Written Commentary
GOLD
August gold futures are sharply higher today and advanced to an 8-day high, as investors digested Federal Reserve Chair Powell’s comments yesterday before a European Central Bank forum. Powell said the Federal Open Market Committee “has made quite a bit of progress” in getting back to price stability and the FOMC’s inflation objective of 2.0%. In addition, Powell said, “We want that progress to continue” and that the recent data “do suggest that we are getting back on a disinflationary path.”
Also supportive to gold prices were today’s smaller than expected ADP employment report and the larger than anticipated jobless claims number, which puts pressure on the FOMC to pivot to accommodation sooner rather than later.
Traders are now looking ahead to today’s release of the minutes from the FOMC’s June 12 policy meeting and Friday’s nonfarm payrolls report.
Underlying flight to quality support for gold remains in light of elevated tensions in the Middle East.
The long term fundamentals for gold are bullish on balance.
SILVER
September silver futures are sharply higher and hit the $30.90 per ounce level. Futures have broken out above a major downtrend line that started in May, extending a 5-day series of higher prices.
In addition, the metal also benefited from a pullback in the U.S. dollar and Treasury yields as Federal Reserve Chair Jerome Powell yesterday indicated recent economic data suggests a shift to a disinflationary trend, although he said the Federal Open Market Committee needs more confidence on the inflation situation before lowering interest rates.
There are increasing expectations of stronger demand for silver in renewable energy expansion.
Futures have recently found support due to soft inflation numbers and weaker-than-expected manufacturing data, which boosted hopes that the U.S. central bank will lower interest rates one or two times this year. Financial futures markets are predicting there is a 68% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 policy meeting.
The fundamentals and technical aspects are improving, which suggests follow-through strength for silver futures.
COPPER
September copper futures advanced and are near the $4.54 per pound level, increasing for the fourth straight session after Federal Reserve Chair Jerome Powell yesterday said that recent data suggests a shift to a disinflationary path. In addition, a weaker U.S. dollar supported copper prices today.
Increasing prospects of lower U.S. interest rates could increase global economic growth, supporting commodity prices.
September copper futures are looking better technically, now that September copper futures on the daily chart advanced above a major downtrend line that started in mid-May.
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.
