement expectations of stronger monetary policy and more persistent inflationary pressures, negative for gold.
Silver: December contracts are down 0.84% to $53.880.
BASE METALS
Copper: LME copper was up 0.7% at $14,430, while US prices rose 0.78% to $6.5930. Prices are finding near-term support from a stabilization in AI stocks and stronger demand signals from China. Anthropic’s IPO filing has helped revive enthusiasm for the AI trade ahead of big tech earnings, but attention now centers around funding costs and investment returns. The Yangshan copper premium hit a 13-year high of $188 overnight, as limited availability and strong demand have created tight conditions for copper in China. The scrap market in China is under modest duress, with smelters out of production, leading more demand for refined products. Tightness in the Chinese market should translate across the globe, even as the LME saw an uptick in inventories recently. SHFE copper stocks dropped 25% to 54,356 tons, contrasting with LME inventories, which rose 20% over last week to 273,750 tons.
Zinc: Zinc was up 0.4% at $3,828. The International Lead and Zinc Study Group showed that the market experienced a 3,900 tons deficit in August. The cash LME zinc contract is trading at a $81 premium over the three-month forward, suggesting tightness in the market. SHFE stocks fell 5% last week.
Aluminum: Aluminum rose 0.7% to $3,062.
Tin: Tin gained 0.4% to $51,240.
Lead: Lead fell 0.2% to $1,919.
Nickel: Nickel added 0.5% to reach $15,645.
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