Written Commentary
SILVER
Metals futures in general, including September silver futures, quickly advanced when the on balance weaker than predicted U.S. personal income report was released.
Much of the pressure on silver futures this month prior to today’s up move can be linked to softening industrial demand. In addition, price pressures in June can be attributed to a strong U.S. dollar and firming U.S. Treasury yields. Also, hawkish comments from Federal Reserve officials have pressured prices. Earlier this week Federal Reserve Governor Michelle Bowman said inflation will remain elevated for some time, so it is not yet appropriate to begin cutting rates.
September silver futures on the daily chart, in light of higher prices today, are getting close to a major downtrend line that started two months ago.
GOLD
August gold futures advanced to near the $2350 per ounce level on Friday after the bullish on balance personal income report was released. Personal income in May increased 0.5% when a gain of 0.4% was expected, and the more market impactful personal consumption expenditures portion of the report were up 0.2% when up 0.3% was anticipated.
The probability of the Federal Open Market Committee lowering its fed funds rate at its September 18 meeting increased to 66% from the 64% probability before the personal income report was released. Despite many Federal Reserve officials predicting only one fed funds rate cut this year, and some predicting no rate reductions, financial futures markets are suggesting there will be two 25 basis point rate cuts in 2024.
In addition to expectations that the Federal Open Market committee will pivot to accommodation this year, analysts anticipate several other major central banks will become more accommodative this year, and some already have, which remains a bullish long term fundamental for gold prices.
COPPER
Yesterday September copper futures traded at the lowest level since April 16. In addition to a weaker near term demand outlook, some of the pressure on copper since mid-May has been linked to a rallying U.S. dollar and firming U.S. Treasury yields. Hawkish commentary from several Federal Reserve officials has also undermined prices.
Copper futures are higher today in light of the bullish on balance May personal income report, which puts pressure on the Federal Reserve to pivot to accommodation sooner rather than later.
September copper futures are getting close to testing a major downtrend line on the daily chart that started earlier this month.
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