Written Commentary
GOLD
December gold futures advanced when this morning’s economic reports were released.
Expectations of further interest rate cuts are giving a modest boost to gold, despite higher U.S. Treasury yields and a rising U.S. dollar.
Gold tends to perform well in low-interest rate environments and during periods of economic and geopolitical uncertainty.
SILVER
December silver futures are higher today after lower prices earlier this week. Silver prices were weighed down following a briefing from China’s National Development and Reform Commission, which offered limited details on further stimulus measures. Silver’s industrial demand in China, particularly in the renewable energy sector for electrification technologies and solar panel production, remains a major factor influencing its price.
Price gains for silver today are due to increasing prospects that the Federal Reserve at the next policy meeting will reduce its key interest rate by 25 basis points. In addition, the flight to quality influence remains a supportive factor for silver.
COPPER
December copper futures are marginally higher on Thursday after hitting a two-week low in the previous session. There was selling pressure on copper earlier in the week after a briefing from China’s National Development and Reform Commission indicated there would be no additional stimulus, which disappointed investors. To support the capital markets, China’s central bank launched a swap facility initially valued at 500 billion yuan for financial institutions, including securities firms, fund companies, and insurers, which is aimed at facilitating stock purchases. Beijing had previously unveiled a comprehensive monetary stimulus package in response to economic data threatening its 5.0% gross domestic product growth target.
However, there is some renewed optimism that China, the top copper consuming country, will soon announce more stimulus measures. Analyst expectations are leaning towards a fiscal stimulus package from Beijing that could range between 2-3 trillion yuan.
Commodity prices, including copper, also faced pressure due to rising expectations of a less aggressive easing stance from the Federal Reserve following last week’s stronger-than-expected jobs report for September. In addition, recent strength in the U.S. dollar has adversely affected the price of copper.
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