The ASX 200 Materials index (XMJ) snapped back into positive territory on Thursday, closing 0.39% higher at 25,489.80 after US President Donald Trump indicated the American bombing campaign against Iran would not run “too long”, unwinding part of Wednesday’s risk-off move. The modest gain recovers only a fraction of the sector’s 4.4% weekly pullback, but reinforces a powerful medium-term uptrend that has left the index 9.6% higher over the past month and 43.14% higher over 12 months.
The recovery was broad-based across the metals complex, with all six main London Metal Exchange contracts rising in the latest session into the open. Gold climbed 0.9% to US$4,426 an ounce, with silver matching that gain to reach US$65.88 an ounce. Zinc added 0.9% to US$3,880 a tonne, extending a run that saw it log a fifth consecutive month of gains in August, while copper edged 0.1% higher to US$6.61 a pound, having notched a record closing high just last week. Aluminium and tin also advanced, with August strength across the complex underpinned by signs of supply tightness.
Gold Shares Lead
Gold producers led the index higher, with Greatland Resources adding 3.69%, Ramelius Resources up 3.7%, Newmont gained 2.71%, Evolution Mining advanced 2.6% and Northern Star closed 2.61% higher.
Among the diversified majors, the picture was also bullish, as BHP proved more of an outlier on the day. Rio Tinto finished 1.28% higher, Fortescue added 2.05% and Mineral Resources rose 1.92%, while BHP, the index’s largest constituent closed 1.35% lower, capping the scale of the sector’s advance.
Driving The Volatility
Thursday’s session marks the latest swing in what has become a headline-driven market. Airstrikes on Iranian targets and Tehran’s retaliation triggered a rush from risk assets earlier in the week as crude prices spiked, before Trump’s comments on the likely duration of the campaign steadied sentiment. The pattern mirrors recent episodes in which the sector has rebounded sharply on de-escalation hopes, only to retreat when the rhetoric hardens again.
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The backdrop remains complicated. Gold price have been extraordinarily volatile through the conflict, with the read through to bond yields and inflation also feeding on what is happening with oil. Supply dynamics are also in play. Zinc’s five-month winning streak and copper’s record close reflect genuine tightness in physical markets, while reports of official-sector selling, including Turkey’s disposal of almost 60 tonnes of gold, and discounted bullion in regional hubs such as Dubai have periodically capped rallies.
What Lay Ahead?
Technically, the sector’s position remains constructive despite the week’s turbulence. The XMJ hit highs of 26,969.60 within the past week and sits comfortably in a longer-term uptrend; Thursday’s close leaves it roughly 5.5% below that peak, a pullback rather than a breakdown. The resilience of copper at record levels and the persistence of supply tightness across base metals provide a fundamental pillar beneath the trade that is independent of geopolitics.
The scenarios from here diverge sharply. On the upside, a credible path to de-escalation would likely pull crude lower, ease pressure on bond yields and replicate the “oil down, gold and mining up” dynamic that has driven previous rebounds, with high-beta gold names and lithium stocks the likely leaders. Softer domestic inflation data and a more dovish repricing of the RBA’s rate path would add a second tailwind by lowering discount rates on long-duration mining cash flows.
For now, the materials sector remains a structurally bullish but tactically volatile trade: elevated gold and copper prices, tight base-metal supply and strong 12-month momentum argue for buying the dips, yet the index’s fate is tethered to a conflict narrative that can shift with a single statement.
