CPI Pressures Gold

PRECIOUS METALS

Gold: December gold contracts are down nearly 1.5%, finding support near the $4,000 level. October’s CPI data came in firmer than expected, headline CPI rose 0.4% and core was up 0.3%, the third consecutive 0.3% core reading. Ahead of the release, Fed Governor Waller said the Fed should raise rates next month even if October inflation cooled, and should consider a half-point move if the inflation outlook worsens. Money markets are now fully priced for a hike in December and see 65 bps of tightening over the next 12 months. Broadly, the inflation and Fed outlook will act as a headwind for gold prices over the medium term. According to World Gold Council data, China added approximately 25.8 metric tons to its gold reserves in October, its largest monthly purchase in three years.

Silver: December contracts are down 1.9% to $51.710.

BASE METALS

Copper: LME copper fell 1.2% to $13,730; US prices are down 1.47% to $6.2520, extending recent weakness as the AI-related equity selloff reduced investor expectations for data-center demand. Funds have cut their positions: the net long in COMEX copper fell to 34,444 contracts from 82,649 in mid-September, the largest bullish bet since 2021. Outright longs dropped to 58,475 from 96,824. The latest COT report predates the worst of last week’s selling, so current positioning is probably lower.

Physical conditions remain tight, which creates a split between financial and physical markets. SHFE stocks are at a three-year low of 33,848 tons. China’s Yangshan import premium reached a record $230 per ton, and LME cash copper traded at a $195 premium to the three-month contract. US warehouses hold most of the world’s visible supply. COMEX warehouses account for more than 60% of global exchange stocks, and the US share including LME warehouses in the country is 85%.

The tariff trade is unwinding. The COMEX premium over the LME briefly turned into a discount last week and is now about $80 per ton, versus more than $700 in August. Doubts about US refined-copper tariffs were growing before the midterms, and the election result has added to them. Metal continues to arrive in the US (1.3 million tons year to date through August), but newly delivered metal is increasingly going into LME warehouses in the US rather than being cleared through customs. Whether it stays or leaves depends largely on how much Chinese buyers will pay.

China’s customs data point to a tighter feedstock market. Copper concentrate imports fell 11% from a year earlier to 2.17 million tons in October, from 2.48 million in September. Imports of unwrought copper and products slipped 1.7% from September to 453,000 tons, though they were up 3.4% from a year earlier. Smelters face negative processing fees and falling sulphuric acid prices, and have said production cuts are coming. Reduced domestic output and limited seaborne arrivals have driven spot premiums to record highs.

Zinc: Zinc was steady at $3,730.

Aluminum: Aluminum fell 2.3% to $2,995. Rising Chinese exports and hopes of Middle East de-escalation outweighed tight inventories. President Trump also said he would hold off on new strikes against Iran for now. The LME cash premium over the three-month contract reached $94 per ton, a five-month high. Available LME stocks stand at 207,525 tons, down 51% since the Iran war began in late February and the lowest since March 2025. Nearly all of that metal (99.98%) is Russian-origin, which many Western traders avoid. Shanghai stocks fell 31% last week to 132,605 tons. A Reuters poll forecasts a 2027 surplus of 410,000 tons, compared with a 2026 deficit of 720,000 tons.

Tin: Tin lost 0.8% to $45,990.

Lead: Lead eased 0.4% to $1,878.

Nickel: Nickel dropped 1.0% to $16,060.

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