A research report from China International Capital Corporation Limited (CICC) indicates that geopolitical tensions impact the non-ferrous metals sector primarily through three channels: tightening supply, suppressing demand, and reinforcing expectations of monetary tightening. On the supply side, disruptions to production capacity, energy availability, and logistics caused by geopolitical conflicts have led to supply constraints for non-ferrous metals, particularly aluminum. On the demand side, soaring inflation expectations driven by rising energy prices, along with global supply chain disruptions and uncertainty, are likely to dampen end-user demand and normal inventory replenishment activities. Regarding monetary policy, surging inflation expectations may prompt the Federal Reserve to further delay interest rate cuts or even consider tightening measures. This suggests that stagflation-driven market dynamics could push the non-ferrous metals sector into a phase of volatile prices and compressed valuations.

CICC reiterated its positive outlook on aluminum and gold. In the aluminum sector, three major supply-side risks are contributing to the tightening conditions. First, approximately 9% of global aluminum production capacity located in the Middle East may face disruptions due to power supply issues and potential damage from conflict. Second, the Middle East relies on imports for 68% of its alumina needs, and any closure of the Strait of Hormuz could severely disrupt the supply of raw materials for aluminum smelting. Third, constraints on LNG shipments have driven up European natural gas prices, raising the risk of further shutdowns of aluminum production capacity across the region. Additionally, according to Reuters, the government of Guinea is exploring measures to control bauxite exports, which could further exacerbate supply risks for aluminum raw materials.

In the gold market, although short-term geopolitical tensions and stagflation concerns have triggered panic selling, CICC believes that the correction in gold prices may enhance its investment appeal. The firm points to three factors supporting this view: as geopolitical tensions peak, panic-driven selling is expected to gradually subside; as economic slowdown resulting from U.S.-Iran-Israel tensions becomes more apparent, the Federal Reserve may face growing constraints on further monetary tightening, limiting the rise in U.S. real interest rates; regardless of how the conflict evolves or concludes, it is likely to accelerate global multipolarization and strain the U.S. dollar-dominated international monetary system, thereby increasing gold's strategic role in the ongoing de-dollarization trend.