Analysis Markets Trump’s tariffs inject volatility into metal markets By Jonathan Gorvett February 5, 2025, 11:45 AM Christopher Pike/Reuters Men look at jewellery in the gold souk, Dubai. An unprecedented amount of gold has recently been sent from Dubai and other markets to New York Demand for gold soars Copper price is volatile Critical minerals in spotlight President Donald Trump’s on-again, off-again tariffs have increased uncertainty for global metals and minerals markets. Demand for gold – a traditional safe haven – soared on Tuesday, with the price of international spot gold rising to $2,819.46 an ounce. The precious metal was trading still higher on Wednesday morning at $2,851.21 an ounce. This is despite recent gains in the US dollar, which usually takes demand away from gold. Describing this as a “bullish trajectory”, Ole Hansen, head of commodities strategy at Saxo Bank, tells AGBI that the price is being supported by “haven demand and worries that a global trade war may lead to rising inflation, lower growth and fiscal debt concerns”. Gold demand has also affected the Gulf, with unprecedented amounts of the metal being flown from Dubai and other bullion markets to New York in recent days, ahead of potential import tariffs, Reuters reported. The UAE central bank has also been increasing its gold reserves in recent months in response to concerns over international trade. Yet the picture for industrial metals has been more mixed. Upward pressure on prices from concerns over supply-chain disruption have been balanced by question marks over growth – globally, and in China in particular. The copper price swung by more than $200 on Monday, according to Bloomberg. On Tuesday morning, it was slightly up at $9,144.50 per metric tonne on the London Metals Exchange, as news came of China’s retaliatory tariffs on the US. These include export controls on tungsten and a range of defence, aviation and electronics metals. Copper closed at $9,024.70 per tonne on Tuesday. Aluminium prices also rose on Tuesday, to $2,623 per metric tonne, up 2.8 percent in the year-to-date. Zinc prices were down about 6 percent over the same period, while nickel prices were down 0.8 percent in the year to date, according to U-Capital figures. Aluminium closed at $2,634.94 on Tuesday. Critical supplies At the same time, the outline of a reshaped US critical-minerals strategy emerged, with President Trump tying US military aid to the supply of Ukrainian critical minerals. This highlights concerns that Trump’s tariffs mark a US move away from multilateral Western strategies on critical minerals. “Trump is targeting countries that have trade agreements with the US that aim to foster co-operation in developing critical mineral supply chains,” Amelia Haines, BMI metals and minerals analyst, told a BMI webinar on Tuesday. Tight supply and strong demand pressure silver prices Trump’s bravado fails to spook minerals market – so far UK mining company unearths copper deposits in Oman Canada is one of the world’s biggest critical-minerals suppliers. Trump’s threatened tariffs against the European Union also put a question mark over the 2022 Minerals Security Partnership between the US, EU and a host of other developed economies. This might open these markets to strategies involving other, non-traditional partners. Gulf benefits The Gulf has so far avoided Trump’s tariff plans, leaving countries in a strong position to pick up some of this re-routed demand. Canada, for example, supplies about half of US aluminium imports, while the UAE, Bahrain and other GCC countries have major aluminium industries. Tariffs of 25 percent on Canadian aluminium, should they materialise, “would greatly squeeze out the profit margins of packaging and construction industries operating in the US”, says Vijay Valecha, chief investment officer at Century Financial. “This might make them look for alternatives, which is where Middle Eastern countries are expected to benefit,” he tells AGBI. Saudi Arabia in particular has been developing its own mining sector, with critical minerals and a range of other industrial metals and minerals in its sights. For now, though, uncertainty continues. “While tariffs against Mexico and Canada may not materialise,” Hansen says, “it still shows how unpredictable the world has become.”