Summary
- The Fed has cut rates by 25bps, with a more hawkish path being priced in by the market for 2026.
- The ongoing narrative of copper tightness suggests that any dip in base metals after the Fed announcement may be temporary.
- Following the Fed’s decision, silver stands out as the most rate-sensitive metal, and its volatility is expected to stay elevated.
Macro
US equities rallied, erasing earlier market jitters, with the Dow Jones and Nasdaq trading higher following this evening’s FOMC decision. As anticipated by the market, the Federal Reserve delivered a 25bps rate cut, with the FOMC voting 9-3 in favour of lowering the benchmark. Policymakers revised the statement’s language, signalling that this action is more of a “hawkish cut,” with markets now expecting only one or two additional cuts in 2026. The 10-year Treasury yield dropped to 4.13%, and the dollar index weakened to 98.65 as investors adjusted to Powell’s guidance.
China’s inflation data offered a mixed picture. Consumer prices in November accelerated at their fastest pace in nearly two years, driven in large part by higher food costs. However, producer prices continued to slide, underscoring persistent pressure on industrial margins and revealing that domestic demand remains soft despite ongoing policy support. While China appears broadly on track to meet its growth target of around 5% this year, the divergence between consumer-side strength and factory-gate weakness highlights deepening structural imbalances. We expect policymakers to maintain a supportive stance into early 2026, particularly as export resilience alone will not be sufficient to deliver a sustained recovery.
Base Metals
Base metals firmed today as a softer dollar ahead of the Fed decision and a market view that yesterday’s pullback represented a healthy consolidation rather than a trend reversal. Copper defended the support at $11,500/t as aluminium hovered above the $2,850/t. Zinc and lead held near yesterday’s lows at $3,050/t and $1,980/t, respectively.
While the Fed’s decision to cut rates pressured the dollar lower, we expect markets to gradually reprice a less dovish 2026 narrative, particularly into the first half of the year, which could offer the dollar a moderate lift. This, in combination with the prevailing narrative surrounding refined copper tightness, suggests that base metals appear set for a modest or temporary dip after today’s announcement.
Precious Metals and Oil
In precious metals, gold remained steady around $4,195/oz. Silver briefly reached a new record near $61.7/oz. With volatility rising after the Fed decision, we expect silver to remain more sensitive to shifts in policy tone than gold.
Oil prices softened further, with WTI falling below $58.0/bbl and Brent slipping under $61.5/bbl, leaving both benchmarks trading near the lower end of their one-month range. Without a clearer improvement in demand indicators, we expect price action to remain heavy into year-end.
All price data is from 10.12.2025 as of 17:30