In a recent episode of Goldman Sachs's "The Macro Call" program on June 4th, host Adam Crook spoke with Tony Kim, the global head of metals and bulk trading and investor products trading at Goldman Sachs, to discuss the market outlook for gold, silver, copper, and aluminum.
Tony Kim expressed the view that gold and silver have cooled off after experiencing crowded trades earlier this year. For gold, he described the current environment as challenging for achieving new highs, stating that a push above $6,000 per ounce would be a significant hurdle. Copper, he noted, has been lifted by AI data center demand and expectations of U.S. tariffs, but high inventory levels are undermining the bullish narrative.
In contrast, aluminum presents a clearer short-term supply-demand deficit due to supply disruptions in the Middle East. However, Kim repeatedly emphasized that for these popular trades, one must look beyond the narrative to factors like positioning, inventories, term structure, and the pace of policy implementation.
Gold and Silver: Institutional Net Selling Exceeds $40 Billion, $6,000 Gold a "Major Challenge"
The precious metals market has seen significant volatility in the first half of the year. When gold prices repeatedly hit record highs in January, market sentiment was extremely optimistic, with strategies like call options being heavily deployed. However, following liquidity-driven selling triggered by geopolitical conflicts, market positioning has now fallen back to levels seen in the third quarter of last year.
Addressing market speculation about gold reaching $6,000 per ounce, Tony Kim expressed clear skepticism. He pointed out that Middle Eastern oil producers, facing reduced oil revenues, have less dollar funds typically used for investing in U.S. Treasuries and gold. Simultaneously, rising energy and food prices, along with AI-related capital expenditures, are pushing inflation higher, leading markets to anticipate increases in both nominal and real interest rates. He stated plainly, "This doesn't mean gold prices will necessarily fall, but for gold, the current environment is undoubtedly very difficult for making new highs. So I think a break above $6,000 would be a considerable challenge."
Nevertheless, Tony Kim highly commended gold's performance as a safe-haven asset. He revealed a key data point: excluding central banks or family offices, institutional investors have been net sellers of approximately $40 to $50 billion worth of gold year-to-date. Despite this large-scale divestment and liquidity selling, the gold price has remained around $4,400 per ounce. He stressed, "If at the start of the year you were told we would face this conflict and such a large amount of selling... I think gold has done its job."
Copper's "AI Hype" and Tariff Dynamics: Inventories at Five-Year High, Bullish Logic "Hard to Fully Believe"
Copper has been the metal most influenced by macro narratives this year. Significant capital has flowed into copper as a "commodity proxy for the AI trade." Concurrently, fears of potential U.S. tariffs have led to substantial physical copper being shipped from the East to the U.S., pushing American copper inventories to unprecedented levels for the past two decades.
With copper prices holding firm around $12,000, Tony Kim offered a dose of reality. He pointed out that copper's term structure does not reflect actual physical tightness. "The bulls will say we all know a supply shortage is coming. AI data center demand is real. Tariffs could add fuel to the fire in the next year or two. Copper prices have risen significantly. However, I find it hard to be fully convinced," Kim stated. He noted that the global copper market is currently in surplus, not shortage, with inventories at their highest level in five years.
He warned that the implementation of U.S. tariff policy is a double-edged sword for copper prices. If tariffs are not ultimately imposed, the market could face a backlash as the U.S. has already imported months, if not a year's worth, of excess supply. Consequently, Goldman Sachs maintains a neutral stance on copper prices over the next three to six months.
Aluminum's "Definitive" Shift: Short-Term Shortage Could Push Prices Toward $4,000
While gold, silver, and copper each face their own headwinds, Tony Kim views aluminum as a "very interesting" trade currently at a critical inflection point.
The core driver is a real physical supply shortage. Conflict in the Middle East has destroyed many small smelters in the region, forcing the spot market to tighten supply for the summer. Tony Kim pointed out, "Because these smelters are so damaged, restarting production will take at least until year-end, with some even suggesting 12 months. Therefore, supply will definitely be persistently affected, and we think prices may need to rise further, potentially even testing $4,000, which is about a 10% increase from current levels."
However, he cautioned that this is not a long-term, one-way bull market. Indonesia is currently bringing a significant amount of new aluminum supply online. Once Middle Eastern supply recovers—expected between December this year and the first half of next year—the market could quickly swing back into surplus.
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