Written Commentary
Precious Metals
Gold: Gold futures are higher with December contracts rallying to over $3,750 a troy ounce, buoyed by expectations of further rate cuts out of the Fed ahead of speeches from several Fed officials this week and Friday’s PCE inflation data. Fed Chair Powell is set to deliver remarks on Tuesday. Markets are pricing in a 92% chance of a rate cut from the Fed in October, following last week’s cut that sent mixed signals across markets. Chair Jerome Powell struck a cautious tone on further easing, describing the move as a risk-management measure in response to a softening labor market.
Central bank purchasing of gold continues to provide underlying support to prices. 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 easing in US interest rates could offer further support.
Silver: Silver futures are higher, with spot silver rising above a 14-year high.
Platinum: October platinum contracts held steady around at $1,417.
BASE METALS
Copper: Benchmark three-month copper on the London Metal Exchange was little changed in official open-outcry trading at $9,995 a metric ton after edging up 0.5% on Friday as climbing inventories weighed against Chinese restocking. Copper inventories in warehouses certified by the Shanghai Futures Exchange climbed by 12.5% to the highest since early June at 105,814 tons, weekly data showed on Friday.
Chile’s state copper miner Codelco said its biggest mine, El Teniente, will take longer to return to full production than originally forecast after a deadly tunnel collapse in July. The fall in production will probably exceed the 33,000 tons originally forecast by the company. The mine is estimated to produce slightly more than 300,000 tons of copper this year, from 356,000 last year.
Zinc: Zinc added 1.4% to $2,929 a ton, owing to short-covering in China. Zinc inventories in warehouses registered with the London Metal Exchange have slumped in recent months, suggesting a tight market. Zinc stocks in LME warehouses have dropped 75% from mid-April to their lowest since May 2023. Meanwhile, cancelled warrants indicate another 16,450 tons are due to leave LME storage.
Aluminum: Aluminum dipped 0.3% to $2,663.50 a ton.
Tin: Tin gained 0.4% to $34,290.
Lead: Lead firmed by 0.4% to $2,004.
Nickel: Nickel slipped 0.2% to $15,240.
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