Written Commentary
GOLD
Gold futures edged higher after PPI inflation data out of the US and comments from Fed Chair Jerome Powell, where he said he expects the US to be entering a period of more frequent supply shocks and volatile inflation.
Monthly PPI inflation data contracted 0.5%, and retail sales grew at 0.1%, a steep drop from the previous month’s figure of 1.7%.
Investors seem to be looking to the safe haven as comments from Powell and other Fed officials highlighted increased uncertainty surrounding the future of US economic growth and price stability. The economic data and comments from Powell and Jefferson seem to support the Fed’s wait-and-see approach to monetary policy.
SILVER
Silver futures edged lower, trading around $32.35, extending losses from the previous session and decoupling from gold.
Despite overall dampening safe-haven demand, the long-term outlook for silver’s industrial demand remains robust, mainly due to 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.
COPPER
Copper futures are lower after the release of US economic data. Despite easing trade tensions, global uncertainties surrounding trade have weighed on industrial sentiment as PMIs around the globe have fallen in the wake of tariffs.
The Philadelphia Fed manufacturing index for May contracted less than expected with a reading of -4.0 vs. expectations of -11.3 and a large uptick over the last reading of -26.4.
Expectations of copper surpluses continue to hang over investors’ heads. The International Copper Study Group doubled down on forecasts of surpluses to reach 289,000 tons in 2025, noting, “In view of uncertainty surrounding international trade policy that is likely to weaken the global economic outlook and negatively impact copper demand, usage growth rates have been revised down compared to the group’s September 2024 forecasts.” Abundant ore production from South America has exacerbated the oversupply situation; global mine production is expected to increase by 2.3% in 2025.
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