Written Commentary
Precious Metals
Gold: Gold prices are sharply lower as markets dim prospects of a December rate cut from the Fed. Markets continue to navigate uncertainty following the end to the US government shutdown earlier this week. A lack of fresh data, which markets were hoping would show signs of a slowing economy and prompt the Fed to cut rates, will likely not be released. The White House on Wednesday said that it was unlikely that the October jobs and consumer price index reports will be published as a result of the shutdown. As a result, investors have scaled back expectations for easing this year, with Fed Funds futures pricing a 53.6% probability for a December rate cut. However, a Reuters poll found that 80% of economists expect the Fed to cut rates by 25 bps next month. On the trade front, tariffs on Swiss goods will be lowered to 15% from 39%, the Swiss government announced earlier this morning.
Several Fed officials yesterday offered cautious remarks over their expectations for December; San Francisco Fed President Mary Daly emphasized uncertainty, saying it’s too early to commit to either a rate cut or no cut. Minneapolis Fed President Neel Kashkari highlighted that inflation remains elevated at around 3%, while the economy shows mixed signals. Meanwhile, St. Louis Fed President Alberto Musalem warned against aggressive easing, citing limited room before policy becomes overly accommodative. Today’s Fed speakers will be Kansas City President Schmid (voter, hawkish), Dallas President Logan (nonvoter, hawkish), and Atlanta President Bostic (nonvoter, hawkish). Signals from Fed officials over policy will have a large impact on price direction for gold given the lack of economic data until December’s meeting.
Meanwhile, continued central bank purchasing of gold will continue to provide long-term support to prices.
Silver: Silver futures fell over 4.5% to $50.70.
Platinum: Platinum is 2.8% lower at $1,569.
Base Metals
Copper: Copper prices moved lower, in line with a broader risk-off sentiment as markets reduced bets on a December rate cut out of the Fed. Benchmark three-month copper on the LME was down 1% to $10,850 earlier this morning after having slipped to as low as $10,822 during the session. Weak economic data from China fueled concerns over demand, weighing on prices further. China’s factory output and retail sales grew at their weakest pace in over a year in October, piling pressure on policymakers to increase stimulus as a trade war with the US and weak domestic demand heighten risks to growth.
Industrial output grew 4.9% year-over-year in October, per the National Bureau of Statistics (NBS), the weakest annual pace since August 2024, compared with a 6.5% rise in September. The figures came in below forecasts of a 5.5% increase. Retail sales grew 2.9% last month, recording their slowest pace since August last year, and a step down from a 3.0% rise in September. The data comes on the heels of disappointing loans data out of the country, which showed that outstanding total social financing, a measure of credit and liquidity in the economy, grew at its slowest pace in seven months in October. TSF rose 8.5% year-over-year in October, slowing from 8.7% a month prior. New loans by Chinese banks also fell sharply from the previous month as households and businesses remained wary of taking on more debt due to economic uncertainties and trade tensions with the US.
On the supply front, copper production in Peru, the world’s third-largest producer, ticked up 3.7% in September. Meanwhile, Codelco announced that production fell more than 7% in September. Production at BHP’s Escondida mine, which is the world’s largest copper mine, rose almost 17%. At Collahuasi, another major copper mine jointly run by Glencore and Anglo American AAL, output fell 26%. Ongoing disruptions around the globe should help support copper prices in the near term.
Zinc: Zinc dropped 0.9% to $3,028.
Aluminum: Aluminum fell 1.4% to $2,855.
Tin: Tin slid 0.6% to $37,000.
Lead: Lead slipped 0.1% to $2,076. LME data shows a large long holding of lead futures due to be settled or rolled over next week.
Nickel: Nickel sank 0.8% to $14,860.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
