Summary
- Takaichi’s election boosts Nikkei.
- Base metals hold within recent ranges, as zinc spreads tighten to decade highs.
- Gold and Silver Retreat as Speculative Heat Cools
Macro
US equities opened mixed on Tuesday, with the Dow Jones inching higher while the S&P 500 and Nasdaq edged lower. In Japan, the Nikkei surged to new record highs following the election of Prime Minister Sanae Takaichi, whose market-friendly stance and cautious approach to monetary tightening lifted investor sentiment. The yen weakened further, with USDJPY rising above 151.7, as traders increased bets that the Bank of Japan could delay any rate hike at next week’s meeting. The new administration’s softer tone also heightened speculation that any policy adjustment may favour currency intervention rather than higher rates to support the yen.
In the US, the markets still fully pricing in 50bps of rate cuts by year-end. However, the ongoing government shutdown continues to hinder the release of key economic data, leaving investors without a clear read on inflation or employment trends. Treasury yields extended their decline, with the 10-year dipping below 3.96%, while the dollar firmed, pushing the dollar index back above 98.9.
Base Metals
Base metals are mostly holding within their recent ranges, indicating a continued phase of consolidation. While much attention is focused on today's sell-off in precious metals, we believe that as the markets unwind their speculative positions in precious metals and establish fundamental support levels, this could free up capital for other commodities. As a result, metals like copper may benefit from increased funding.
In the meantime, copper held above the $10,600/t support level once again, trading at $10,612/t at the time of writing. Aluminium remained elevated at $2,780/t. Lead hovered below the $2,000/t mark at $1,987/t, as nickel fluctuated around the $15,180/t mark. Zinc spreads continue to tighten, with the cash to three-month spread approaching $300/t - the tightest conditions seen in decades. Zinc three-month forward prices have edged slightly higher, moving back toward the significant resistance level of $3,000/t.
Precious Metals and Oil
Precious metals saw a sharp correction today as profit-taking and reduced safe-haven flows triggered broad liquidations across the complex. Gold dropped more than 6%, briefly testing support near $4,100/oz before stabilising around $4,130/oz at the time of writing. After an unprecedented rally, a period of consolidation was widely anticipated. While some additional downside remains possible, the underlying macro backdrop of policy uncertainty and low real yields should continue to lend longer-term support.
Silver, meanwhile, fell almost 5% to around $48/oz, retracing a portion of its recent parabolic rise. The speed of the pullback reflects how heavily speculative the market had become in recent weeks. Unlike gold, silver’s rally has been less rooted in fundamental demand and more in momentum-driven flows and tight physical conditions. As those pressures ease, prices could remain under corrective pressure before finding a more stable base in the coming weeks.
Oil prices fluctuated, trading slightly higher at the time of writing, with WTI around $58.0/bbl and Brent at $61.3/bbl.
All price data is from 21.10.2025 as of 17:30