Summary
US yields above 5.30% supported the dollar and pressured equities, while widening French spreads weakened the euro and raised contagion concerns.
Metals recovered in thin Golden Week trading, led by copper at $14,435/t.
Gold slipped towards $4,135/oz under pressure from yields and the dollar, while silver outperformed near $61.20/oz alongside industrial metals.
Macro
The US session opened on the defensive, with equities pressured by the 10-year Treasury yield moving above 5.30%. Friday’s weak payrolls report reduced the probability of another immediate Fed hike, but it failed to generate a lasting bond rally, highlighting persistent concern over inflation, fiscal borrowing and Treasury supply. The DXY rose towards 102.5 before softening to around 102.2, although yield differentials continue to favour the dollar.
In Europe, the French OAT–Bund spread remained close to 142bp after widening by almost 30bp over the previous week. France’s fiscal outlook and political fragmentation are encouraging demand for German Bunds while weakening confidence in the euro, which has broken below 1.12. The concern is increasingly whether French stress remains contained or begins to spread across other European sovereign markets.
We see the US long end and French spreads as the principal macro indicators this week. Wednesday’s Fed minutes could clarify how policymakers assess the trade-off between weaker employment and persistent inflation, but Treasury auction demand may provide the cleaner test of the market’s willingness to absorb duration. We expect the dollar to remain supported while US yields stay elevated, with equities vulnerable to another rise in real rates and the euro dependent on a stabilisation in French debt.
Base Metals
Base metals recovered on Monday following last week’s broad sell-off, although turnover remained limited with Chinese markets closed for Golden Week. Copper led the move higher to around $14,435/t, while aluminium reached $3,130/t, zinc $3,745/t, lead $1,885/t, nickel $15,720/t and tin $54,330/t. Lead and zinc strengthened into the European close, while aluminium and nickel recovered more gradually from last week’s lows. The moves should nevertheless be viewed against reduced Chinese participation and subdued volatility.
We see copper as the main test for the complex after it held up better than the other metals during last week’s decline. Its move back above $14,400/t suggests that underlying support remains in place, although the recovery has yet to be validated by Chinese demand.
We expect activity and intraday volatility to increase when Chinese participants return on Thursday. Renewed physical buying could extend the recovery, while a muted response would leave the complex vulnerable to high US yields, dollar strength and further profit-taking.
Precious Metals
Precious metals diverged during Monday’s session. Gold failed to sustain an early move above $4,160/oz and fell back towards $4,135/oz, as the US 10-year yield remained above 5.30% and the dollar stayed firm. Silver showed greater resilience, briefly trading above $62.00/oz before easing to around $61.2/oz. The stronger performance in silver relative to gold is consistent with the broader recovery across industrial metals, although the pullback from the session high suggests that conviction remains limited.
We expect gold to remain caught between demand for protection against European fiscal and geopolitical risk and the headwind from elevated US yields. A further widening in the OAT–Bund spread could strengthen safe-haven demand, but gold may struggle to recover convincingly while the dollar remains supported and Treasury yields elevated. Silver could continue to outperform if the base-metals recovery holds, although Wednesday’s Fed minutes and China’s return on Thursday will be important in determining whether today’s move can extend.
All price data is from 05.10.2026 as of 17:30