Written Commentary
SILVER
Silver futures are lower, although spot silver is holding firm above the key $40 level, which it first broke in late August after rallying from around $36.30. The rally has been driven by expectations of Fed rate cuts, especially following weak US labor data. Traders now await this week’s inflation reports, with markets fully pricing in a 25 bp rate cut later this month and some betting on a larger half-point move.
On the macro-front, China’s industrial momentum remains strong, with recent data showing solar cell exports surged over 70% in the first half of the year, fueled by robust photovoltaic demand from India. This follows a record-breaking installation of more than 93 gigawatts of solar capacity in May—a 300% year-over-year increase—driven by a rush to connect panels ahead of upcoming policy changes that will tighten grid access.
On the supply side, global silver mine production has declined by 7% since 2016, contributing to an estimated shortfall of 800 million ounces between 2021 and 2025. Investor appetite remains resilient, with silver-backed exchange-traded products (ETPs) attracting net inflows of 95 million ounces in the first half of 2025. Since 2019, over 1.1 billion ounces have been withdrawn from mobile inventories.
Silver prices continue to find support from a persistent structural supply deficit and strong investor demand. Industrial usage is expanding, 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—triple their share from a decade ago.
COPPER
Copper futures are higher ahead of key revisions to US labor data. In China, the yuan rose to a 10-month high against the USD, making dollar-priced metals more attractive for Chinese buyers. Freeport-McMoRan said it had temporarily halted mining in Indonesia’s Grasberg, one of the world’s largest copper mines, after a large flow of wet material blocked access to parts of the underground mine, restricting evacuation routes for seven workers. Bahlil Lahadalia, Indonesia’s mining minister, said on Tuesday his team would go to the area for checks and give updates once they have returned.
Chinese imports of unwrought copper fell to 425,000 tons in August from July but were higher year-over-year, while copper concentrate imports rose to a four-month high of 2.76 million tons. Despite weak factory activity indicated by the NBS PMI, demand signals remain strong, especially with the Yangshan copper premium hitting a three-month high. Beijing’s removal of subsidies for scrap copper recyclers has helped ore refiners improve margins. Looking ahead, refined copper imports are expected to stay robust in September due to favorable import conditions and subdued domestic output.
LME-registered copper stocks stood at 155,825 tons, with outflows of 2,125 tons across several locations and fresh cancellations of 8,500 tons in South Korea, LME daily data showed on Monday. Meanwhile, COMEX-registered warehouses in the US have continued to see inventory buildup, weighing on US futures prices.
GOLD
Gold futures continue their record advance, hitting fresh highs again as growing bets of interest rate cuts have helped fuel and maintain the rally in gold. A lower USD index has also lent support for gold, making the metal more attractive to foreign currency holders. Markets will eye revisions to US labor data, which could see payrolls from previous month’s figures fall by as much as a 800,000. Signs of a continued slowdown in labor market conditions will add to bets of rate cuts out of the Fed, which will would be supportive of gold. Focus now shifts to Producer Price Index data on Wednesday and the Consumer Price Index on Thursday, which could offer more clarity on the size of the Fed’s expected rate cut and expectations on the amount of easing the economy could see from the Fed this year. Fed funds futures have priced in a 100% chance of a rate cut in September, and a 79% chance of an additional 25 bp rate cut at the following meeting in October.
President Trump issued an executive order revising the US tariff system, notably exempting gold and bullion-related goods from import duties after market fears briefly disrupted gold trading. The order also reshuffled the tariff list—adding some goods to the exclusion list and imposing new tariffs on others—while introducing a framework for future tariff relief tied to reciprocal trade agreements.
Gold continues to attract strong demand from central banks amid geopolitical tensions in Ukraine and the Middle East. China extended its gold-buying streak to ten consecutive months in August, and official data now shows central bank gold holdings have surpassed US Treasury holdings for the first time since 1996. Poland’s central bank is also pushing to raise gold’s share of reserves from 20% to 30%. Despite elevated bullion prices, central bank buying remains resilient, providing a solid price floor for gold, especially as a potential easing in US interest rates could offer further support.
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