Base metals markets displayed mixed performance overnight across both domestic and international exchanges, with precious metals showing divergent trends as market participants braced for the release of key US inflation data scheduled for August 12, 2026. In the base metals sector, SHFE lead closed flat at 15,860 yuan per metric ton, while LME aluminum rose 0.82% and SHFE aluminum gained 0.58%. The most-traded alumina contract advanced 0.93%, and cast aluminum edged up 0.42%.
Within ferrous metals, stainless steel declined 0.07%, bucking the broader upward trend. Iron ore gained 0.76%, while rebar and hot-rolled coil each edged higher within a 0.5% range. The standout performers in the ferrous complex were coking coal and coke, which surged 1.64% and 1.01%, respectively.
Precious metals trading revealed conflicting directional pressures. COMEX gold advanced 0.18% overnight, while COMEX silver fell 0.63%. On China's Shanghai Futures Exchange, SHFE gold declined 0.28% and SHFE silver slipped 0.42%.
Despite the overnight softness in SHFE silver, the contract marked its sixth consecutive day of gains leading into the close, reflecting underlying support for the precious metal. Market participants remained heavily focused on macroeconomic signals ahead of Wednesday's CPI release. According to analysis from Business Insider, the inflation data could trigger sharply divergent market reactions.
Should inflation readings come in higher than expected, stocks could face significant selling pressure in a worst-case stagflation scenario, potentially prompting the Federal Reserve to consider further rate hikes despite soft employment data. Conversely, inflation readings below 3% could signal to markets that the Fed has room to cut rates or at least hold steady, potentially unwinding rate-hike expectations currently priced into markets for later this year. Fed Chair Warsh's recent comments dismissing the Fed's "data-dependent" approach have added uncertainty to the policy outlook.
Wall Street Journal reporter Nick Timiraos noted that FOMC members increasingly view coming months' inflation readings as critical to determining whether inflation can fall back to the Fed's 2% target within two years without additional rate hikes. CME "Fed Watch" data indicated that as of August 12, the probability of the US Federal Reserve holding rates unchanged in September stood at 52.0%, with a 48.0% probability of a cumulative 25 basis point rate hike. For October, the Fed hold probability declined to 38.7%, while cumulative 25bp hike probability rose to 49.0%, and cumulative 50bp hike probability reached 12.2%.
Bank of America analysts expected July CPI to follow recent trends, forecasting headline CPI up 0.1% month-over-month and core CPI up 0.2% month-over-month. The bank noted that a downside surprise in CPI would likely trigger a stronger US dollar reaction, as it would essentially rule out a Fed rate hike in September. In crude oil markets, both WTI and Brent crude extended gains overnight, with WTI rising 1.34% and Brent up 1.8%.
Supply disruption concerns related to Middle East geopolitical tensions supported prices. The US Energy Information Administration projected that approximately 600,000 barrels per day of oil supply disruptions caused by ongoing US-Iran conflict would persist through the end of 2027. The EIA's Short-Term Energy Outlook raised its 2026 Brent crude forecast to 87 dollars per barrel, up from a previous estimate of 82 dollars per barrel, and lifted its 2027 estimate to 69 dollars per barrel from 65 dollars per barrel previously.
US crude inventories, measured via API data, rose by 9.072 million barrels in the most recent week. API Cushing crude inventories increased by 157,100 barrels, while gasoline inventories fell by 1.531 million barrels and distillate inventories decreased by 596,000 barrels. Source: Shanghai Metals Market (SMM), news.metal.com, Wall Street CN APP, Jin10 Data APP, US Energy Information Administration.
Source: news.metal.com