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Daily Base Metals Report

Geopolitics Stir Flows, but Markets Look Through the Noise

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Authors
Daria Efanova

Daria Efanova Head of Research

Viktoria Kuszak

Viktoria Kuszak Senior Research Analyst

Contact research Contact Industrial Commodities

Summary

  • Geopolitical headlines generated brief FX and metals volatility, but rates and equities continue to look through the event, keeping the broader macro narrative intact.
  • Base metals rallied, as systematic players drive momentum alongside precious metals, leaving little room for fundamental fair value analysis.
  • Precious metals remain the primary channel for geopolitical risk expression, while oil is likely to stay range-bound unless concrete changes to Venezuelan production prospects emerge.

Macro

US equities opened higher, tracking gains across Asian and European markets, as investors absorbed headlines around US intervention in Venezuela. Initial safe-haven demand lifted the dollar early in the session, but the move faded quickly, with the dollar index settling just above 98.5. The rapid reversal suggests FX markets are viewing the development as a contained headline risk rather than an event with meaningful macro or policy implications.US Treasuries were similarly unmoved, with the 10-year yield confined to a narrow 4.17–4.19% range, reinforcing our view that rates remain anchored by positioning and policy expectations rather than headline risk.

Base Metals

Base metals opened the week with a strong rally, pushing toward fresh highs. The move appears driven by a combination of improving post year-end liquidity and rising geopolitical risks. Copper jumped to test a record high of $13,000/t as aluminium rallied towards $3,090/t. Zinc was close behind, gaining more than $80/t towards a December high of $3,200/t.

Base and precious metals have been moving side by side in recent weeks - an increasingly unusual dynamic. Copper has continued to rally even during risk-off episodes, while precious metals have also strengthened during periods of risk-on sentiment. This convergence suggests that the price action is being driven less by fundamentals and more by a build-up of systematic exposure across the commodities complex.

From here, the key question for us is not the direction of prices, but the longevity of this trend. With systematic players appearing to be in control, risks remain skewed on the upside in the near term. However, further upside will depend on how much additional strain the rally places on physical participants, which could increase producer hedging to cap prices. Until then, price trend is likely to remain flow-driven.

Precious Metals 

By contrast, precious metals reacted more decisively. Gold climbed towards $4,450/oz and silver approached $77/oz, reflecting a familiar pattern where geopolitical uncertainty feeds directly into metals via hedging and allocation flows, even when broader markets remain calm.

Oil prices were initially pressured on speculation that Venezuela-related developments could eventually boost supply, but crude quickly recovered, with WTI rising to $58.4/bbl and Brent to $61.8/bbl. While Venezuela holds the world’s largest proven oil reserves, we expect any meaningful increase in supply to take considerable time, requiring substantial investment and political clarity. As a result, near-term oil pricing is unlikely to be materially altered by today’s headlines alone.

All price data is from 05.01.2026 as of 17:30

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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