Metals prices declined across the board on Wednesday as unresolved Middle East tensions kept traders on of high interest rates this year despite some relief provided by the May inflation print.
Base metals from aluminum and zinc all fell during the early hours of trading in London, after US forces launched another attack on Iran as retaliation for the downing of a helicopter while both sides were still negotiating over a peace deal.
However, the metals later erased some losses following the latest US inflation report, which showed that core consumer prices rose less than expected last month, though annual headline inflation still accelerated to 4.2%, the fastest pace in more than three years.
Meanwhile, precious metals continued to show weakness, with gold falling as much as 2.6% as the prospects of a US interest rate hike this year weighed on the non-yielding metal. Silver, despite being more volatile, dipped just 1%.
Since the start of the war in the Middle East, bullion has lost nearly 20%, wiping out its entire gains in 2026.
“The metals market is focusing on tighter global liquidity following robust US employment data last week, which is bearish for risk assets from gold and silver to industrial materials,” Li Xuezhi, research head at Chaos Ternary Futures Co., told Bloomberg.
Long-term positive
Nevertheless, the long-term outlook for metals remains positive. For gold, analysts point to factors like strong central bank buying and bullion’s elevated role as a reserve asset, with many still predicting prices to approach the $5,000/oz. level this year.
“Despite recent price consolidation, inflation, central bank buying and currency debasement concerns continue to support gold,” Paul Wong, a market strategist at Sprott Asset Management, said in a note this week.
Industrial metals are also facing strong tailwinds in the coming years, driven largely by increased spending on technology. China, said it is preparing to spend around 2 trillion yuan ($295 billion) over the next five years on building data centers, which would require more copper.
Analysts at Fitch Solutions unit BMI are expecting metals to experience what it calls “a multi-decade structural shift” powered by advanced technological integration, supply chain diversification and shifting consumption patterns.
Over the coming decades through to 2050, the ability to adapt to the changing dynamics of the industry will determine long-term company survival, BMI said in a note published on Wednesday.
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