US dollar fell on the week, metals generally rose, LME copper, aluminum, zinc and SHFE zinc each rose more than 1%, gold, silver and crude oil surged more than 5% on the week [Overnight Market]

SMM August 22 News:

Metal Markets:

Overnight, base metals in both China and overseas markets generally rose, with only SHFE tin falling by 0.1%. LME copper, LME aluminum, LME zinc, SHFE zinc, and SHFE nickel all rose over 1%, with LME copper up 1.02%, LME aluminum up 1.79%, LME zinc up 1.99%, SHFE zinc up 1.37%, and SHFE nickel up 1.04%; other metals rose within 1%. Alumina main contract rose 0.97%, and cast aluminum main contract rose 0.5%.

Overnight, ferrous metals collectively rose, with iron ore up 1.06% and hot-rolled coil up 1.03%. In coking coal and coke, coking coal rose 2.42% and coke rose 3.51%.

Overnight precious metals: Driven by the US dollar decline, COMEX gold rose 1.97% and COMEX silver rose 1.33%. On a weekly basis, COMEX gold rose 5.05% for a fifth consecutive weekly gain; COMEX silver rose 5.99% for a third consecutive weekly gain. In China, SHFE gold rose 2.36%, successfully breaking through the 1,000 yuan/g mark, and SHFE silver rose 2.15%. On a weekly basis, SHFE gold rose 4.4% and SHFE silver rose 6.47%.

As of 8:21 on August 22, overnight closing prices:

Macro Front

China:

[State Council Executive Meeting: Ensure maintenance and risk inspection of power equipment and facilities to guarantee safe and stable operation of the power system]Li Qiang presided over a State Council executive meeting. The meeting pointed out the need to strengthen pre-prevention and source control, ensure maintenance and risk inspection of power equipment and facilities, strictly manage quality in all stages of new project design, construction, and acceptance, to guarantee safe and stable operation of the power system. It is necessary to enhance emergency response capabilities for power accidents, continuously promote technological equipment upgrades, and improve the working pattern of all departments' joint management. (Jinshi Data APP)

[Ministry of Finance: Jan-Jul National General Public Budget Revenue Up 5.8% YoY]The latest news from the Ministry of Finance: From January to July this year, national general public budget revenue was 14.37 trillion yuan, up 5.8% YoY, an increase of 1.1 percentage points from H1. National general public budget expenditure maintained necessary intensity, with key areas well supported. From January to July, national general public budget expenditure was 16.29 trillion yuan, up 1.3% YoY. (CCTV News)

[State Administration for Market Regulation: Embodied AI robots, solid-state power batteries, etc. included in second phase of quality-strengthening chain research directions]The State Administration for Market Regulation held a special press conference on the morning of August 21 on "Promoting and Implementing Quality Strengthening Chains."Zhang Leilei, Deputy Director of the Quality Development Bureau of the State Administration for Market Regulation, stated at the meeting that, on the basis of the successful completion of the first-phase project, the administration has systematically planned and promoted the second phase of ten landmark projects for strengthening the quality chain. While continuing key areas such as high-end instruments, new energy, and industrial robots, it has expanded to new directions like embodied AI robots and solid-state power batteries, and added new key areas such as industrial machine tools, drones, and advanced synthetic biology manufacturing. When discussing the layout considerations for the second-phase projects, Zhang Leilei said that the second phase adheres to a "three batches" optimization approach: continuing a batch of key areas such as high-end instruments, new energy, and industrial robots to deepen efforts; expanding a batch of new directions such as embodied AI robots and solid-state power batteries to keep pace with industrial iteration and development; and adding a batch of new key areas such as industrial machine tools, drones, and advanced synthetic biology manufacturing to target industrial development hot spots. (Jin10 Data APP)

On the US dollar front:

As of overnight close, the US dollar index fell 0.02% to 98.85, down 0.79% for the week. TD Securities strategists noted in a report that additional guidance that Fed Chairman Warsh Kevin might provide at the Jackson Hole symposium next week could give investors "some relief." However, if Warsh continues to avoid providing forward guidance, it would be disappointing. They stated: "The market will look to Warsh for stability, but the risk of disappointment remains high." Strategists believe Warsh may try to improve communication, but forward guidance could still be lacking. "The market will seek clues about his reaction function and a reaffirmation of the Fed's ability to fight inflation." Strategists expect Warsh's speech to be incremental rather than disruptive. (Jin10 Data APP)

Separately, according to Bloomberg, economists have raised their forecasts for US economic growth in the third quarter, reflecting upward revisions to expectations for consumer spending and private investment, including capital spending in AI. According to Bloomberg's latest monthly survey of economists, GDP in the third quarter is now expected to grow at an annualized rate of 2.5%, up from the previous survey's forecast of 2%. Quarterly GDP forecasts through the end of 2027 have changed little, all within a narrow range of 2%-2.2%. Economists' inflation forecasts through the end of next year have also barely changed. The personal consumption expenditures price index excluding food and energy is expected to average 3.2% this year, then pull back to an average of 2.5% for all of 2027. With the so-called core PCE price indicator showing that inflation is slowing down, economists expect the Fed to keep interest rates unchanged until the end of July next year. (Bloomberg)

According to the CME's "FedWatch": the probability of the US Fed keeping interest rates unchanged by September is 59.9%, and the probability of a cumulative 25-bps rate hike is 40.1%. The probability of the Fed maintaining rates by October is 45.3%, of a cumulative 25-bps hike is 44.9%, and of a cumulative 50-bps hike is 9.8% (Jin Shi Data App)

On the macro front:

In the US next week, data to be released include: US ADP employment change for the week ending August 8, US June FHFA house price index month-on-month, US June S&P/CS 20-city not seasonally adjusted home price index year-on-year, US July new home sales annualized, US August Conference Board consumer confidence index, US August Richmond Fed manufacturing index, US July core PCE price index year-on-year, US July personal spending month-on-month, US Q2 real GDP annualized quarterly rate revised, US July core PCE price index month-on-month, US July durable goods orders month-on-month, US initial jobless claims for the week ending August 22, US August Chicago PMI, US 2026 non-farm payroll benchmark revision preliminary, US August University of Michigan consumer sentiment index final, US August one-year inflation expectations final, among others; in Germany, data include: Germany Q2 unadjusted GDP year-on-year final, Germany August IFO business climate index, Germany September Gfk consumer confidence index, Germany August seasonally adjusted unemployment change, Germany August seasonally adjusted unemployment rate; in France, data include: France August CPI month-on-month preliminary, France Q2 GDP year-on-year final; in the euro area, data include: euro area August industrial sentiment index, euro area August economic sentiment index; also to be released: Switzerland August ZEW investor confidence index, Switzerland August KOF economic leading indicator, Canada Q2 current account, Canada June GDP month-on-month, Australia July unadjusted CPI year-on-year, UK August CBI retail sales difference, Japan July unemployment rate.

In addition, China will open a new round of price adjustment window for refined oil products. The Reserve Bank of Australia will release the minutes of its August monetary policy meeting. 2027 FOMC voter and Richmond Fed President Barkin will deliver a speech on "The Mysterious US Economy," and also attend a panel discussion. The Jackson Hole Global Central Bank Conference will be held from August 27 to 29. Fed Chairman Wo Shi will give his first speech at the Jackson Hole Global Central Bank Conference, and Nvidia will release its earnings report after the US stock market closes on August 26.

Crude Oil:

Both crude oil futures fell overnight, with WTI down 0.22% and Brent down 0.19%. On a weekly basis, WTI rose 5.15% and Brent rose 5.74%, both posting a second consecutive weekly gain. Trump again signaled tensions, according to CCTV International News, he also said that Iran is very eager to reach an agreement, but he did not know if he really wanted to reach one, as in his view, "the Strait of Hormuz is now US territory, it is US territory." Market concerns about tighter crude supply in the coming weeks intensified.

Hedge funds sharply reduced their net short positions on European diesel to the lowest level in more than two years, while adding new bullish bets. This indicates that traders expect this historic fuel supply crisis to continue for some time. Profit margins from producing diesel and light diesel from crude oil have risen to near record highs. Diesel supply has tightened significantly due to reduced crude supply from the Middle East and a ban on most Russian diesel exports as Ukraine again stepped up attacks on refineries. With little sign of relief in the crisis, according to data from ICE Futures Europe, in the latest week, hedge funds cut their net short positions in gasoil by 309 lots, bringing them to the lowest level since July 2024. Meanwhile, hedge funds added 1,498 lots of net long positions, pushing total long open interest to the highest since the week before the US-Iran war began. On a net position basis, traders were the most bullish on gasoil in about six months. (Jin Shi Data APP)

In addition, Citigroup pointed out in a client note on Thursday thatthe US-Iran conflict and the Strait of Hormuz disruption have led to a cumulative global observable inventory destocking of about 519 million barrels from February to August 2026, with a daily average destocking of 3 million barrels.If this pace continues, OECD inventories could drop to the 70-day safety margin as early as the end of 2027—a critical level last touched during the second oil crisis in the 1970s and 1980s. Meanwhile, refined oil products such as diesel have shown signs of localized crisis, and market concerns over the current situation are intensifying.

Citi maintains its base case scenario: the U.S. and Iran will reach an agreement in Q4 this year, leading to the reopening of the Strait of Hormuz, with Brent crude oil expected to pull back to the $60 range by 2027. (Wall Street Journal)