Metals in Motion

Precious and industrial metals have experienced volatility in recent weeks: gold has surged past $3,700 to reach a new all-time high, silver has climbed to $44 per ounce (its highest level since 2011), and platinum is trading at multiyear highs. Even copper has been trending higher, driven in part by U.S. tariff concerns. Drivers are declining interest rates, inflation concerns, geopolitical tensions (including tariffs), and supply chain disruptions—which may present opportunities for emerging markets EM debt investors.

Precious Metals Rally on Rates, Dollar, and Demand

Several catalysts are supporting precious metals.

The U.S. Federal Reserve made its first rate cut in September, and lower interest rates generally support gold and silver prices.

At the same time, persistent concerns over the U.S. economic outlook have weighed on the dollar, another tailwind for precious metals.

Gold has also benefited from strong investor demand. September saw continued gold inflows, and bar and coin purchases rose notably in the second quarter. Central bank buying has slowed from last year but remains historically elevated.

Silver, meanwhile, has gained support from both investment flows and industrial demand—particularly a sharp rise in solar panel installations in China during the first half of the year.

Inflation uncertainty, questions about Fed independence, and broader concerns about U.S. and global growth add further support for gold and silver.

Platinum is the best-performing metal year-to-date across both precious and base metals.

Platinum has stood out as the best-performing metal year-to-date across both precious and base metals, delivering gains of about 60%. The rally has been driven by tight supply, strong investor flows, and some substitution of jewelry demand away from gold. Palladium has also advanced, though more modestly. Both platinum and palladium are currently subject to a U.S. trade investigation, which could result in tariffs and potentially higher domestic prices—a factor the market has not yet fully priced in. Platinum’s supply deficits are likely to persist, providing continued support.

In palladium, the dynamics differ somewhat, with potential catalysts stemming from trade policy. Some U.S. producers have been pushing for anti-dumping sanctions on Russian palladium imports, which could tighten supply further and lend support to prices. Still, the bigger structural issue for palladium is the shift toward electric vehicles. Roughly 80% of palladium demand comes from autocatalysts, and electric vehicle (EV) adoption poses an existential threat to that demand base. For now, EV uptake outside China has been slower than expected, which has provided some relief for palladium prices, but the long-term risk remains significant.

Industrial Metals: Mixed Signals Amid Tariffs and Policy Shifts

Industrial metals such as copper, in contrast, have shown a more mixed picture. Many industrial metals, such as aluminum, have moved modestly, reflecting both macroeconomic uncertainty and their specific supply-demand dynamics. But copper has rallied on the back of robust demand from energy-transition projects and constrained supply growth, with recent tariff developments driving volatility.

On COMEX, in particular, copper prices spiked after the U.S. announced a 50% tariff on copper in July, only to collapse in August when refined copper was excluded from the measure. Instead, the tariffs will now apply to semi-finished and copper-intensive products. In comparison, the London Metal Exchange (LME) has not experienced the same swings, though prices there have been trending higher since the start of the year.

Policy shifts, including infrastructure spending programs, could support copper.

Inventories tell part of the story. U.S. stockpiles are currently elevated, as market participants accelerated shipments ahead of the tariff’s effective date. This created scarcity in markets outside the United States, and global inventories are now low. If COMEX premia turn to discounts, metal could be re-exported creating headwinds.

On the demand side, recent policy shifts, including infrastructure spending programs, could provide additional support. Infrastructure spending has a strong fiscal multiplier, and copper—given its high beta to gross domestic product (GDP) growth—is particularly sensitive. Today’s infrastructure projects, such as grid modernization and EV charging stations, are especially copper-intensive. For instance, China’s announcement of a new mega dam recently lifted prices across several metals.

Looking forward, the picture remains mixed. A global macro slowdown could weigh on copper and other base metals in the medium term. But structurally, demand drivers remain intact—from both the energy transition and emerging sources such as AI data centers, which are increasingly copper-intensive. In addition, the supply picture remains supportive, with high disruptions and limited supply copper supply growth on the horizon.

Key Drivers for the Months Ahead

Over the next few months, we believe precious metals are better positioned than industrial metals. Economic uncertainty, persistent inflation risks, and even concerns about Fed independence remain supportive for gold and silver, especially alongside a weaker dollar and rate-cut cycle. Historically, precious metals have responded strongly in the months following the first Fed rate cut, suggesting the current policy backdrop could provide continued support.

We believe precious metals are well positioned over the next few months given economic uncertainty, persistent inflation risks, and even concerns about Fed independence.

Still, the medium- to long-term opportunity looks strongest in copper. Its role in EVs, renewable energy infrastructure, data centers, and power grids gives it structural demand tailwinds that are not yet fully priced into the market. Taking this into account, the supply picture looks tight in comparison. While recent volatility tied to tariffs, inventories, and macro concerns has clouded the near-term picture, copper’s demand profile points to significant potential ahead.

Key risks for investors include heightened trade and tariff uncertainty, as critical minerals become increasingly strategic assets in the United States and globally. Regulatory shifts could reshape supply chains, pricing, and access to metals. For palladium specifically, the accelerating adoption of EVs poses a significant demand challenge, even as slower-than-expected uptake outside China has offered temporary relief.

Investors should stay alert to policy headlines, tariff developments, economic announcements (such as recent labor and inflation reports in the United States), and currency moves, as these will likely remain the dominant catalysts shaping metals markets over the next year.

Alexandra Symeonidi, CFA, is a senior corporate credit and sustainability analyst on William Blair’s emerging markets debt team.