Written Commentary
Gold: April COMEX contracts are little changed at $4,845, as markets asses a potential second round of talks between the US and Iran. Given the recent rally in gold over the last few days, gold is likely experiencing mild profit-taking. Gold has rallied on improved risk appetite and has sold off on periods of risk-aversion, counter to traditional dynamics, suggesting that traders are more focused on Fed implications and inflationary pressures. Longer-run inflation expectations at the time-being offer resistance to higher yields as the Fed should remain biased towards policy-easing given weakness in the labor market. The 1/2-year inflation swap spread rose to 36.22 bps, in line with expectations that markets are expecting the impact of higher energy prices to be short-lived.
In a Fox News interview, Trump said the conflict is “nearly concluded” and suggested a new round of direct negotiations could take place in Pakistan within the next two days. CENTCOM confirmed a full economic blockade of Iranian ports is in effect, no cargo entering or exiting by sea, while mine-clearing operations continue in the Strait. Oil fell on Tuesday as Trump’s comments fueled a slight unwind. Brent settled around $95 and have moved little since.
De-escalation could ultimately prove supportive for precious metals, particularly if it weighs on the dollar. March’s core CPI reading of 2.6% YoY confirms that energy-driven inflation has not yet penetrated underlying price pressures, though upside risks remain. We expect the Fed to maintain its easing bias and expect a rate cut later in the year.
Silver: Silver futures are up 0.36% to $79.84. The Silver Institute and consultancy Metals Focus said the silver market is heading for a sixth year of structural deficit, with 762 million troy ounces drawn from stocks since 2021, raising the risk of a renewed liquidity squeeze despite weaker demand expectations. The global silver market deficit is expected to widen to 46.3 million ounces in 2026 from 40.3 million in 2025, even as total demand falls 2% due to weaker industrial and jewelry consumption, partly offset by stronger coin and bar demand. Industrial silver fabrication is forecast to fall 3% to a four-year low with the Iran war’s damage to global growth threatening further downside. By contrast, coin and bar demand is seen rising 18% supported by a recovery in the US buying.
BASE METALS
Copper: Benchmark three-month copper on the LME reversed course overnight after hitting a one-month high of $13,392 before falling 0.2% to $13,254 as profit-taking and a stronger dollar weighed. Optimism about the possibility of US-Iran peace talks have proven favorable to the metal in recent days. Chinese demand has also been supportive of prices in recent days, highlighted by the Yangshan copper premium, a gauge of China’s appetite for importing copper, which rose to $74 a ton. It has gained 270% since the end of January and is at its highest since June last year. Additionally, inventories in SHFE warehouses have dropped in recent days, reflecting stronger demand inside China.
Industrial production and investment data due later this week will help traders gauge Chinese demand for industrial metals. Copper and nickel are supported by worries about shortages of sulphur used to process both metals, due to disrupted supplies from the Middle East. The Middle East accounts for 24% of global sulphur production, where it is a byproduct of oil and gas refining.
China’s copper smelters will likely press ahead with plans to trim output as Beijing’s ban on sulphuric acid exports tames a price rally in the byproduct that had offset falling processing fees, industry insiders and analysts said. At least three analysts and two copper processors told Reuters that smelters will have to trim output if prices of sulphuric acid slow their climb or fall while processing fees are still tumbling.
Zinc: Zinc rose 1.1% to $3,378.
Aluminum: Aluminum was 0.2% firmer at $3,571.
Tin: Tin slipped 0.4% to $50,155.
Lead: Lead added 0.6% to $1,947.
Nickel: Nickel advanced 0.4% to $18,285. Nickel processors in top supplier Indonesia trimmed output and the government revised the formula used to determine mineral reference prices.
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