Summary
- US stocks opened higher, driven by increasing valuations in AI, as labour figures are expected to be delayed.
- Base metals continued to strengthen, supported by ongoing buying from a speculative perspective.
- Gold edged lower, while silver weakened significantly due to lacking the fundamental support that gold has.
Macro
US stocks opened higher today, driven by increasing valuations in AI, which gave equities an early boost. Notably, the sale of shares by OpenAI has pushed the company to become the world’s most valuable startup, while a reversal in Tesla's shares, following a surprising increase in quarterly vehicle sales, has weighed on the benchmarks later in the trading session, resulting in only a modest overall increase so far. During this period of a quiet macroeconomic calendar, equities continue to be supported by ongoing hedging against a weaker dollar. Additionally, the strong performance of the tech sector is giving stocks an advantage over the dollar, which currently seem to be factoring in most of the negative aspects affecting the US, including fiscal, political, and economic concerns. The US government shutdown has already been priced into the market and appears to have a limited impact on both FX and equities.
On the macroeconomic front, the release of initial jobless claims figures has been delayed, and the nonfarm payrolls report scheduled for Friday is also expected to be postponed. This lack of clarity adds to the recent weakness in labour market figures, complicating the Fed's decision-making process. As a result, we expect the market to maintain expectations for two rate cuts of 25bps each, although we believe the Fed is more likely to implement only one rate cut for the remainder of the year. This view stems from the confusing and delayed labour figures, as a consistent set of data is needed for economists to evaluate the strength of the US economy.
At the time of writing, the dollar had edged slightly higher to 97.60, while the 10-year US Treasury yield remained steady above 4.10%.
Base Metals
Base metals continued to strengthen, following a supply-focused rally in copper last week, which provided a much-needed catalyst for speculative traders to push metal prices beyond their current ranges. We believe the impacts of the force majeure mine disruption at Grasberg are already priced in, and the recent price increases have been more driven by speculative traders finding value outside the ranges that limited momentum during the summer months, rather than consistent supply and demand fundamentals.
This morning, copper opened strong, breaking above the $10,400/t level and attempting to breach the May 2024 high of $10,500/t before retreating slightly and hovering just below this level at $10,490.50/t by the end of the day. As copper enters ranges not seen since 2024, we believe that the potential for further gains is likely to remain cautious. Early morning sessions may aim to breach near-term resistance levels based on previous days’ highs, but gains may be short-lived due to the absence of a solid fundamental narrative, which keeps bullish sentiment in check.
The rest of the metal complex followed suit. Aluminium tried to break above the robust $2,700/t resistance level but reversed this momentum, leading to a moderate decline to $2,692.50/t. Zinc, which typically follows copper as a by-product of the same ore, broke above the $3,000/t level, keeping ground above this level by the end of the day, suggesting that the market is comfortable with pushing zinc prices higher in the near term. Lead remained steady at $2,024/t. Tin has emerged as a standout, with speculative interest driven by supply concerns related to Indonesia's crackdown on mining, threatening a significant portion of the global tin supply. Nickel’s gains remained more subdued, closing at $15,317/t.
Precious Metals and Oil
Gold prices weakened today, as the recent upward momentum seems to be losing steam. We view this as more of a pause rather than a trend reversal, with immediate support expected to hold around $3,800/oz in the near term. In contrast, silver has experienced a more prolonged decline, dropping from $48.00/oz to $46.20/oz. As noted in our comment yesterday, we believe that recent silver purchases were largely driven by speculation, making it more vulnerable to sharp price reversals once this speculative interest wanes.
Unlike gold, which is supported not only by ETFs but also by central bank purchases as a hedge against FX and risk exposure, silver's 50% demand share from industrial uses provides it with less fundamental support to maintain high prices.
On the oil front, futures continued to decline, with WTI and Brent crude falling to $61/bbl and $64.50/bbl, respectively.
All price data is from 02.10.2025 as of 17:30