Written Commentary
PRECIOUS METALS
Gold: June COMEX contracts slipped overnight but found support at the $4,500 level, as markets broadly trade in a holding pattern, awaiting the outcome of President Trump’s pause in strikes against Iran. A resumption of US strikes would spark further oil price gains, extend the inflation shock, and trigger a broad risk-off selloff amid the retaliatory strikes from Iran, while a deal or framework peace agreement would reverse the recent trends across equities, treasuries, metals, and currencies. Today’s FOMC minutes will be watched for signs that policymakers at the Fed, apart from the dissenters, may be considering a rate hike or at the least removing language related to the easing bias in the Fed’s policy statement.
Expectations that the Fed will raise rates, higher yields, and a stronger dollar are creating a challenging environment for gains in the metal. Spiraling inflation concerns are prompting the aggressive selling rather than the classic flight-to-quality buying one would expect given the geopolitical backdrop. Recent trends have shown that gold is now positively correlated with equity performance. Still, structural support for gold remains intact with central bank purchasing expected to offer underlying support amid lower prices and elevated yields. Several large banks have trimmed their near-term price forecast for gold amid softer investor demand; JP Morgan cut its average price forecast to $5,243 from $5,708.
Silver: Silver futures are up 1% higher at $75.88.
BASE METALS
Copper: Copper prices moved higher overnight; Chile cut its production outlook, while investors continue to assess the geopolitical outlook. Benchmark three-month copper on the London Metal Exchange rose 0.6% to $13,490. Chile announced that copper production would fall 2% this year, after initially estimating 3.7% growth back in February. Chile’s copper commission, Cochilco also expects global mined copper output to rise 0.5% in 2026, while demand is expected to grow 1.5% leaving an expected surplus 12,000 tons. However, with LME copper warehouse stocks sitting near 400,000 metric tons, the highest level since early 2018 alongside elevated COMEX inventory, limits how urgently the Chile supply story can lift prices. Meanwhile, continued worries over sulphuric acid shortages affecting copper producers remains supportive of prices.
Several major Chinese copper smelters met with government officials on Tuesday ahead of negotiations with global miners over processing fees. China’s major copper smelters agreed last November to cut concentrate-fed supply by more than 10% to counter overcapacity and the low fees, though output in Q1 grew by 9.3% and forward guidance from some leading smelters revealed no signs of a reduction in production. Weaker-than-expected data from China on Sunday night showed industrial production rose 4.1% YoY in April, down from 5.7% growth in March and below forecasts for 5.9%. The reading marked the slowest growth since July 2023.
Zinc: Zinc added 0.5% to $3,529. An incident at Nexa Resources Cajamarquilla zinc smelter in Peru has put supply worries back into the picture. The smelter is responsible for producing around 344,400 tons of zinc per year and is the largest in Latin America. Supply worries have been a theme in the market for some time, with the International Lead and Zinc Study Group previously announcing there to be a 19,000 ton deficit this year.
Aluminum: Aluminum dipped 0.4% to $3,589. The conflict in the Gulf has removed roughly 4% of global aluminum supply, while damage to production facilities has exacerbated further supply worries.
Tin: Tin jumped 5.6% to $54,490, largely a delayed reaction to news out of Indonesia, where export controls could potentially limit global supplies.
Lead: Lead was little changed at $1,963.
Nickel: Nickel lost 0.2% in official activity to $18,770. China’s Tsingshan Group asked smelters at its Weda Bay industrial park to divert power to aluminum production in favor of higher prices and better margins. Indonesia recently suspended nickel mining licenses for several companies after they failed to submit required documentation regarding their 2026 mining plans.
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