On Friday the 23rd, global metals markets erupted into a fresh wave of buying frenzy. New York silver futures and London spot silver both broke through the $100 per ounce barrier for the first time in history, while gold extended its record-breaking run for a fifth consecutive session, pushing closer to the $5,000 milestone. LME copper reclaimed the $13,000 level, nearing the intraday peak set earlier this month. Other precious and industrial metals also posted sharp gains. At their Friday session highs during early US trading, New York platinum and palladium futures surged over 6% and approximately 7% respectively, while industrial metals LME nickel and tin both climbed more than 4%. This rally is being fueled by a confluence of factors. A weakening US dollar, massive investor outflows from currencies and sovereign bonds, former President Trump's criticism of the Federal Reserve threatening central bank independence, and turbulent geopolitical conditions have all heightened risk-off sentiment, collectively driving metals higher. Commentary noted that Trump's remarks about a US "fleet" heading towards Iran prompted investors to flock to silver, gold, and base metals like copper. This refers to reports from Xinhua News Agency that Trump, speaking to media aboard Air Force One on Thursday the 22nd, stated the US was mobilizing significant forces towards Iran, with many vessels en route. Wall Street institutions are broadly bullish on the outlook for precious metals. As mentioned last week, JPMorgan Chase forecasts gold reaching $5,000 by Q4 2026, with a long-term view even targeting $6,000. Citi, in a bull-case scenario, raised its 0-3 month gold price target to $5,000 and its silver target to $100. UBS expects silver has about 25% further upside from current levels but warns of a potential "rollercoaster" ride within the year. This metals frenzy reflects an acceleration in the global trend of de-dollarization. Emerging market assets continued their strong start to the year, with investors pouring money into EM funds at a record pace. The $135 billion iShares Core MSCI Emerging Markets ETF attracted nearly $6 billion in January, on track for its largest monthly inflow since its 2012 inception.
Industrial Demand and Chinese Buying Power NY Silver Past $100
During early US trading on Friday, the front-month COMEX March silver futures contract breached $101.10 per ounce, up nearly 5% on the day. Spot silver followed suit, rising above $100.90, a gain of nearly 4.9%, with both futures and spot prices setting consecutive all-time intraday highs. Silver futures are poised for a second straight weekly gain exceeding 10%, bringing the year-to-date increase to over 40%. Silver's performance in 2025 has outpaced gold, with the white metal gaining nearly 150% for the year compared to gold's over 60% rise, marking the strongest annual gains on record. This reflects a shift by some investors towards silver as gold became perceived as too expensive. Silver is also benefiting from robust industrial demand, particularly from the solar industry, with buying from Chinese retail investors adding further upward momentum. When silver broke above $80 per ounce in the final week of 2025, queues at the trading counters in Shenzhen's Shuibei market—the country's largest gold jewelry trading hub—reportedly grew even longer. Analysts view $100 as a significant psychological level for silver. Neil Welsh, Head of Metals at Britannia Global Markets, stated in a Friday report: "Turbulence in the geopolitical order and the new attack on the Fed by [Trump] is sparking safe-haven demand." Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted: "Momentum has clearly become a key factor influencing price action, with 'fear of missing out' (FOMO) psychology playing a notable role as prices break through historic highs. However, it would be a mistake to attribute this rally solely to speculation." Activity in the Chinese market is crucial for silver prices. Hansen pointed out that Chinese physical demand for silver remains strongyat, though rising prices may eventually start to curb consumption over the long term. Local futures prices continue to trade at a premium of over $12 per ounce compared to London prices, indicating regional supply tightness and robust demand. Hansen cautioned: "If prices accelerate too rapidly, the risk of demand destruction cannot be ignored, a dynamic that could ultimately favor a rotation back into gold." Citi Group aggressively raised its short-term price target in a report last week. Analysts including Max Layton stated that in a bull-case scenario, they were significantly increasing their 0-3 month silver price target from $62 to $100 per ounce. Citi noted that due to a potential delay in the US Section 232 tariff decision, the ongoing physical silver shortage could worsen slightly in the near term. However, the bank's base case assumes a $70 per ounce target for the next 6-12 months, indicating caution regarding market volatility in the second half of the year. UBS's research report last week projected that silver prices still have about 25% upside from current levels, but anticipated prices would gradually retreat by year-end, depicting a "two-half" performance. UBS strategist Joni Teves said the core driver for this forecast adjustment is a surge in trading activity in the Chinese market. Since the second half of 2025, Chinese silver futures trading volumes have skyrocketed, with investor participation exceeding expectations and amplifying the impact of market tightness on spot prices. UBS specifically highlighted that Chinese silver futures trading volumes far exceed those on COMEX, while Shanghai Futures Exchange silver inventories are less than 10% of COMEX stockpiles.
Gold as a Hedge Against Trump Uncertainty Up Over 10% YTD
Gold hit a fresh record intraday high during early US trading on Friday. New York gold futures approached $4,990, gaining nearly 1.6%, while spot gold surpassed $4,988.30, up nearly 1.1%. Gold is set to post its best weekly performance since March 2020, with a weekly gain exceeding 7%, bringing its year-to-date advance to 14%. Yuxuan Tang, Asia Macro Strategy Lead at J.P. Morgan Private Bank, commented: "Gold is undergoing a sustained re-rating as the post-WWII rules-based order shows cracks. Faced with risks of regime shifts that are difficult to quantify, investors are increasingly viewing gold as reliable protection against these risks." Chris Weston, Head of Research at Pepperstone, noted in a report that gold is increasingly acting as a hedge against Trump "uncertainty." While many traders see gold as a hedge against US-Europe tariff war risks, he pointed out that gold's gains did not reverse after tariff threats subsided. Global central banks, particularly from emerging markets, are "looking for reasons almost daily to rotate reserves out of the dollar and into gold." He believes spot and futures gold will hit $5,000 "sooner or later," with the target now clear and attracting buyers. Saxo Bank analysts stated: "This rally is being driven by FOMO, while also continuing to focus on the broader drivers supporting hard assets after a slight easing of US-Europe tensions. Central bank demand remains firm, the dollar continues to weaken, and governments continue to issue debt with little clear plan for long-term repayment." Analysts at Commerzbank wrote in a Friday report: "The search for a safe haven remains the most important driver. However, in the short term, the rally might pause as the Greenland dispute appears temporarily resolved." Major Wall Street investment banks are generally bullish on gold's long-term trajectory. Morgan Stanley set a Q4 2026 gold price target of $4,800, a significant increase from its previous forecast of $4,400 made in October 2025. JPMorgan Chase expects gold to reach $5,000 by Q4 2026, with a long-term view even targeting $6,000. Natasha Kaneva, the bank's Global Head of Commodities Strategy, emphasized in a December 18th report: "The trends driving gold's re-rating are not yet exhausted." She believes that against a backdrop of persistent trade uncertainty and geopolitical risks, diversification demand from central banks and investors will continue to push gold prices higher. Citi, in a bull-case scenario, raised its 0-3 month gold price target from $4,200 to $5,000 per ounce. UBS recently reiterated its outlook for gold, suggesting potential for further gains in the first half of the year, with its base case indicating roughly 9% upside from current levels. Poland's central bank this week approved a plan to purchase an additional 150 tonnes of gold in response to heightened geopolitical instability. Concurrently, India's holdings of US Treasuries have fallen to a five-year low, with gold and other alternatives taking a larger share, reflecting a shift away from the world's largest bond market by some major economies.
Supply Disruptions and Weak Dollar Drive LME Copper Rebound
On Friday, three-month copper on the London Metal Exchange (LME) traded as high as $13,173.50 per tonne, up 3.3% on the day, approaching the intraday record set earlier this month and potentially reversing cumulative losses from the first four days of the week. LME nickel and tin both gained over 4%. Copper was on track for a weekly gain exceeding 1.5%. The rise in copper prices benefited from a weaker US dollar, ongoing supply disruptions, and eased concerns about trade friction between Washington and Europe. The dollar was headed for its first weekly decline this year, making commodities cheaper for buyers holding other currencies. Capstone Copper stated on Thursday that operations at its Mantoverde copper-gold mine in Chile had largely halted due to a three-week labour strike. ANZ analysts noted: "Workers have blocked access to the site; the mine can produce approximately 106,000 tonnes per year. There are no plans to resume wage negotiations at this stage." Trump's disruption of the geopolitical order and new attacks on the Fed are sparking safe-haven demand. This typically benefits gold and silver primarily, but recently, such effects have spilled over into base metals. This adds further momentum to the copper market, which has been rising since the middle of last year due to major mine disruptions, booming demand from electrification, and a surge in shipments to the US ahead of potential tariffs. Despite the rise in the benchmark copper price, the spread between different LME contracts remained modest, as deliveries to warehouses in the US and Asia eased pressure on buyers following a sharp price spike earlier in the week. On Friday, the cash copper contract was at a discount of $74.50 per tonne to the benchmark three-month LME contract, a contango market structure indicating improved supply conditions. This contrasted sharply with Tuesday, when the cash price commanded a premium of over $100 to the three-month contract, a backwardated pattern signalling supply tightness. Traders said deliveries into Asian warehouses were partly driven by Chinese smelters booking deliveries when arbitrage opportunities were profitable. Chinese smelters have increased exports via deliveries to LME warehouses this year, partly because gains in the LME benchmark price have outpaced domestic prices, and a slowdown in the property sector has affected consumption. Traders expect more deliveries in the coming weeks, although the arbitrage window is currently closed. Morgan Stanley is bullish on aluminium and copper, both facing supply constraints alongside rising demand. ING analysts noted that the outlook for base metals in 2026 remains constructive, supported by industrial demand from sectors like solar panels and battery technology, alongside sustained investment inflows.
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