Summary
- The Fed kept interest rates on hold; oil stays elevated on Middle East risk
- Copper’s narrow trading range highlights a disconnect from fundamentals, as falling China TCs signal tightening concentrate supply not yet reflected in prices.
- Silver softens after Tuesday’s rally; gold holds below $3,390/oz
Macro
US equities opened higher on Wednesday, as markets turned cautiously optimistic ahead of the Federal Reserve’s policy announcement. The Fed left its benchmark rate unchanged at 4.25%–4.50%, with only two rate cuts anticipated by year-end. Investors closely watched Chair Powell’s remarks, especially his emphasis that the central bank is firmly committed to a wait-and-see approach before making further policy changes. Concerns over potential US involvement in the conflict have contributed to the recent oil rally, lifting prices to their highest levels in nearly a year.
In Japan, the trade balance for May showed a smaller-than-expected deficit of ¥637.6 billion. Exports fell by 1.7% YoY, less than forecast, but still marked a reversal from April’s modest growth. Imports contracted 7.7% YoY, raising concerns about soft domestic demand. Trade negotiations with the US remain stalled.
UK inflation data offered a mixed picture. Headline CPI eased to 3.4% YoY in May, down from a revised 3.5% in April and in line with Bank of England expectations. Services inflation fell to 4.7%, providing some relief on the domestic front. However, food inflation reaccelerated to 4.4%, its highest in over a year, placing renewed pressure on households. Despite ongoing energy concerns, markets continue to expect the BoE to hold rates steady this week, with also two cuts priced in by year-end.
Base Metals
Base metals were trading thinly today, confined within narrow ranges. Copper remained below the $9,700/t mark, trading at $9,668/t, with only marginal movements in recent days, underscoring a lack of trading conviction in the market. This muted price action reflects a continued divergence from copper’s underlying fundamentals, particularly as China’s treatment charges (TCs) have fallen into negative territory for the first time. This suggests a tightening supply of copper concentrate, pointing to growing stress in the upstream supply chain that is not yet being priced into the broader market. Meanwhile, aluminium struggled above yesterday’s highs of $2,550/t, trading in a narrow range just below at $2,547/t. Lead and zinc held their nerve at $1,980/t and $2,635/t, respectively. Meanwhile, nickel bounced back above $15,000/t to $15,090/t.
Precious Metals and Oil
Gold was little changed, holding just below $3,390/oz as markets awaited the Fed decision. Silver eased modestly after Tuesday’s rally, trading at $36.80/oz. Oil prices remained elevated amid geopolitical tensions, with WTI and Brent last seen at $73.90/bbl and $75.30/bbl respectively.
All price data is from 18.06.2025 as of 17:30