Gold extended its rally to another fresh record high while Copper prices jumped to their highest level since June 2024, as market participants geared up for a potential easing of US Federal Reserve policy and wait for further rate cut signals this year, ING's commodity experts Ewa Manthey and Warren Patterson note.
"Investors expect a quarter-point rate cut this week amid signs of a weaker labour market. Swap markets also price in at least one more cut by the end of the year, with a strong chance of a third."
"These expectations have pushed Treasury yields to multi-month lows and weakened the dollar index. Continued concerns over the Fed’s independence will also remain the focus for the global market looking ahead. Gold prices have surged more than 40% so far this year amid Trump’s aggressive trade policy, conflicts in the Middle East and Ukraine, and central bank buying."
"As for Copper, recent reports suggest that Chile expects production to grow this year and next, targeting a record 6 million tons by 2027, despite setbacks at two major mines (Codelco’s and Teck Resources Ltd.), offering some relief to a tight global market. Operational disruption at major mines poses hurdles to achieving its annual Copper output target of around 5.6mt. However, BHP’s Escondida mine boosted production in the first half of the year (+11% YoY), Collahuasi is recovering from a period of low-quality ore, and the EI Salvador mine is beginning to ramp up output."