Silver Lower, Remains Near Highs

SILVER

Silver futures are lower but found some support following May’s CPI data release, remaining near 13-year highs.

Silver is facing its fifth straight year of a structural supply-demand deficit, although the deficit is expected to narrow by 21% in 2025, according to the Silver Institute Industry Association. Silver is largely a by-product of the mining of other metals, meaning an increase in price will not directly drive new supply, which will maintain the deficit for longer.

The long-term outlook for silver remains positive, driven by its essential role in semiconductors, solar panels, and other clean-energy technologies, sectors that continue to attract substantial global investment. That demand has remained robust despite broad headwinds faced in the last few months as a result of tariffs. Recent data highlights this trend, with China significantly increasing its wind and solar capacity in the first quarter of 2025, while solar power generation in Europe surged 30% year-over-year during the same period.

COPPER

Copper futures fell as the outlook for demand in the world’s biggest consumer, China, dominated the mood. China’s imports of copper fell by 2.5% in May from April, per newly released data. The US and China said on Tuesday that they had reached an agreement to put the Geneva trade truce back on track and resolve China’s restrictions on rare earth metals and magnets. However, the agreement so far has failed to reassure markets as uncertainty remains regarding the larger tariff picture.

More copper inventories departed from LME-registered warehouses as traders took advantage of higher US prices due to expectations that US President Donald Trump will impose tariffs on the metal, following duties levied on aluminum and steel. Speculation over a potential tariff on copper continues to provide upward support for the metal. In February, President Trump ordered a probe into possible new tariffs on copper imports to rebuild US production of a metal critical to electric vehicles, military hardware, and semiconductors. Copper inventories at the CME continue to break record highs as traders and producers rush to get copper in the US before an expected tariff is levied. CME copper stocks as of today are at 190,935 tons, a ten thousand ton increase over last week’s reading.

Production delays at Teck Resources’ Chilean operations are expected to persist for about a month. Teck said it expects the mine, which accounts for about 10% of consolidated 2025 copper output, to produce 45,000 to 55,000 tons of the metal this year as previously forecasted. Mining activities at the Kamoa-Kakula project in the Democratic Republic of Congo are expected to resume later this month on the western side of the mine, although operations for the rest of the mine remain interrupted for the time being.

GOLD

Gold futures are higher, supported by at-large uncertainty surrounding the US-China trade picture and a weaker dollar.

US and Chinese officials announced late Tuesday that they have reached a framework agreement aimed at reviving the Geneva trade truce and addressing China’s restrictions on rare earth minerals and magnets. According to representatives from both nations, the framework would effectively reinstate the pact established in Switzerland last month, pending final approval from Presidents Trump and Xi. President Trump said on Wednesday the US deal with China is done, subject to final approval by him and President Xi, with Beijing to supply magnets and rare earth minerals while the US will allow Chinese students in its colleges and universities.

Annualized CPI inflation rose at a rate of 2.4% in May, just below the expected 2.5% and above the previous reading of 2.3%, showing inflation ticked slightly higher. The dollar fell steeply after the figures were announced. The readings reinforce the Fed’s wait-and-see approach to monetary policy, with the bank still expected to hold rates steady until its September meeting. Markets are expecting 50 bps of easing this year from the Fed. Long-term, strong central bank and investor demand remain in favor of gold’s upside.

Central banks across the globe added a net 12 tons of gold to their reserves in April, albeit at a slower rate of accumulation than in previous months. Global central banks are on pace to purchase 1,000 metric tons of gold in 2025, marking the fourth consecutive year of substantial buying as they continue to shift reserves away from dollar-denominated assets. Several African central banks—including those of Namibia, Rwanda, Uganda, and Madagascar—have recently announced plans to either initiate or expand their gold reserves.

Global gold-backed ETFs saw an outflow of -19 tons in May, per recent data from the World Gold Council. Gold’s near-term outlook will mostly depend on the evolution of US trade policy and signals from the Fed on their path regarding monetary policy.

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