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Daily Base Metals Report

US Inflation Shows Early Tariff Effects

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Authors
Daria Efanova

Daria Efanova Head of Research

Viktoria Kuszak

Viktoria Kuszak Senior Research Analyst

Contact research Contact Industrial Commodities

Summary

  • Equities mixed as US inflation surprises higher.
  • Base metals weakened on the back of a stronger dollar. 
  • Gold resilient despite rising yields and dollar strength.

Macro

US stocks opened mixed on Tuesday, with the Dow Jones slightly lower while the Nasdaq advanced to fresh record highs. Investors digested stronger-than-expected US inflation figures for June, with headline CPI accelerating to 2.7% YoY, the sharpest rise in five months, up from 2.4% in May. Core inflation also edged higher, reaching 2.9%. The data suggests that recent tariff increases are beginning to feed through into consumer prices, potentially prompting the Federal Reserve to maintain its cautious stance in upcoming policy meetings. Market expectations for a rate cut have now diminished, with swaps pricing only a 50% likelihood of a 25bps reduction in October, down notably from recent levels. In response to the inflation print, the US 10-year Treasury yield surged to 4.47%, its highest in over a month. The dollar strengthened significantly against major currencies, driving the dollar index close to the 98.5 mark.

In Asia, China's Q2 GDP also came in above forecasts at 5.2% YoY, although it moderated slightly from Q1’s 5.4%. The better-than-expected growth highlights the economy’s underlying resilience amid ongoing US tariff pressures. Retail sales and investment numbers undershot expectations, but this was partly offset by stronger-than-anticipated industrial output figures.

Base Metals

Base metals prices continued to decline today, with the dollar strength driving the overall momentum. Copper is hovering just above the $9,600/t support level at $9,645.50/t, as nearby spreads dip further into contango, following the tightness seen earlier this month. With the deadline for tariff implementation on August 1st approaching, there is limited time to ship copper to US inventories without incurring the higher rate. As a result, we expect that the amount of copper leaving the LME should begin to slow as the deadline nears. 

Additionally, although the 50% tariff rate has been announced, market participants remain sceptical that this will be the final figure. Many US manufacturers still hope for a lower rate of around 25%. This sentiment is reflected in the COMEX/LME arbitrage, which currently shows a 27% premium. 

The rest of the complex followed suit. Lead continued to weaken, erasing June gains and falling below $2,000/t support level to $1,996/t. Zinc sold off, dropping below $2,700/t to $2,697/t. Aluminium continued to fluctuate around the $2,600/t mark.

Precious Metals and Oil

Gold demonstrated resilience despite the dual headwinds of higher Treasury yields and a firmer dollar, holding steady at $3,350/oz. Silver, however, drifted slightly lower, testing support around the $38.00/oz mark. Oil prices were broadly unchanged, with WTI hovering around $66.60/bbl and Brent stable at approximately $69.00/bbl. Investors appeared content to await fresh fundamental drivers before positioning further.

All price data is from 15.07.2025 as of 17:30

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

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