Daily metals

Global equities edged higher, as a robust macroeconomic backdrop weighed against the outlook of restrictive monetary policy and potential AI disruption. Non-farm payrolls rose by 130K on private sector support, more than twice of what was expected, and the unemployment rate unexpectedly dropped (4.4% to 4.3%). The figures underscored stability in the labour market and challenged dovish calls by some Fed Governors. A stronger USD weighed on sentiment across the commodity complex. Energy markets remained sensitive to geopolitical headlines. Metals were broadly lower. Headwinds are building for iron ore. Yields on 10-year US Treasuries rose by 3bp to 4.18%, while the USD index was steady at 96.8. Precious metals continued to consolidate, as stronger US labour data tempered expectations for rapid Fed easing while keeping the broader policy pivot intact. The firmer employment and wage figures reduced the urgency for near term rate cuts, prompting traders to push back the next fully priced 25bp move to Jul from Jun, Gold appears capped in the near-term, with technical resistance is seen near $5,090, and a break above could open for a move towards $5,140, the 61.8% retracement of the recent correction. Gold is not being driven by traditional considerations regarding real rates and inflation expectations. On the contrary, while we are in a Fed rate-cutting cycle, which can sometimes be constructive for bullion, especially versus money markets and bonds, gold has defied these correlations. In fact, it has risen while inflation breakevens have fallen and real rates have actually continued to move up. The silver market is expected to remain in deficit in 2026 for the sixth consecutive year, at 67Moz, according to an update from the Silver Institute. Base metals traded in subdued fashion, with price action muted and volumes notably lighter. Nickel prices jumped after the Indonesian government ordered a steep cut in production at the world’s biggest nickel mine, Weda Bay, a mining complex operated by French miner Eramet and Chinese nickel group Tsingshan Holding, will be capped at 12Mt of nickel ore this year, a steep reduction from the mine’s 42Mt quota set by Jakarta in 2025, Eramet said. COT data shows investment funds have continued to reduce aluminium net length, though positioning remains elevated, leaving aluminium vulnerable to further trimming should sentiment deteriorate. China’s long-standing 45Mtpy aluminium capacity cap is being quietly tested, with recent output data suggesting effective capacity has already edged past official limits. Iron ore was steady as China’s central bank reaffirmed its pledge to continue implementing moderately loose monetary policy, prioritising stable economic growth and a reasonable rebound in prices. However, headwinds are building for the iron ore market. Chinese demand is on a structural decline, while supply is on the increase as the giant Simandou mine in Guinea ramps up.