Summary
Higher US yields and oil weighed on equities, supported the dollar and renewed pressure on European sovereign markets.
Copper and lead strengthened ahead of China’s return, while aluminium remained the main laggard.
Gold fell towards $4,105/oz and silver below $60/oz as elevated yields outweighed weaker Fed hike expectations.
Macro
US equities opened lower on Wednesday as Treasury yields and oil prices rebounded, renewing pressure on valuations after Tuesday’s record highs. The 10-year yield moved back above 5.30% ahead of the $39bn Treasury auction, while the DXY tested 102.5 as higher US yields reinforced demand for the dollar.
European pressures also intensified. Brent moved back above $100/bbl amid renewed Middle East supply concerns, while the French OAT–Bund spread widened towards 140bp and European bank shares fell as investors reassessed sovereign and inflation risks. We see the combination of higher energy costs and fiscal stress keeping the euro under pressure and complicating the ECB outlook.
All eyes turn to tonight’s Fed minutes and the outcome of the 10-year auction. We expect the minutes to retain an inflation-focused tone, although they predate September’s weak payrolls report and may therefore offer limited guidance on the October decision. Tomorrow’s jobless claims and $22bn 30-year Treasury auction should provide a more current test of labour-market weakness and demand for duration. Firm auction demand could stabilise yields, but we see equities remaining vulnerable and the dollar supported while the 10-year stays above 5.30%.
Base Metals
Base metals were mixed on Wednesday as Chinese participation remained limited ahead of the post-holiday reopening. Copper strengthened into the close, breaking above $14,450/t to trade near $14,480/t, while lead extended its recovery towards $1,900/t. Nickel rose to $15,735/t, tin reached $54,345/t and zinc held near $3,770/t. Aluminium was the outlier, falling below $3,110/t before recovering towards $3,125/t.
Copper’s resilience appears consistent with continued exchange tightness. LME inventories fell by 1,925 tonnes to 242,975 tonnes on Tuesday, while stocks of aluminium, lead, nickel and tin also declined. Nearby copper and zinc spreads remain in backwardation, although both have eased from previous levels, suggesting that physical conditions are supportive but not becoming materially tighter across the complex.
Attention now turns to China’s return on Thursday. We see copper’s close near the session high as constructive, but physical buying will need to confirm the move above $14,450/t, particularly with the dollar testing 102.5 and the US 10-year yield above 5.30%. Aluminium remains comparatively vulnerable below $3,150/t, whereas lead’s sustained advance above $1,890/t points to firmer near-term momentum.
Precious Metals
Precious metals weakened sharply as the rebound in US yields and the dollar increased the opportunity cost of holding non-yielding assets. Gold declined steadily from above $4,160/oz and briefly fell below $4,080/oz before recovering to around $4,105/oz. Silver experienced a steeper sell-off, breaking below $60.50/oz and reaching nearly $59.1/oz before recovering towards $59.9/oz. The limited rebound left both metals below their earlier consolidation ranges.
The decline came despite markets assigning only around a 20% probability to an October Fed increase. Elevated Treasury yields and expectations that another increase could still follow in December are outweighing the support from weaker payrolls and European fiscal uncertainty. Recent positioning evidence also suggests that part of the broader decline has reflected a leveraged futures unwind, even as longer-term investment demand has remained more resilient.
All price data is from 07.10.2026 as of 17:30