Summary
- US government shutdown in its 16th day, leaving markets to trade on sentiment.
- Copper spreads continued to unwind across the curve while zinc remained heavily backwardated.
- Gold and silver hit new records as speculative momentum continues.
Macro
US equities opened modestly higher on Wednesday, buoyed by stronger-than-expected Q3 results from Taiwan Semiconductor Manufacturing, which raised its 2025 revenue growth forecast to the mid-30% range. The upbeat guidance helped ease concerns over stretched valuations in the AI sector, restoring some confidence in tech-led momentum. With the US government shutdown now in its 16th day, the halt in official data releases has left investors without key economic indicators, forcing markets to rely instead on equity performance and rate expectations as their main guide. The markets continue to price in two 25bps cuts by year-end, though we expect Chair Powell to strike a more cautious tone at the upcoming meeting, opting for a single cut while signalling that a further move in December remains unlikely. Elevated volatility around the Fed statement in two weeks appears inevitable. The dollar softened further, with the index slipping below 98.5, while the 10-year Treasury yield held steady just above the key 4.0% support level.
In the UK, August trade figures showed a wider deficit, highlighting renewed pressure on external demand. The total trade gap rose to £3.4b from £3b in July, though this was narrower than the £4.8b shortfall expected. Excluding precious metals, the deficit widened to £2.5b as exports to both the US and EU declined sharply, led by lower shipments of machinery, transport equipment, and chemicals. The data suggest that weaker global demand and lingering post-Brexit frictions are weighing on the UK’s export base. If this trend persists, it could further strain the country’s already fragile growth outlook and reinforce expectations for a more dovish stance from the BoE in early 2026.
Base Metals
Spreads remained the dominant driver across the base metals complex today, with thin liquidity amplifying the speed and scale of intraday moves. In copper, spreads continued to unwind across the curve, with the cash to 3-month weakening to $11.00/t contango. Meanwhile, the 3-month forward price held firm, edging higher to $10,647/t and maintaining the key support of $10,500/t. Zinc’s cash to 3-month spread remained firmly elevated, which helped underpin a slight rebound in the forward price towards $2,973/t, signally nearby tightness has not abated. Aluminium extended gains, breaking back above the $2,750/t level back toward recent highs of $2,788.50/t, while lead remained on the back foot at $1,965.50/t.
Precious Metals and Oil
Persistent policy uncertainty and the prolonged shutdown continue to fuel speculative flows into precious metals. Gold surged to fresh record highs above $4,260/oz, while silver climbed toward $53.8/oz. The speed and scale of the rally raise questions about positioning risk, particularly for banks and institutional players whose clients remain heavily long. Any correction could test liquidity and hedging capacity across the market. Oil prices were more stable, with WTI holding around $58.6/bbl and Brent near $62.1/bbl after testing key support levels earlier in the week.
All price data is from 16.10.2025 as of 17:30