Miners up 5%, banks down 4% as the great rotation starts

The rise of US16c a pound by copper to US$5.14/lb took the world’s most important industrial metal to within touching distance of the all-time high of US$5.23/lb reached in late March.

Other metals, including iron ore, tin and even lithium, also moved higher thanks to renewed demand from China, an expectation that U.S. interest rates will soon fall and a brighter outlook for the global economy next year.

But the most important news for Australian investors is that the bank boom, which has sucked capital out of the resources sector, appears to have reached a peak, which is best seen in the 5% rise this week in the ASX metals and mining index versus a 4% fall in the ASX banking index.

The bank sell-off knocked $10 off the price of Commonwealth Bank shares, offset by $1.76 being added to the price of BHP which benefited from the higher copper price and a US$2/tonne increase in the price of iron ore, which rose to US$95 a tonne.

Overall, market sentiment was aided by news that the U.S. has made another adjustment to its aggressive tariff policies by striking a deal with Vietnam with other deals expected to follow, boosting confidence that the U.S. economy could outperform next year.

Gold, always a useful measure of the global mood, rose by US$50 an ounce to trade around US$3347/oz, potentially heading up to US$3900/oz towards the end of the year, a price Macquarie Bank sees as the metal’s last hurrah in the current cycle.

Other banks are not as confident as Macquarie. Citi sees gold sitting around US$3300/oz for the next three months, before a fall later this year as it weakens under the pressure of declining investment demand.

“Our work suggests that gold returns to between US$2500/oz-and-US$2700/oz by the middle of next year and we strongly recommend that gold producers take insurance against the downside risk in prices,” Citi said.

It’s a different story in copper where the price is rising thanks to a combination of improving demand and evidence of a squeeze in supply pointing to continued strength in the price and a possible return to a time when copper tips top US$6/lb.

Winners in the copper circle this week included the three major diversified miners. BHP, as mentioned earlier, performed strongly with a rise of $1.86 (5%) to $38.76. Rio Tinto was up $3.78 (3.5%) $109.64, and South32 rose by 23c (8%) to $3.20.

Among the specialist copper stocks Sandfire rose by 8c to $11.40, perhaps heading back to its all-time high of $11.88 reached in January.

Canadian focused Capstone Copper added 25c to $9.78, but could go as high as $11.50, according to stockbroker Morgans. 29Metals added 3c to 30c. Microcap Megado Minerals rose by 1c (47%) to 2.5c, and Loyal Metals rose by 3.5c to 23c after announcing the acquisition of the Highway Reward copper/gold mine in Queensland.

Overall, the Australian market had a mixed first week of the new financial year, rising initially but fading yesterday to close down 0.5% as measured by the all ordinaries index, a fall which reflected the sell-down in bank stocks.

The resources outlook, according to UBS, is for a “soft patch” in metals demand as the negative effects of higher U.S. tariffs weigh on markets but once that is absorbed, stronger demand and higher prices can be expected.

“We lift our (calendar) 2025 industrial metal price forecasts by around 5%, reversing a more cautious demand outlook as maximum tariff uncertainty subsides,” UBS said.

“We remain constructive on a 12-month view on commodities with supportive supply side dynamics. We remain positive for gold and see limited downside for coal and nickel. We remain cautious for lithium and iron ore.”

Macquarie’s most preferred commodities over the next three months are gold, cobalt, oil and gas. The least preferred commodities over the next three months are thermal coal and industrial metals which are vulnerable to a pull back once the tariff drag kicks in during the current six months.

In the gold sector the most closely followed stock was Greatland thanks to a share register which is top heavy with millionaires (and billionaires) thanks to its close association with Andrew and Nicola Forrest of Fortescue fame, and its plans to expand the already world-class Telfer project in WA.

After a few days of selling since joining the Australian market (from its original listing in London) Greatland bottomed at $7 on Tuesday before moving up to $7.09, possibly heading to the $7.80 price forecast from Macquarie or the $8 from Citi.

News flow in the gold sector accelerated during the week as explorers kicked off the new financial year with a flood of reports, including:

• Uvre, which is assembling a large portfolio of gold assets in New Zealand, adding 2.1c to 12c, but that was after reaching a 12-month high of 14c on Wednesday.

• Sun Silver rose by 2c to 81c after reporting an exceptional 70m intersection and a separate, smaller intersection grading 10,548 grams of gold equivalent per tonne (gold + silver) from drilling at its Maverick Springs project in the U.S.

• Santana Minerals edged up by 1c to 55c after releasing an updated pre-feasibility study for its Bendigo-Ophir gold project in New Zealand with Bell Potter seeing the stock rising to $1.18 and CG Capital Markets setting a target of $1.40.

• Minerals 260 was steady at 12c but scored a rave review from Morgans which described its consolidation of assets in WA’s goldfields as a “Coolgardie Cracker”, forecasting a future share price of 26c.

• Trek Metals added 1.4c to 11c after reporting the discovery of a gold nugget field at its undrilled Turner Prospect near Christmas Creek in WA.

• WIA Gold rose by 2.5c to 26c after reporting the intersection of high grade gold at its Kokoseb project in Namibia, including 50m at 12g/t from a depth of 188m.

• Ausgold gained 3c to 69c after the release of an encouraging definitive feasibility study for its Katanning project in WA.

• West African rose by 9c to $2.35 after reporting the first gold pour at its Kiaka project on Burkina Faso, and

• Saturn Metals added 3c to 41c after reporting high quality drill results from its Apollo Hill project in WA including 11m at 6.29g/t from a depth of 38m.

Uranium stocks ran out of puff after as burst of interest last month. Boss Energy lost 44c to $4.20. Paladin was 28c weaker at $7.73 and Bannerman slipped 4c lower to $3.22.

Iron ore stocks rose with the higher price of their mineral with gains by BHP and Rio Tinto mentioned earlier setting the pace, followed by Fortescue which added 97c to $16.15 and Mineral Resources which rose by $2.80 to $24.10.

Opinions about Mineral Resources remain as divided as ever with Citi weighing in during the week with a lowball price forecast of $20, a country mile under Morgan Stanley’s optimistic (and consistent) $35 target.

Other news and market moves this week included:

• New World Resources slipping by 0.2c to 6.4c after Canadian private equity firm Kinterra started a legal fight with an appeal to the Takeover Panel alleging NWR and rival bidder Central Asia Metals had impeded a competitive auction process.

• WA Resources continued its stellar run, adding another 83c to $16.58 after reporting an updated mineral resource estimate for its Luni niobium prospect in central Australia.

• Peak Minerals rose by 1.5c (55%) to 4.2c after reporting a thick zone of high-grade rutile at its Minta project in Cameroon.

• Sunrise Energy Metals added 23c to $1.18 after raising $7.5 million to accelerate work at its Syerston scandium project in NSW, and

• Pilbara Minerals led a stronger lithium sector with a rise of 14c to $1.49 thanks to hints of a sustainable lithium price recovery.