The mining sector slightly outperformed broader equity markets in May, despite continued softness in the gold sub-sector. The broader mining complex was supported by supply tightness in parts of the market, including aluminium, alongside continued demand for materials linked to electrification, energy security and power infrastructure investment tied to growing hyperscalers' CAPEX. The gold price fell by 0.6% in May to US$4,591/oz and trading in a wide US$4,370/oz to US$4,700/oz range as sentiment shifted with the U.S. dollar, Treasury yields and geopolitical developments. After initially holding firm following the Federal Reserve's decision to leave rates unchanged, bullion came under pressure from stronger U.S. economic data, firmer inflation and a more hawkish policy backdrop, before partially recovering later in the month as yields eased, the U.S. dollar weakened and hopes for a resolution to the Iran conflict improved. Copper rose by 4.6% to US$13,503 per tonne, supported by ongoing supply concerns, with Middle East disruption and China's sulfuric acid export restrictions tightening conditions for acid-leach copper production. Lithium also stood out, rising by 5.2% over the month as demand expectations were supported by growth in energy storage systems, particularly in China, where power market liberalisation has improved the economics of battery storage deployment. Bulk commodities posted modest losses, with iron ore (62% Fe) falling by 1.7% to around US$106 per tonne. The move reflected softer expectations for Chinese steel demand heading into off-season. Chinese manufacturing momentum slowed, with the Caixin Manufacturing PMI easing to 51.8 in May from 52.2 in April. Turning to companies, May marked the end of the first-quarter reporting season, with results broadly highlighting resilient fundamentals but also continued cost pressures across the sector.
