Manufacturing Data Disappoints

COPPER

Copper futures are lower, as markets await comments from Powell on Friday. The Philadelphia Fed Manufacturing Index for August fell far below expectations with a reading of -0.3. Economists were expecting a reading of 6.8. July posted a reading of 15.9, signaling a sharp drawdown in manufacturing activity. In the survey, firms reported continued hiring, though at a slower pace. Most reported no change in staffing, and the average workweek lengthened. Input costs surged, with the prices paid index hitting its highest level since May 2022. Selling prices also rose, though more gradually. Businesses forecast a 4.1% increase in their own prices over the next year and expect wage growth to slow slightly. They also anticipate competitors will raise prices within three months. Despite current weakness, firms are optimistic about future activity, with strong expectations for new orders, shipments, and capital spending.

PMI data outside the US was relatively positive, Eurozone Composite PMI rose to 51.1 in August from 50.9 in July, beating expectations of 50.7. This marks the fastest pace of private sector expansion since May 2024. Growth was driven by a third consecutive expansion in services and a surprise rebound in manufacturing—the first in over three years. Markets will look to US PMI data out later this morning for further clues regarding demand for copper.

GOLD

Gold futures are little changed, likely to face resistance from a stronger dollar and higher bond yields.

Investors will look to Friday’s long-anticipated speech from Powell at  the Federal Reserve’s annual symposium for more cues on the path of US interest rates. A rate cut in September is already priced in, so any hawkish comments from Powell are likely to result in a sell-off in the Treasury market that could weigh on gold prices. Markets will also look for any clues regarding the extent of easing from the Fed, although tariff talk regarding economic uncertainty is likely to be a mainstay of the speech. Fed meeting minutes showed that policymakers remain concerned about both inflation and the labor market, with most voting members agreeing it is too early to lower interest rates.

On the geopolitical front, Russia said on Wednesday that attempts to address security concerns related to Ukraine without Moscow’s involvement are a “road to nowhere”, sounding a warning to the West as it begins exploring post-conflict security guarantees for Kyiv. President Trump said he had spoken with President Putin following his meeting with President Zelenskiy and several other European officials and was working to arrange a meeting between the two warring leaders. While this raised hopes for a potential peace deal, investors remained skeptical about an imminent breakthrough. Trump told Zelenskiy that the US would help guarantee Ukraine’s security in any deal to end the war with Russia. Trump ruled out deploying ground troops to Ukraine on Tuesday but suggested air support could be part of a deal to end Russia’s war in the region.

SILVER

Silver futures are higher, continuing a rally from the previous session as investors look ahead to Friday. Market participants are set to focus on Fed Chair Jerome Powell’s remarks, searching for indications of whether the central bank may push back against expectations for near-term monetary easing.

Silver prices remain well-supported by a persistent structural supply deficit and robust investor demand. Industrial usage continues to expand, particularly in energy-related sectors such as solar power, electric vehicles, and electronics. Notably, solar applications accounted for 17% of total silver demand last year—three times their share from a decade ago.

On the supply side, global mine output has declined by 7% since 2016, contributing to an estimated shortfall of 800 million ounces between 2021 and 2025. Investor interest remains strong, with silver-backed exchange-traded products (ETPs) seeing net inflows of 95 million ounces in the first half of 2025. Since 2019, over 1.1 billion ounces have been drawn from mobile inventories.

Despite recent headwinds from tariff-related developments, silver’s long-term outlook remains constructive. Its critical role in clean energy technologies, underscored by rising solar capacity in China and Europe and resilient semiconductor demand, continues to underpin its strategic importance.

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