George Cotton, Commodities Portfolio Manager at J. Safra Sarasin Sustainable AM
Both precious and industrial metals attracted strong investor interest in the first and second quarters respectively. Gold and silver stood out in the first part of the year following a surge in investor demand in Asia, while Chinese equities continued to disappoint. Now, gold and silver prices have stabilised at higher levels as markets anticipate the start of a US rate-cutting cycle in the coming months.
There is no doubt that the structural forces favouring precious metals are still at work: large fiscal deficits, geopolitical uncertainty and a shrinking universe of safe haven assets.
However, for the moment, investor positioning seems rather one-sided, and the existing large bullish bets make us more cautious in the short term. This positioning could even set us up for a surprise “sell the news” reaction, which could lead to short term instability.
Meanwhile, copper and other industrial metals have experienced an explosive move that peaked in late May. Balance sheet outlooks suggest that supply shortages are likely in 2026/2027, but much of this recent move, was due to investor flows driven by both the AI story and Green Transition-related spending expectations, rather than particularly tight supply.
Since then, copper has been weak, as news related to stimulus from China and reduced smelting activities have disappointed, prompting a wave of investor selling in recent weeks. Against this backdrop, it seems that an attractive entry point in copper could be fast approaching.