Summary
- Private-sector weakness is becoming a key focal point for markets.
- With markets firmly expecting the December Fed cut, we see increased downside risk for the dollar, which should support base metals in the near term.
- Precious metals remain dollar-driven, with range-bound trade likely until early-December data provide clearer macro direction.
Macro
US stocks opened mixed on Tuesday, with the Dow Jones and S&P 500 posting gains while the Nasdaq slipped, following Monday’s strong lift. The standout mover today was the ADP private payroll report – an independent gauge of employment trends that showed US private employers losing an average of 13,500 jobs per week over the last four weeks. Despite the hawkish PPI print for September at 2.7% y/y, markets remain firmly fixated on the prospect of a December Fed rate cut, with the implied probability now hovering close to 80%. The 10-year Treasury yield dropped to around 4.0% and the dollar index softened, briefly dipping to 99.7.
Base Metals
Base metals gained momentum in the early afternoon, supported by the dollar’s weakness on the back of disappointing private payroll data, which overshadowed official retail sales and PPI releases. With the Fed more focused on labour data than inflation to drive the monetary policy narrative, markets are watching labour metrics closely until mid-December’s official numbers. As markets maintain their bias for a December Fed cut, we believe that any weakening macroeconomic data is likely to reaffirm these expectations, with stronger figures likely to be disregarded. As a result, there is a stronger downside risk for the dollar in the coming days, which should help support the entire complex. However, sustained rallies also remain elusive, as any sharp gains are quickly erased by profit-taking before the end of the day.
Copper leads sentiment, buoyed by news that Chilean producer Codelco plans to more than triple its premium to Chinese customers. This move highlights a potential shift to prioritise US customers over global ones, especially given this year’s tariffs and tightening material supply. It supports our long-term bullish outlook for copper, as a fragile balance is set to tip into deeper deficits by the end of the decade, as availability declines. This could increase upside risk for copper in 2026, particularly if any new supply disruptions are announced.
This tightness is becoming more evident at the front end, with the cash-to-3-month spread tightening to $34/t backwardation. Forward prices were volatile, spiking to $10,950/t before retreating to $10,840/t. Nickel also pushed higher, supported in large part by mean reversion following previous weakness, as it approached key $15,000/t resistance while testing the $14,900/t level today. Zinc continued to hover around $3,000/t, as lead settled into the $1,980/t support level.
Precious Metals and Oil
Gold held above $4,120/oz, preserving most of Monday’s gains as renewed expectations of a December Fed rate cut bolstered the metal. Silver similarly maintained yesterday’s improvement but struggled to hold above $51.0/oz. Looking ahead to next week, we expect precious metals to remain in a consolidation phase, with upside potential limited until clearer data or a meaningful shift in dollar and funding conditions emerges. Silver may offer better sensitivity to any dollar softening, but until then the metals complex is likely to stay range-bound.
Oil prices dropped sharply after markets interpreted reports of potential Russia-Ukraine talks as a sign that the conflict, and related sanctions on the major global producer, could be moving towards resolution. WTI slipped to $57.5/bbl, while Brent traded near $62.1/bbl. We view a near-term resolution as unlikely and therefore consider the current price levels unsustainably low. As geopolitical risk premiums are re-priced, we expect crude to rebound from these levels.
All price data is from 25.11.2025 as of 17:30