Written Commentary
PRECIOUS METALS
Gold: August gold contracts fell sharply to $4,086 as fighting in the Gulf heightened inflation expectations and reinforced a more hawkish policy backdrop from the Fed. The combination of higher oil and renewed Gulf tensions reinforces the sense that the inflation/rates narrative could become more complicated again, which pressure gold through a stronger dollar and higher rate‑expectations. Today’s FOMC meeting minutes offer a window into the “family fight” Warsh described over two days of internal debate. The labor market has stabilized after last year’s weakening trend, reducing the urgency for cuts and giving hawks more room to argue for renewed tightening. Because the statement no longer offers guidance, the minutes could reveal how many officials are in the “hike at least once” camp versus the “hold” camp, show what data (inflation, labor, financial conditions) moved those views, indirectly shape expectations for the timing and probability of hikes, especially if they highlight concern about war‑related inflation and lingering price pressures. Markets are priced for a move higher in December and see a total of 36 bps of tightening by year-end. The geopolitical bid will remain in focus and gold’s direction will be dominated by Fed policy expectations. We slightly favor a Fed rate hike in Q4, over a hold. However the outlook remains dependent upon inflation data rather than labor data in our view.
Silver: July Silver is down 3.7% to $58.67.
BASE METALS
Copper: Copper prices fell lower in response to the renewed fighting in the Gulf. Benchmark three-month copper on the London Metal Exchange shed 1.5% to $13,168, while COMEX copper prices are fell 2% at $6.10. The broader metals market is reacting to the rise in oil prices as traders await further headlines if fighting escalates or deescalates. Copper is likely to remain driven by broader macro sentiment. Before the drop lower, copper had been trading in a narrow range as the market is still awaiting a possible decision from Washington over tariffs on refined copper as outflows from LME warehouses to the US continue. The Trump administration had originally set a June 30 deadline to announce potential tariffs on the metal. Still, tariff risk is still present and should not be discounted. US copper stocks sit at 606,626 tons have climbed nearly 600% since the initial launch of the investigation. Much of that stock has come from LME warehouses. In China, the Yangshan copper premium, rose 8% to $80 a ton, to mark a 13-month high.
Zinc: Zinc fell 1% to $3,535.
Aluminum: Aluminum gained 0.2% to $3,145. Potential supply tightness worries continue amid the escalation in fighting and a potential shutdown of the Strait. The Guld region accounts for about 9% of global supply of aluminum. Meanwhile outflows from warehouses also continues to trigger supply worries. On the SHFE, aluminum rose 0.7% to $3,394.
Tin: Tin lost 1.2% to $52,700.
Lead: Lead added 0.6% to $1,895.
Nickel: Nickel was little changed at $16,350.
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