CSC: U.S. Non-Farm Payrolls Miss Expectations, Copper, Aluminum, and Gold Rally Together
Claire Weston
U.S. July nonfarm payrolls unexpectedly fell by 23,000, hammering rate-hike expectations. CITIC Securities sees non-ferrous valuations still under-repaired, with more upside ahead for copper, aluminum, and gold.
Payrolls shocked — why did metals rally instead of falling?
July nonfarm payrolls fell by 23,000 — far below the consensus forecast of +80,000. A sharply weak jobs report.
This means → the economic-cooling signal undercuts the Fed's case for hiking this year. Market bets shifted toward easing.
After the release, traders' implied probability of a September hike dropped from 57% to roughly 44%. In plain terms = the market now sees a coin-flip, tilting toward "no hike."
Cooling hike expectations + low non-ferrous valuations + strong earnings → sustained capital inflows. CITIC Securities argues P/E recovery is still incomplete, with further upside.
Gold hit a 7-week high — what's holding it up?
Gold rebounded to a 7-week high after the payrolls miss. The short-term catalyst is straightforward: lower rate-hike odds directly favor gold.
Medium-to-long-term support rests on three pillars: structural deficit expansion in major economies, strategic central-bank buying, and escalating geopolitical conflict.
The World Gold Council's latest survey shows 89% of central-bank reserve managers expect global central-bank gold holdings to keep rising over the next 12 months. This reflects a systematic shift away from dependence on any single sovereign credit.
Copper is closing in on its all-time high — what's driving it?
Since June 30, the Comex-LME copper spread has widened steadily. This means → the market is pricing in a presidential announcement of copper tariffs on September 30, and arbitrage flows are accelerating shipments into the U.S.
Non-U.S. inventories keep falling. LME spot copper premium — the extra cost of buying copper now versus later — rose to $115/ton, a direct signal of tight stocks.
Supply is worsening: the DRC banned copper concentrate exports; global copper mine output growth missed again; major miners cut guidance. Copper concentrate spot treatment charges — the fee miners pay smelters, where negative means ore is scarcer than smelting capacity — fell to -$173/ton.
In plain terms = low stocks, tight supply, tariff risk stirring the pot — CITIC Securities believes copper is on the verge of a new all-time high.
Aluminum stocks fell below one million tons — how big is the gap?
LME aluminum gained 2.3% this week. China's aluminum inventory officially broke below 1 million tons; prices reclaimed the 24,000-yuan level.
Where did the gap come from? Middle East curtailments removed 2.86 million tons of capacity; Mozambique shut 520,000 tons → a 1.2-million-ton global supply shortfall for the year.
China's aluminum stocks are about to drop below 900,000 tons; LME stocks are under 250,000 tons. The Middle East has begun restarting, and millions of tons of new overseas capacity are in the pipeline — but all of that is future supply. This means → it cannot fix today's shortage, and the near-term gap will keep pushing aluminum prices higher.
Can the rally last? Three risks that matter
CITIC Securities flags three risks: a sharp global recession causing demand to collapse; U.S. inflation spiraling, forcing the Fed to tighten more than expected; and China's new-energy consumption growth missing forecasts alongside persistent weakness in property-sector demand.
In plain terms = if demand suddenly craters, or the Fed is forced to slam the brakes, the logic behind this rally breaks down.
CITIC Securities sees copper's ability to truly breach its prior all-time high as the key litmus test for this entire non-ferrous rally.
Content is for reference only, not financial advice.