Metals Recover Following US Inflation Data Release
Precious metals have begun recovering while industrial metals continue to rise on supply constraints following the release of June US inflation data.
Metals Show Signs of Recovery After US Inflation Data Release
Tashkent, Uzbekistan (UzDaily.uz) — Precious metals are starting to regain their footing following the release of June's inflation figures in the United States, while industrial metals continue to climb amid supply limitations, as noted by Alpari analyst Anna Bodrova.
She indicated that the slowdown in the growth of US consumer prices fell short of market predictions, alleviating fears of a potential interest rate increase by the Federal Reserve. This has bolstered demand for both precious and industrial metals, although ongoing geopolitical tensions in the Middle East are still dampening investor sentiment.
Gold is currently priced around US$4,030 per ounce, while silver has dipped below US$59 per ounce. Both metals have partially recouped recent losses due to a shift in expectations regarding US monetary policy. The likelihood of a Federal Reserve rate hike as soon as September is estimated to be about 50%, but the market no longer anticipates immediate tightening of policies.
Among the precious metals, palladium has been highlighted by the analyst, rising above US$1,310 per ounce with an increase of over 5%, marking its highest point in nearly a month. This rise has been fueled by a weakening dollar, lower rate expectations, and developments from South Africa, where Sibanye-Stillwater is fast-tracking new mining projects.
In the industrial metals sector, copper has surpassed US$6.25 per pound. Prices have been bolstered by production cuts in Chile, the leading copper exporter globally. The reduction in output is attributed to water shortages, declining ore quality, technical shutdowns, and labor disputes.
Aluminum is trading close to US$3,150 per ton. Macquarie estimates that the global aluminum market may face a shortfall of approximately 930,000 tons this year, which is a significant factor supporting prices.
In the steel market, rebar futures in China have exceeded 3,100 yuan per ton, reaching a one-month peak. Despite a drop in steel exports and the weak profitability of steel companies, market players anticipate a decrease in supply due to rising coking coal prices, scheduled maintenance, and reduced production at Chinese steel mills.
According to Anna Bodrova, the metals market is currently navigating between two influences: the easing of US inflationary pressures, which alleviates the burden of high interest rates on commodity assets, and persistent geopolitical risks and supply constraints that are bolstering industrial metals.