On Tuesday, the metals market continued Monday's rally with a full-blown breakout. Industrial metals led the charge, with LME nickel spearheading the advance by surging over 9% intraday. COMEX silver jumped more than 6% during the session, approaching the record intraday high set just a week prior. LME copper extended its gains after historically breaching the $13,000 per tonne mark on Monday, climbing over 3% intraday on Tuesday to set consecutive record highs. COMEX gold rose more than 1% intraday, erasing most of its losses since CME Group Inc raised trading margins the previous Monday and moving closer to its pre-Christmas peak.
Chinese investors have emerged as a significant driving force behind this metals surge. Trading dynamics revealed sharp price jumps and a surge in trading volume for metals including nickel, copper, and tin during the Asian session, with another rally occurring after the night session opened on the Shanghai Futures Exchange. At Tuesday's daytime close, Shanghai silver surged over 7%, while Shanghai copper, tin, and nickel all gained more than 4%. At the night session's opening, Shanghai nickel rose nearly 5%, Shanghai silver advanced almost 3%, Shanghai tin climbed over 2%, and Shanghai copper increased more than 1%.
Potential tariff policies from the Trump administration continued to influence markets. According to some reports, U.S. President Trump is considering imposing tariffs of approximately 15% on copper imports in 2027, potentially raising them to 30% in 2028. Investor expectations of U.S. tariff hikes have triggered a massive influx of copper inventories into the United States. CME data shows U.S. copper inventories have grown more than fourfold since April 2025, reaching 453,450 tonnes as of January 2, while supplies in other global regions have become critically tight.
Geopolitical risks are boosting safe-haven demand. According to reports, the U.S. launched a large-scale military operation against Venezuela in the early hours of last Saturday, January 3, conducting raids in the capital Caracas and other areas, forcibly taking control of President Maduro and his wife, and transporting them to the United States. This forceful action has intensified global tensions, supporting higher precious metal prices. The Bloomberg Precious Metals Subindex has surged over 13% in the past month and gained approximately 5% since the start of the year.
LME Nickel Leads: Chinese Buying Drives Largest Gain in Three Years
The LME three-month nickel contract soared over 9% on Tuesday, hitting a high of $18,545 per tonne, marking its largest intraday gain in more than three years. Nickel prices have accumulated gains exceeding 20% over the past two weeks.
This represents a dramatic reversal. The nickel market had previously been constrained by surplus production capacity in Indonesia and lower-than-expected usage in electric vehicle batteries. This rally also signals a recovery for the LME nickel contract, which saw significantly reduced trading volumes following the historic short squeeze event in 2022. Trading dynamics indicate Chinese investors played a crucial role in driving the nickel price surge. LME futures prices jumped with high volume during Asian trading hours, rising again after the night session opened on the Shanghai Futures Exchange. Although the nickel market faces severe oversupply, rising production risks in Indonesia, the world's largest supplier, have helped support market sentiment, coupled with broad inflows of investment funds into China's domestic metals market.
LME Copper Breaks Records: Inventories "Locked in the U.S."
LME three-month copper advanced further on Tuesday. After breaking through the $13,000 per tonne barrier on Monday, it reached an intraday high of $13,387.50 on Tuesday, setting consecutive record highs with an intraday gain of 3.1%. It ultimately settled nearly 1.9% higher at $13,238, closing above $13,000 for the first time. Copper prices have accumulated gains exceeding 20% since late November 2025.
The massive inventory migration driven by tariff expectations forms the core logic behind copper's surge. Anticipation that the Trump administration may impose tariffs on refined copper has prompted substantial inventory flows into the U.S., creating shortages in other global regions against a backdrop of miners struggling to increase production. Li Xuezhi, Research Director at Chaos Ternary Futures, commented, "Inventories used to serve as a buffer, but now they are locked in the U.S. So the buffer is gone, and everyone has to scramble for supplies." Although demand has slowed in recent months—particularly in China, the largest consumer—Chinese buyers are being forced into bidding wars to secure supply as copper continues flowing to the U.S. The LMEX Index, tracking six major LME-traded metals, has surged to its highest level since March 2022, while aluminum prices have also risen to their highest point in over three years. The initiation of a strike at Chile's Mantoverde copper mine has further intensified supply concerns. Warren Patterson, Head of Commodities Strategy at ING, stated, "Until there is clarity on tariffs, the tariff risk will keep supplies tight outside the U.S. and global prices elevated. The downside risk for copper is that if refined metal is again exempted from tariffs, flows to the U.S. could reverse, pushing inventories back onto the global market." U.S. copper import data confirms this trend. In December, U.S. copper imports jumped to their highest level since July. Driven by higher copper prices, copper miner Freeport-McMoRan rose over 4% in early trading on Tuesday, while Southern Copper, the largest U.S.-listed copper miner by market value, also gained over 4%, and BHP Group's U.S. shares rose nearly 3%.
COMEX Silver Soars: Chinese Retail Participation Triggers Self-Reinforcing Cycle
During Tuesday's U.S. midday trading, both COMEX March silver and spot silver rose above $81 per ounce, each gaining over 6% intraday and approaching the record intraday high set on Monday, December 29. Silver futures recorded a 147% gain in 2025, their strongest annual performance in over forty years since the 1970s.
Chinese retail investors have played a pivotal role in the latest round of silver's surge. Reports indicate that when silver broke above $80 in the final week of 2025, queues at transaction counters in Shenzhen's Shuibei market—the country's largest gold and jewelry trading hub—grew even longer. Media reports quoted local merchants reflecting the premium出货 for silver in the Shuibei market, stating, "It hasn't been this hot in recent years," and "In late December, the price basically increased by one unit per day. Shuibei went crazy; everyone was grabbing silver." Another report cited precious metals retailer Fenny Zeng saying, "Even the 'aunties' have come," referring to the buyer demographic that previously helped China surpass India as the world's largest gold consumer in 2013. This time, their target is silver. On one hand, gold has become too expensive. Although silver has also surged dramatically, its price remains relatively affordable and sufficiently volatile, presenting an attractive combination for those who feel they missed the gold rally. Memories of the historic short squeeze in the London silver market last October remain fresh, and silver bulls have reasons for optimism, from declining Chinese inventories to potential U.S. import tariffs locking substantial supply in New York. As the world's largest silver consumer, China's new demand for silver as a precious metal—not just an industrial raw material—has propelled its retail buyers to the forefront of the year-end frenzy. During several days in late December, the rally became self-reinforcing: Chinese demand pushed global spot prices higher, which in turn attracted more local buyers tempted by popular investment content on social media. China's only pure silver fund even had to refuse new investors, concerned about a high-risk surge in the premium of its underlying assets.
Gold Futures Advance: Geopolitical Risks and Rate Cut Expectations Resonate
COMEX gold futures broke above $4,500 during early U.S. trading on Tuesday, gaining over 1.1% intraday, while spot gold rose above $4,490, advancing nearly 1%, both reaching their highest levels since the previous Monday. Gold prices accumulated gains exceeding 60% in 2025, marking their best annual performance since 1979.
Geopolitical tensions following the U.S. arrest of former Venezuelan President Maduro have boosted safe-haven demand. "Precious metals traders are currently seeing more risk than equity and bond traders are seeing," said Jim Wyckoff, Senior Analyst at Kitco Metals. "The weekend U.S. raid on Venezuela has triggered sustained safe-haven demand for gold and silver." Expectations for Federal Reserve rate cuts also provide support for gold prices. Market participants are focused on Friday's U.S. monthly jobs report, expecting 60,000 new jobs added in December, slightly below the previous 64,000. According to Refinitiv data, traders anticipate two Fed rate cuts this year. Richmond Fed President Tom Barkin stated that further interest rate adjustments must be "fine-tuned" to balance unemployment and inflation risks. Non-yielding gold typically benefits in a low-interest-rate environment. Carsten Fritsch of Commerzbank noted, "The U.S. military intervention in Venezuela over the weekend provided a tailwind, leading to enhanced safe-haven demand. Furthermore, the U.S. December Manufacturing ISM Index was disappointing, falling to a 14-month low." Morgan Stanley forecasts that gold prices could surge to $4,800 per ounce by the fourth quarter of 2026, benefiting from lower interest rates, a change in Fed leadership, and strong purchases by central banks and funds. Among precious metals, platinum and palladium outperformed both silver and gold on Tuesday, with spot platinum and palladium rising over 7% and 6% intraday, respectively.
