Tashkent, Uzbekistan (UzDaily.uz) — As of 7 October, the metals market continues to be driven by two equally important factors.
On the one hand, rising oil prices and geopolitical tensions are sustaining inflation risks and making investors more cautious about commodities.
On the other, expectations of an immediate Federal Reserve rate hike have eased somewhat, partially reducing pressure on the market.
Still, there is no uniform direction: precious metals remain subdued, while industrial metals continue to draw support from physical demand, inventories and long-term infrastructure trends.
Gold is trading at around US$4,150 per ounce, while silver is holding slightly above US$60 per ounce. Both metals remain significantly below their September levels and have been unable to recover quickly. The main reason appears to be that markets are awaiting the minutes of the Federal Reserve’s September meeting and new comments from policymakers.
The probability of a rate hike as early as October has declined, but market participants still price in a high likelihood of monetary tightening by the end of the year. This remains a challenging backdrop for gold and silver: high bond yields and a strong dollar are limiting interest in assets that do not generate interest income.
At the same time, safe-haven demand has not disappeared completely. Oil has once again risen above US$100 per barrel for Brent crude due to the threat of supply disruptions in the Gulf of Mexico and renewed tensions in the Middle East.
This trend is reinforcing inflation concerns and making the Fed’s position more difficult.
Under normal circumstances, geopolitical tensions could support gold, but this time they are working through oil and inflation and, consequently, through the risk of higher interest rates. Gold is therefore holding its ground for now, but is not gaining strong momentum.
Platinum is trading at around US$1,710 per ounce, while palladium is in the range of US$1,165–1,170 per ounce. Both metals remain under pressure from broader caution in the precious metals sector, but their fundamental outlooks differ.
Platinum appears more resilient on expectations of a supply deficit and demand from hybrid vehicles. Palladium is weaker, as the market continues to factor in a long-term decline in demand for automotive catalysts due to the growing share of electric vehicles and the gradual substitution of palladium with platinum.
Copper remains the main story in the industrial metals segment. Prices are holding at around US$6.6 per pound, close to the historical high reached in September. The metal is still up more than 30% for the year. Demand from data centers, power grids and artificial intelligence-related projects is providing support.
Another factor is supply and trade flows: the United States has still not made a final decision on possible tariffs on refined copper, while expectations of such measures previously drew the metal into US inventories. However, weak industrial data from China remains a restraining factor for further gains.
Zinc has cooled somewhat after a strong rally and is trading at around US$3,760 per tonne, but the supply-deficit story has not disappeared. China has sharply increased refined zinc exports to take advantage of tight conditions on the LME, but this rather illustrates how thin the Western market has become.
Production in Europe remains under pressure from high energy costs and raw material shortages, while any threat of capacity closures once again brings the issue of a potential deficit to the fore. Zinc therefore no longer appears overheated in the short term, but its fundamental support remains intact.
Aluminum is trading at around US$3,150 per tonne and has given up some of its gains over the past month. The market looks calmer here: some supply concerns have eased, while investors are waiting for the recovery of certain production capacities.
However, low inventories continue to prevent prices from entering a deep correction. There is still little readily available metal in the physical market, leaving aluminum sensitive to any new disruptions, from logistics problems to energy costs for producers.
Overall, the week showed that the metals market is once again being driven by several parallel themes. Gold and silver depend on the Fed, yields, the dollar and oil-driven inflation. Copper is supported by long-term demand and trade flows.
Zinc and aluminum are receiving support from limited metal availability, even as their short-term momentum has weakened.
The main conclusion therefore remains unchanged: macroeconomic factors are weighing on the entire sector, but where physical metal is scarce, prices continue to find support.
