Theme of the Day: Copper and Zinc Strengthen as Gold Loses Momentum

July's metals outlook reflects a fragile macroeconomic backdrop, with the US-Israel war with Iran still at the fore and risks of inflation ever-present, even though major central banks held rates steady at their latest policy meetings during the month. Fundamentals were broadly supportive but uneven across our metals market coverage: Notably, tight supply and firm demand provided support to copper and zinc, while higher-for-longer rate expectations have displaced safe-haven demand for gold. Metals markets generally rebounded in July, with most ending the month higher than they began. The drivers were diverse, though many still hinged on the ripple effects of the war: Aluminium and zinc were supported by rising energy prices that threatened supply by elevating production costs; gold ceased to benefit from safe-haven demand and became hampered by the opportunity cost of being a non-yielding asset. Overall, demand for base and industrial metals remained surprisingly steady, supported by mostly expanding manufacturing activity in July. The eight-month low in gold reflects waning safe-haven demand amid the US-Israel war with Iran, with gold responding instead to the strengthening US dollar and rising Treasury yields in line with its typical inverse relationship. Prices found support when inflation data cooled and rate-hike expectations eased but came under pressure as labour-market data reinforced the likelihood of higher-for-longer interest rates. As prospects of another bull run fade, consensus price forecasts have been revised down by 3.1% annually through 2030, although $4,000/oz remains the floor. Structural demand from AI infrastructure, electronics and electrification is poised to grow amid yet another year of physical silver deficit. Although consensus price targets have been revised downward for each year of the forecast horizon, the price is expected to remain well above the 2025 average of $40.31/oz. While consensus price forecasts were lowered for both platinum and palladium across the forecast horizon, the differing market sentiment was evident: an annual average downgrade of 4.5% for platinum versus 6.6% for palladium. Further supply growth will come from China, Indonesia and Venezuela, where the aluminium industry is reviving. While demand has held steady in Japan and the US, concerns are emerging about the impact of the US' 50% import tariff policy. With expectations of a record deficit this year, the consensus price is forecast to peak in 2026 at $3,364.45/t before retreating as the supply deficit withers over the next few years. Driven by strong demand from the energy and AI sectors, copper consensus price forecasts have been increased by an average of 2.8% annually through 2030 — the largest upward revision among the metals covered in this month's report. Nickel is capped by the ongoing market surplus. However, the tide is expected to turn, with the market shifting into deficit in 2028. While consensus forecasts still point to rising prices through 2030, price targets for 2027 onward have been downgraded. Mine suspensions in China are contributing to the raw material shortage in zinc pressuring TCs and refined production growth this year, making for a positive price outlook supported by a projected short-term refined market deficit. Accordingly, consensus forecasts have been upgraded across the entire horizon by an annual average of 2.5%. Further, the restart of Ambatovy in Madagascar will add to available cobalt raw material supply. This has pressured the European cobalt price, which had edged down to $26.30/lb by the last trading day of July. Consensus expectations are for an annual average of $24.25/lb in 2026. With the steel market further entering a seasonal slowdown in July and August alongside planned mill maintenance, demand for iron ore will remain flat — and so should the price. Consensus expectations have been almost constant month over month, with target prices adjusted by less than 1%, in either direction, through 2029.