Written Commentary
BASE METALS
Copper: Copper prices are higher despite a mix of manufacturing PMI revisions across Europe. Benchmark three-month copper on the LME was up 0.7% to $12,510, after having hit a record of $12,960 on Monday. UK Manufacturing PMI was revised lower in December to 50.6 from an initial estimate of 51.2, although above November’s 50.2, marking the second consecutive month of expansion in the UK’s manufacturing sector after a full year of contractionary readings. Meanwhile, eurozone manufacturing activity for December fell to 48.8, below the preliminary estimate of 49.2 and November’s reading of 49.6, marking the fastest pace of contraction since March. Declines in output and new orders led the downside in activity, as activity in Germany recorded the weakest performance since February.
Copper output has been pressured by halted operations in Freeport-McMoRan’s Grasberg mine in Indonesia, responsible for 3% of global supply, following a fatal incident in the second half of 2025. Meanwhile, risks to supply from Chile and Peru due to workers’ protests magnified supply worries. Flows to COMEX-registered warehouses are continuing to take place ahead of an expected tariff announcement on coper in mid-2026, which has supported the COMEX premium against LME prices. Seasonality could provide short-term support for copper as the first quarter tends to be supportive for the industrial cycle, with broad inventory build-ups ahead of summer. Meanwhile, demand in China, the world’s biggest metal consumer, remains higher than originally expected, with January-November imports down only 3% year-over-year.
Zinc: Zinc rose 0.4% to $3,130.
Aluminum: Aluminum nudged up 0.5% to $3,010, moving above the $3,000 level for the first time in over three years following the shutdown of the Mozal smelter in Mozambique. Supply constraints have also been strained from the EU’s new carbon tax, which consequently has reduced the flow of the metal into the trade bloc.
Tin: Tin jumped 3.4% to $41,950.
Lead: Lead edged down 0.2% to $2,007.
Nickel: Nickel was up 1.6% at $16,910, breaking above 14-month highs following the suspension of Vale’s Indonesia mine. Nickel has found recent support following an announcement from the Indonesian government that proposed cutting nickel ore output by a third in 2026. Indonesia’s mining minister recently announced that the country would be reducing mining quotas in an effort to support prices.
PRECIOUS METALS
Gold: Gold prices are higher as profit-taking eased and geopolitical risks heightened following a social media post from President Trump, who threated action against Iran for shooting protesters. Elsewhere, tensions in the Caribbean remain high as the US continues enforcement against Venezuela’s oil trade, while renewed Russia-Ukraine strikes over the New Year period targeted Black Sea ports and key energy infrastructure. February contracts are trading just below its 200 day MA of $4,416.
The Fed’s December meeting minutes did little to offer clues on monetary policy other than that policymakers will likely want to hold on cutting rates until they see further, sustained evidence of cooling inflation and/or a labor market that is cooling faster than expected. However, policymakers do expect to cut rates again in 2026. November’s CPI inflation report was promising, showing that inflation cooled to 2.7% year-over-year, a steep drop from September’s 3.0%. However, the data required a technical fix to be applied to the data collection efforts, which likely biased the figures downwards. Upcoming reports could showcase a hotter inflation reading as data collection efforts resume to normalcy and price pressures are reflected more accurately.
Silver: Silver prices rebounded and are up 4.7% to $73.97 after hitting an all-time high of $83.62 on Monday. Thin liquidity conditions in recent days have intensified price movements, with the metal experiencing choppy trade in recent trading. The gold-silver ratio has stabilized around 59 in recent days after plummeting from 81 in late November, hitting its lowest level since August of 2013. Since 2022, the gold-silver ratio has largely maintained a range between 75-95, but shot to as high as 105 in April as gold prices soared and silver remained relatively subdued, in part thanks to weak retail investor attention and global economic slowdown worries, which weighed on silver’s industrial demand side.
Platinum: Platinum is up 5% to $2,140. Prices have found support from a recent pivot by the European Union on its 2035 combustion-engine ban, a tight supply backdrop, and rising investment demand. Platinum and palladium are both used in cars to reduce exhaust emissions. The EU’s extension regarding the delay of its engine ban is indefinite and will also require stricter emission standards, which could require higher platinum and palladium contents in exhaust systems.
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