Risk-off Sentiment Dampens Metals: Copper and Gold Prices Slide

Metals – Risk-off sentiment weighs on the complex

The prevailing risk-off sentiment in the broader financial markets weighed on the industrial metals complex with prices of most of the metals trading under pressure this morning. LME copper extended the declines for a third consecutive day after falling by more than 1% yesterday to close at the lowest level since 2 June. LME copper cash/3m backwardation eased to US$4.5/t as of yesterday, after reaching its year-to-date high of US$31/t of backwardation early this week.

Meanwhile, copper exchange inventories at LME warehouses extended the declines for a second straight session with total stocks falling by 1,775 tonnes to 75,275 tonnes as of yesterday, the lowest since 9 May. A stronger US dollar, following hawkish comments from the US Fed and a soft set of economic data from China, weighed on the complex.

A stronger USD has also weighed on precious metals with gold prices softening to US$1,905/t in the morning session today, the lowest levels in around three months. Hawkish comments from the Fed and the ECB at this week's Sintra conference in Portugal have pushed money away from gold. Total ETF gold holdings have dropped by around 0.8mOz over the past week and around 1.5mOz from the recent peak in May 2023.