Copper prices break out! First weekly rise since U.S.-Iran conflict, gold rebounds 4% intraday but still falls for four consecutive weeks

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As the conflict in the Middle East continues into the fourth week, the commodity markets saw divergence this week—industrial metals stabilized and rebounded, while gold, despite a sharp intraday rally, remained in a slump.

London copper rose more than 2% this week, achieving its first weekly gain since the outbreak of the US-Iran conflict. A sharp decline in inventories in China has led to renewed demand expectations, which is the main driving force.

During early Friday trading, as US stocks hit new daily highs, spot gold rose above $4554.90, gaining nearly 4.1% intraday; the main New York gold futures contract rose to $4552.10, up just over 4% during the day.

However, due to Monday’s one-day plunge of over 10%, the front-month gold futures contract still fell nearly 2% this week, extending the four-week losing streak and marking the longest weekly decline in almost three years.

Trump once again postponed the deadline for a strike against Iran, raising hopes for de-escalation, but Iran rejected the US-proposed 15-point truce plan, and missile exchanges between the two sides continue, with tensions showing no substantive easing. Oil prices remain above $110 per barrel, inflation pressures persist, further limiting the Federal Reserve’s room for rate cuts—markets have fully priced in no further rate cuts through 2026.

Most Industrial Metals Advance, London Tin Up Nearly 6% for the Week

Basic metals traded on the London Metal Exchange (LME) generally recovered losses this week.

London copper posted its first weekly gain since the outbreak of the US-Iran conflict, a stark contrast to the previous three weeks of declines. LME copper futures closed up $48, rising nearly 0.4% to $12,195/ton, up 2.22% for the week.

London tin was the standout performer on Friday, with LME tin futures closing up $1,663, a 3.77% rise, at $45,788/ton, hitting a new high since March 17. Weekly gain was 5.8%, leading basic metals for the week.

London aluminum rose 2.52% for the week, zinc up 1.57%, both refreshing more than one-week highs for several days in a row; nickel edged up 0.98% for the week but fell for the second consecutive day on Friday. Lead was flat for the week.

Aluminum’s strong performance has a special background—the Strait of Hormuz is effectively blockaded, cutting off about 9% of global aluminum supplies. Reports indicate Japanese buyers agreed to pay the highest aluminum premium in 11 years this week, and this cost pressure is expected to be passed down to manufacturers, further aggravating inflation.

Chinese Demand Recovery Supports Copper Prices

The core driving force for this week’s copper rebound came from signals on the Chinese demand side.

According to reports, copper inventory at the Shanghai Futures Exchange recorded the largest weekly decline so far this year, the second largest weekly drop in history. Analysts believe that the previous sharp decline in copper prices triggered a wave of restocking by manufacturers, leading to an increase in orders.

However, market sentiment has not fully recovered. Harry Jiang, a trader at Zhongji Ningbo Group, said that although there are some talks of negotiations from the US side, in reality, tensions have not eased at all. "Many traders are holding a wait-and-see attitude."

Uncertainty in the Middle East remains a major macro factor suppressing industrial metals. Ongoing conflict continues to drive up energy and fertilizer prices, reinforcing global inflation expectations, dragging down economic growth prospects, and putting pressure on industrial demand outlook.

Gold Futures Mark Longest Weekly Losing Streak in Nearly Three Years

Gold rebounded intraday on Friday but failed to reverse the weekly decline.

The COMEX March gold futures contract in New York closed up 2.66%, at $4,492/oz, but was down 1.72% for the week, marking the longest weekly losing streak since April 18, 2023, with a cumulative decline of 14.12% over the past four weeks.

Daniel Pavilonis, senior market strategist at RJO Futures, believes this pullback represents a buying opportunity: "The market has dropped significantly... prices have fallen below the 200-day moving average... this is a rare buying opportunity." He expects gold prices to rise slowly in the coming weeks and says that once the Iran situation eases, the market will see a favorable recovery in risk appetite.

Gold’s Safe-Haven Appeal Questioned, Central Bank Selling Adds Additional Pressure

This unusual movement in gold has prompted deeper reflection among Wall Street institutions about its safe-haven properties.

Saxo Bank analysts noted in a research report that the latest price action shows "in macro shocks driven by supply, gold has become a source of liquidity and behaves more like a risk asset, fluctuating in tandem with overall market stress, failing to provide traditional safe-haven support."

Julius Baer analyst Carsten Menke pointed out that central bank gold reserve selling is exerting extra pressure on gold prices. He noted that since the outbreak of the Iran war, Turkey has sold about 54 tons of gold to support the lira, and Poland is also considering sales. Menke emphasized that passive selling is more worrying than active rebalancing, because the former lacks controllability, and expects short-term volatility to remain high.

Despite this, some institutions remain optimistic about gold in the long term.

Commerzbank has raised its gold price forecast, increasing the year-end target from $4,900/oz to $5,000/oz, believing the recent pullback is unlikely to persist. The bank expects the Iran war to end in spring, when expectations for Fed rate hikes will cool, and forecasts the Fed will resume rate cuts later this year, lowering rates by about 75 basis points by mid-next year.

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