Daily metals

LME base metals open the week under pressure as a sharp escalation in the U.S.-Iran conflict over the weekend sends oil surging and risk appetite tumbling. As of 04:33 GMT Monday, copper traded at $13,377, down 0.3% from Friday's official close of $13,418.55. Aluminium slipped 0.3% to $3,146 versus the $3,137.68 close — the only metal trading above its settlement. Zinc fell 0.9% to $3,585 against Friday's $3,616. Nickel dropped 0.9% to $16,400 from $16,545.04, while lead was flat at $1,850.50 versus $1,848.80. Tin eased 0.4% to $52,550 from $52,751. Macro & Geopolitics The U.S.-Iran conflict escalated sharply over the weekend, with Tehran targeting U.S. facilities across the Gulf and claiming to have again closed the Strait of Hormuz. Brent crude jumped over 4% to around $79, the dollar firmed, and Asian equities sold off heavily — South Korea's KOSPI plunged over 5%. Markets now price a 72% chance of a September Fed rate hike, up from 63% last week. Fed Chair Kevin Warsh delivers his first congressional testimony tomorrow, hours after the release of U.S. June CPI data — a pivotal double event for rate expectations. The Fed's latest monetary policy report flagged that inflation "stepped up further this spring" as tariffs, energy costs, and AI investment compounded price pressures. For Europe, the oil spike is particularly damaging given the bloc's import dependence, and ECB policymaker Stournaras warned on Friday that the central bank is "back to square one" on inflation. Base Metals The complex is caught between two forces: the inflationary oil shock, which raises input costs and supports nominal prices, and the growth-negative implications of higher energy costs and tighter monetary policy, which weigh on demand expectations. Copper is holding relatively well near $13,400, supported by the structural supply deficit narrative, but the risk of demand destruction from sustained high oil prices is growing. Aluminium remains sensitive to Gulf supply disruptions — two regional smelters were hit by missile attacks in late March, and Middle East production fell sharply between February and May. LME aluminium stocks fell below 300,000 tonnes in early July for the first time since 2022, continuing to underpin the market. Zinc and nickel are the weakest performers this morning as the stronger dollar and risk-off mood dominate. Precious Metals Gold dropped 1.5% to around $4,059 as the oil-driven spike in Treasury yields and the dollar overwhelmed safe-haven demand. The counterintuitive move reflects the market's focus on rate-hike expectations: higher oil means stickier inflation, which means tighter policy and higher real yields — all negative for non-yielding gold. Silver fell 3% to $58.03, platinum shed 1.8% and palladium dropped 2.3%. COMEX gold speculators trimmed net longs by nearly 2,000 contracts last week. China's central bank reported its largest monthly increase in gold reserves in over two-and-a-half years in June, providing a floor for physical demand. Steel The EU's new steel safeguard regime, which took effect on 1 July, is causing significant disruption at European ports. Importers report customs clearance delays of up to three weeks as authorities struggle to implement the new quota system, whose country-specific allocations were published only one day before the regulation came into force. Benelux customs are reportedly demanding deposits to cover potential 50% out-of-quota duties, squeezing importer liquidity. The chaos is boosting interest in domestic European supply, with HRC prices in Northern Europe last assessed around €691/t. For scrap traders, the tighter import regime and the restart of capacity at mills like ArcelorMittal's Dąbrowa Górnicza blast furnace should support ferrous scrap demand in H2. Rare Earth Metals China's Rare Earth Price Index climbed to 272.4 on 9 July, extending the broad-based rally that opened the month. All 18 tracked elements rose in early July, averaging a 16.7% gain, with terbium up 21.6% and dysprosium gaining 25.4%. The rally is concentrated in magnet and specialty inputs — NdPr, dysprosium, terbium, and samarium — rather than reflecting broad inflation. Outside China, heavy rare earth availability remains structurally constrained, with some buyers reporting difficulty sourcing material at any price. The key catalyst remains China's overdue MIIT H2 mining quota announcement. Forex The euro slipped to $1.1394 on Monday, down 0.2% from Friday, as the oil shock hit Europe's energy-import-dependent economy harder than the U.S. The single currency remains near one-year lows, weighed down by the conflict-driven inflation resurgence. Traders are pricing over 30 basis points of additional ECB tightening this year, with a September hike increasingly likely. Sterling eased 0.2% to $1.3379 ahead of a pivotal week in UK politics as Andy Burnham is expected to be formally named Labour leader. The dollar index firmed to 101.13, supported by rising Treasury yields and narrowing rate differentials as the Fed hike probability climbs. Watch Today Fed Governor Christopher Waller speaks later today and could offer early signals on the Fed's reaction to the weekend's Gulf escalation. Tomorrow is the main event: U.S. June CPI lands at 14:30 CET, followed immediately by Fed Chair Warsh's first congressional testimony before the House Financial Services Committee. U.S. bank earnings (JPMorgan, Goldman Sachs, Wells Fargo) also begin tomorrow and will set the tone for risk sentiment through the week.