Commodities Comment

Research evidence excerpt

Commodities Comment

for solar due to the export rebate tax ending on 1 April. Stockpiling is

now thought to have finished, and lease rates have stabilised. Recent

developments in India have caused some disruption after the 15% import

tariff on gold and silver was reinstated from 13 May (previously 6%). This

was to curb demand and thereby ease pressure on foreign exchange

reserves and the rupee due to higher oil prices. This was followed by

tightened restrictions on imports of most silver products from 16 May, with

only shipments licensed by India’s Directorate General of Foreign Trade able

to be brought into the country. This caused Indian prices to rise and the arb

to spike higher and could see a looser physical market develop ex-India if

imports reduce.

Back to macro, and uncertainty continued unabated this week after

President Trump said on Tuesday he had called off a scheduled attack on

Iran for a few days at the request of the Gulf Arab states because "serious

negotiations" were now taking place. This was countered on Wednesday by

Iran warning it would extend the war beyond the region if the US carried out

its threat. There is still no evidence that Iran intends to meet US demands,

with an increasing risk of a drawn out stalemate. This forced inflation and

rate hikes sharply back into focus and a sell-off in global bond markets -

bond yields consequently rose, with US 30-year yields rising to almost 5.2%,

their highest level since 2007, and Japan's 30-year bond yields increasing to

4.2%, the highest level since the series began in 1999.

Looking forward, our economists continue to think the next move by

the Federal Reserve will be a rate hike, likely coming in H1 2027, which

will increase downward pressure on precious metal prices. Headline CPI