Silver Sees Investor Interest

SILVER

Silver futures slipped after hitting their highest level in 14 years on Wednesday, aided by concerns over the US tariff policy, signs of tightness in the spot market, and growing investor interest in alternatives to gold. Silver, both a precious and industrial metal, is up 36% this year, outperforming gold’s 31% growth and coming close to the key $40-per-ounce mark. Silver’s supply-demand fundamentals also remain favorable as the market is expected to remain in a deficit for the fifth straight year. Silver’s recent rally has improved its ratio with gold to the strongest level in seven months. It currently takes 87 ounces of silver to buy an ounce of gold, compared to 105 ounces in April.

Silver has found support from China in recent days, after the industry ministry pledged to stabilize growth in key sectors such as machinery, autos, and electrical equipment. The initiative aims to modernize production and is expected to boost demand for metals. The action plan also covers 10 major industries, including steel, nonferrous metals, petrochemicals, and construction materials.

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. South Korea’s exports rebounded in June largely on brisk semiconductor shipments, indicating the importance of and demand for the technology, despite challenges from higher US tariffs weighing on global trade. Recent data highlights this trend: China significantly increased 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.

GOLD

Gold futures extended losses from the previous session as optimism over an EU-US trade deal lifted markets and as the dollar continued to gain. However, markets are remaining cautious over the trade picture with South Korea and India, which are both still negotiating deals and could face steep tariffs as well.

Elevated inflation expectations and strong economic data have weighed on expectations over the number of Fed rate cuts this year. Fed Governor Christopher Waller last week reiterated his call for a rate cut later this month, despite data showing ongoing resilience in the US economy and other officials pushing to keep rates steady. President Trump will visit the Federal Reserve on Thursday, the White House said, which could intensify tensions between the administration and the central bank. The Fed’s policy meeting, scheduled for July 29-30, is expected to maintain interest rates within their current range. Investors anticipate the central bank will resume rate cuts in September.

Strong central bank demand will continue to support gold prices. A recent World Gold Council survey showed global central banks expect to increase their gold holdings and are on track to buy 1,000 metric tons of gold in 2025, well above the previous decade’s average of 400–500 tons. Several African nations, like Namibia, Rwanda, Uganda, and Madagascar, have also announced plans to expand their gold reserves.

COPPER

Copper futures are little changed after hitting a record high earlier in the session, expanding the premium over LME contracts to 31% from 29% on Wednesday. Sentiment was also lifted after Treasury Secretary Scott Bessent said he would soon meet top Chinese officials to extend the two countries’ trade truce, saying he expects the two economic powerhouses to work together on issues like manufacturing and oil. Chinese and US officials are set to meet in Stockholm next week.

Gains in copper could be limited over concerns of surpluses in the market. The global refined copper market showed a 97,000 metric ton surplus in May, compared with an 80,000 metric ton deficit in April, the International Copper Study Group (ICSG) said in its latest monthly bulletin. For the first 5 months of the year, the market was in a 272,000 metric ton surplus compared with a 273,000 metric ton surplus in the same period a year earlier, the ICSG said. The US is expected to begin using up the stockpile of copper it built ahead of the tariff announcement before importing from abroad, which could make demand look a bit weaker for that period of inventory rundown.

China’s industry ministry pledged to stabilize growth in key sectors such as machinery, autos, and electrical equipment. China’s GDP grew 5.2% during April-June, slightly lower than the 5.4% in the first quarter, with first-half 2025 GDP growth at 5.3%. Traders are focusing on how China will deal with overcapacity in its industrial sectors for further guidance on copper demand in the world’s largest copper consumer.

New home sales data will be published later today, followed by June durable goods figures on Friday. The data will be watched for signs of any economic fallout from President Trump’s tariffs, although recent data has shown that the economy is holding up relatively well with a limited impact on prices for the time being.

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