Key Takeaways:
Commodity scoreboard: Gold +17 percent to $4,700/oz; copper +15 percent YTD to near $14,500/tonne; Brent +30 percent to about $90/bbl.
Gold hit $4,700/oz, copper neared $14,500/tonne, and Brent returned to $90/bbl, all up 15 percent to 30 percent since late June, according to a Soochow Securities report published Aug. 26.
"This rally is not a simple commodity-wide advance but the result of rising geopolitical risk premiums, improved overseas liquidity, growing supply-chain fragility, and weakening dollar credibility," the Soochow Securities macro team wrote in the report.
Gold's move is driven by US fiscal sustainability concerns and central bank buying, with the People's Bank of China adding 640,000 ounces in July — its largest monthly increase since November 2024. Copper has risen about 15 percent year-to-date on US tariff expectations, mine supply constraints, and AI and new-energy demand. Oil is supported by Hormuz Strait disruptions and low global inventories.
The report maintains a bullish outlook across all three assets. Gold could reach $5,000/oz in an optimistic scenario, copper is unlikely to see deep corrections before US tariff policy is finalized, and Brent crude could hold an $80-$90/bbl range if Middle East tensions persist.
Gold broke above its range on Aug. 5 and confirmed a weekly MACD golden cross on Aug. 21. The US fiscal deficit reached $1.37 trillion through June in fiscal 2026, with interest payments consuming 48 percent to 55 percent of deficits in 2024-2025 — above defense spending in both years. The People's Bank of China added 640,000 ounces of gold in July, lifting reserves to 76.08 million ounces, while SPDR Gold ETF holdings rose to 1,047 tonnes as of Aug. 21.
The report argues that rising US Treasury yields have not suppressed gold prices because fiscal pressure and high interest costs are eroding dollar credibility, strengthening gold's monetary and de-dollarization attributes. Gold ETF volatility stood at 27 percent as of Aug. 22, suggesting market crowding has not yet become excessive. At $4,700/oz, gold trades 16 percent below its record $5,600/oz set in January 2026.
Copper has risen about 15 percent year-to-date, approaching the record of $14,600/tonne set in January. US tariff expectations — 15 percent on refined copper from January 2027, rising to 30 percent from 2028 — have driven metal into the United States, with July imports exceeding 200,000 tonnes, the highest monthly level since 2014. COMEX inventories reached 740,000 tonnes, a record, while LME stocks fell to 238,400 tonnes and Shanghai Futures Exchange stocks dropped to 41,100 tonnes.
Mine supply is tightening. Chile's second-quarter copper output fell 7.7 percent year-over-year, and Codelco cut its production target. Treatment charges for copper concentrate dropped to negative $181 per dry tonne in August, reflecting intense competition among smelters for scarce raw material. The report expects copper to avoid deep corrections before US tariff policy is finalized.
Brent crude has recovered from $68/bbl in June to about $90/bbl as Middle East tensions escalated. Hormuz Strait daily vessel traffic fell from about 120 ships before the conflict to fewer than 10, with tanker transits averaging about 1.25 per day in early August. OPEC production dropped to about 23.63 million barrels per day in July, down nearly 5 million from pre-conflict levels.
Global observable oil inventories have fallen by about 410 million barrels since the conflict began, including 69 million in July alone, reaching the lowest level since April 2025. US Strategic Petroleum Reserve stocks fell to about 290 million barrels as of Aug. 21, the lowest since 1982. The IEA projects a third-quarter market deficit of 1.8 million barrels per day. The report expects Brent to trade in an $80-$90/bbl range if tensions persist, with a potential drop to $70/bbl if effective negotiations resume.
This article is for informational purposes only and does not constitute investment advice.
