Trump tariffs, copper chaos, and the metals that still matter – Saxo Bank - Middle East Business News and Information
President Trump continues to wield considerable influence over global markets, including commodities. In July, attention centered on intense trade negotiations ahead of the self-imposed August 1 deadline. While a framework deal was reached between the U.S. and EU, and talks with China continued ahead of the mid-August expiry of a 90-day tariff truce, other U.S. trading partners struggled to secure agreements.
Despite these negotiations, markets experienced an eerie calm, allowing U.S. equities to extend their rally. The S&P 500 and Nasdaq both hit record highs, supported by surprisingly strong U.S. economic data. That strength delayed rate cut expectations, lifted Treasury yields, and gave the dollar a modest boost after months of weakness.
Precious metals spent July consolidating their first-half gains. Silver and platinum extended their rallies, regaining some ground versus gold, which continues to trade in a narrow range after hitting a record high of $3,500 in April. Platinum briefly reached a year-to-date gain of 61%, while silver came close to $40—its highest since 2011, though still below the all-time peak of $50.
Also supporting silver and platinum early in the month was a surge in High-Grade copper prices in New York, which hit a record $5.8955/lb on July 8. This followed President Trump's surprise suggestion of a 50% tariff on copper imports—double what markets had priced in. The remark drove the premium over LME copper in London to a record 34%, sparking a rush to ship copper into the U.S. ahead of the deadline.
That trade unraveled last week when Trump, in a sudden reversal, announced that refined copper—traded on futures exchanges—would be excluded from the tariff until at least January 2027. The New York premium collapsed within minutes, leaving traders nursing losses and U.S. warehouses with copper inventories at a 21-year high. With imports set to dry up, U.S. prices may now fall below global benchmarks to clear the excess.
While New York copper grabbed headlines, LME copper remained relatively stable, trading around $9,550 per ton ($4.33/lb). Our medium- to long-term bullish view remains unchanged. The tariff reversal only underscores copper's strategic role in the global energy and digital transition. Demand is expected to rise sharply due to the electrification of transport, industrial reshoring, and rapid expansion of AI-driven data centers.
Supply, meanwhile, remains constrained by underinvestment and recent disruptions—including a mining accident in Chile. As a result, copper prices are likely to remain volatile but biased higher, supported by both near-term momentum and long-term structural tailwinds. It is increasingly becoming the defining commodity of the energy and digital age.
Precious Metals: Focus Shifts to Tariffs and Fed Policy
After a stellar first half, investment metals entered a consolidation phase in July, with some volatility triggered by copper's sharp moves. Gold has traded sideways for four months, allowing silver and platinum to catch up. With year-to-date gains near 27% for gold and silver and nearly 50% for platinum, investors are naturally asking: is the rally over?
We don't believe so. Recent data weakness in the U.S. has reopened the door for Fed rate cuts. Friday's dismal jobs report, including sharp downward revisions to prior months, has led markets to almost fully price in a cut at the next FOMC meeting on 17 September, with more expected into 2026. The effective Fed funds rate is now seen 125 basis points lower by next September.
The key drivers that have propelled metals higher in recent years remain intact, and additional tailwinds could emerge in the second half. Most notably, the mentioned prospect of lower U.S. interest rates could reignite demand, especially for metal-backed ETFs by reducing the opportunity cost of holding non-yielding assets like precious metals, compared to short-dated government bonds.
To understand gold's enduring appeal—and by extension, that of silver and platinum—it's important to recognise what sets these metals apart. Precious metals are politically neutral, unlike sovereign bonds or fiat currencies. They are universally recognised as a store of value, not tied to the creditworthiness of any nation, which is why central banks are increasingly allocating to gold as a core reserve asset.
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Those questions ranged from whether AI services might be eating into search engine usage, whether the forthcoming Siri upgrade could drive future new products and whether Apple would consider acquiring AI companies to further its product roadmap. 'Taking a step back, we see AI as one of the most profound technologies of our lifetime,' Cook said in his opening remarks during the earnings call. 'We are embedding it across our devices and platforms and across the company. We are also significantly growing our investments.' But Apple can't risk falling too far behind when it comes to the iPhone's AI capabilities. By doing so, it could create an opportunity for Samsung, Google and Qualcomm – the three of which dominate the Android phone space – to pull ahead, says Ted Mortonson, managing director and technology sector strategist at financial services company Baird. 'What's more important with investors is, after the iPhone 17, what do they really do?' he said. 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