Written Commentary
PRECIOUS METALS
Gold: December gold contracts moved higher overnight, aided in part by a lower dollar and a lack of action in Treasury yields. July’s retail sales data fell more than expected at -0.6% MoM, with the weakness concentrated in autos and non-store retailing. The report adds to market expectations that the Fed can keep rates steady in September following this week’s “benign” inflation data. Still, while traders have pushed back expectations of a September rate hike, the reports did show that underlying inflationary pressures remain firm, which is likely to reinforce hawkish Fed members views that policy should move upwards. As such, and given the lack of forward guidance from the Fed, a September rate hike remains firmly on the table. For many, the reports continue to make the case for the Fed to hold on rates, which will leave further upside in precious metals contingent upon whether or not upcoming data can leave that narrative intact.
However, next month’s readings will likely reflect the rebound in energy prices and the backdrop of an unresolved Strait of Hormuz disruption leaves a material risk that the energy shock re-accelerates headline inflation and feeds into expectations. Still, breakeven inflation remains well contained, suggesting that while underlying price pressures remain firm, markets continue to expect the Fed to ultimately bring inflation under control. That backdrop is supportive for gold over the longer term and, so long as inflation expectations remain anchored, could help keep the 10-year yield below 4.70%.
Silver: September contracts are up 0.70% to $65.46.
BASE METALS
Copper: Copper prices on the LME slipped 0.1% to $14,133 as traders continued to book profits, while COMEX prices are down 0.18% at $6.59; prices also fell in China, with SHFE copper 0.1% lower to 107,690 yuan/$15,970. While questions over the impact of the Iran war raise questions over the risks to the global economy and potential drag on demand, the structural factors remain supportive of copper prices. Lower production expectations in Chile and dwindling available copper stocks in LME warehouses keep the cash-to-three-month spread remains in backwardation near its highest level since October 2025. Falling inventories outside the US have been the main catalyst in setting up bullish conditions for the metal despite the uncertainty over the status of US-Iran negotiations. However, the uncertainty over those dynamics could leave copper vulnerable to a modest pullback if negotiations deteriorate.
Zinc: Zinc gained 0.3% to $3,763.
Aluminum: Aluminum fell 0.4% in official activity to $3,244. Emirates Global Aluminum announced it would resume full-scale production in the first quarter of 2027, after it was damaged in strikes during the US-Iran war, easing concerns over future supply deficits.
Tin: Tin gained 0.6% to $56,195.
Lead: Lead added 0.1% to $1,888.
Nickel: Nickel was little changed at $16,780.
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