Written Commentary
PRECIOUS METALS
Gold: August gold contracts are higher, trading around $4,150 despite a rise in the dollar. The modest fall in Treasury yields and Fed rate hike expectations are favorable to the metal today. June’s payroll data, which came in well-below expectations at just 57k vs. forecasts of 114k. The unemployment rate fell to 4.2% with the labor force participation rate dropping to 61.5%. Elsewhere in the data April and May’s figures were revised lower by a combined 74k. Perhaps what the market was pricing over the last two months was significantly more robust than reality. Still, with no immediate signs of a downturn in the labor market, the Fed should still have the edge to focus on inflation. JP Morgan, said that demand for gold from key sectors would not be as strong as expected, with prices limited to $4,300/oz in the third quarter and $4,500 in the fourth quarter of this year. The Fed’s June meeting minutes are due on Wednesday and could give further insights into policymakers’ rate outlook.
Recent dynamics continue to show that gold is moderately correlated (negatively) with moves in the dollar and the 10-year TIPS yield. The failure for gold to hold recent gains highlights the current sentiment that macro factors are determining price direction.
Silver: July Silver is up 3.3% to $62.62.
BASE METALS
Copper: Copper prices broadly moved higher overnight. Benchmark three-month copper on the London Metal Exchange was little changed at $13,368, while COMEX copper prices are 0.75% higher at $6.22. Traders are still waiting for the outcome of the review into the possibility of tariffs on US imports of copper. The lack of an announcement by US officials to make a decision over potential tariffs on refined copper has in recent sessions pressured the metal. The Trump administration had originally set a June 30 deadline to announce potential tariffs on the metal. Still, tariff risk is still present and should not be discounted. US copper stocks sit at 606,626 tons have climbed nearly 600% since the initial launch of the investigation. Much of that stock has come from LME warehouses.
Zinc: Zinc rose 1.1% to $3,580.
Aluminum: Aluminum traded 0.7% higher at $3,112.
Tin: Tin advanced 0.7% to $53,000.
Lead: Lead slipped 0.2% to $1,887.
Nickel: Nickel fell 1.1% to $16,240.
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