Written Commentary
GOLD
Gold futures fell steeply in overnight trade as the US and China agreed to slash tariffs on each other for 90 days while trade discussions continue. US tariffs on Chinese goods will fall from 145% to 30%, while Chinese tariffs on US goods will fall to 10% from 125%. In addition, China has also agreed to suspend or cancel retaliatory, nontariff measures that could potentially include export restrictions on critical minerals. On the geopolitical front, India and Pakistan agreed on Saturday to a US-brokered cease-fire deal.
Gold-backed ETFs have remained supportive of gold, with strong demand resulting in inflows of 115.33 tons of gold globally. This is the largest inflow of gold since March 2022; Asia was in part responsible for the strong demand as the continent saw an inflow of 69.6 tons, while North America saw an inflow of 44.2 tons.
Friday’s Commitments of Traders Report showed managed money traders were net sellers of 3,558 contracts of gold for the week ending May 6, reducing their net long to 112,307.
SILVER
Silver futures fell in overnight trade as appetite for safe-haven demand waned following the breakthrough in US-China trade relations.
Despite the dampened safe-haven demand, the trade deal has boosted the long-term outlook for silver’s industrial demand, especially in the tech space where the US and China are major players. Silver is a key ingredient in semiconductors, solar panels, and other clean-energy technologies, which are all sectors that would greatly benefit from a continued drawdown in tariffs between the two countries that would support industrial production. Half of the total demand for silver comes from the industrial sector.
For silver, managed money traders were net sellers of 1,004 contracts, reducing their net long to 30,248.
COPPER
Copper futures are higher following the trade development between the US and China, with July copper trading above $4.66. The trade news sparked optimism in the industrial sector, which stands to benefit greatly from reduced tariffs that could spur manufacturing activity around the world and support copper demand. Factory activity across the globe has slumped in recent months as manufacturing PMIs in China, the US, and Europe have indicated a decline in activity. The International Copper Study Group forecasts copper surpluses to reach 289,000 tons in 2025, thanks in part to higher mine supply and rising smelting capacity across the globe.
Copper inventories at the Shanghai Futures Exchange fell again on Friday, although at a slower pace than previous weeks. Inventories fell by 10% since the end of April, reaching 80,705 tons last Friday, with the rate of decline slowing from a 23.5% drop last week.
Friday’s Commitments of Traders Report showed managed money traders were net buyers of 3,325 contracts of copper for the week ending May 6, increasing their net long to 23,338.
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