Written Commentary
GOLD
Gold futures edged lower as a stronger dollar weighed on prices. Investors will be watching developments in the Middle East very closely, especially the risk of other countries being dragged into the conflict. President Trump cut short his trip to the G7 summit in Canada, citing escalating tensions in the Middle East, particularly over Iran’s nuclear ambitions. Trump stated he wanted a “real end” to the nuclear dispute with Iran and warned that “Iran cannot have a nuclear weapon.” He also directed the National Security Council to convene in the White House Situation Room upon his return, signaling heightened urgency amid rising conflict between Israel and Iran.
Investors will also be eyeing several central bank meetings this week, while the Fed is expected to hold rates steady. The Fed will also update its summary of economic projections, offering insights into the broader economic outlook and future path of the bank’s monetary policy. Markets are expecting a 25 bps rate cut to come in September.
A recent survey by the World Gold Council (WGC) reveals that central banks globally anticipate an increase in gold holdings as a share of their reserves over the next five years while expecting a decline in their US dollar reserves. Seventy-three central banks participated in the WGC’s survey, conducted between February 25 and May 20. Of those, 76% expect their gold holdings to increase over the next five years, up from 69% in last year’s survey. Meanwhile, nearly three-quarters of respondents anticipate a decline in central banks’ US dollar-denominated reserves, compared to 62% who held that view a year ago.
Central banks across the globe added a net 12 tons of gold to their reserves in April, albeit at a slower rate of accumulation than in previous months. Global central banks are on pace to purchase 1,000 metric tons of gold in 2025, marking the fourth consecutive year of substantial buying. Central banks averaged a 400-500 metric ton rate of accumulation in the previous decade, marking a substantial increase in investment. Several African central banks—including those of Namibia, Rwanda, Uganda, and Madagascar—have recently announced plans to either initiate or expand their gold reserves.
SILVER
Silver futures are higher, with July contracts up 1.7% as technical momentum, supported by a structural supply-demand deficit, has driven prices up. Silver is largely a by-product of the mining of other metals, meaning an increase in price will not directly drive new supply, which will maintain the deficit for longer.
The long-term outlook for silver remains positive, driven by its essential role in semiconductors, solar panels, and other clean-energy technologies, sectors that continue to attract substantial global investment. That demand has remained robust despite broad headwinds faced in the last few months as a result of tariffs. Recent data highlights this trend, with China significantly increasing its wind and solar capacity in the first quarter of 2025, while solar power generation in Europe surged 30% year-over-year during the same period.
COPPER
Copper futures slipped Tuesday as escalating tensions in the Middle East added to fears of dampening global economic growth and demand for industrial metals; in addition, a stronger dollar weighed on metals prices.
China, the world’s largest copper consumer, saw a mixed economic picture in recent data. Retail sales in May exceeded expectations, while industrial production came in below forecasts, suggesting uneven momentum in the post-pandemic recovery. Imports of copper into China also fell by 2.5% in May from April. The US and China said last week that they had reached an agreement to put the Geneva trade truce back on track and resolve China’s restrictions on rare earth metals and magnets. However, the agreement so far has failed to reassure markets as uncertainty remains regarding the larger tariff picture.
Copper inventories at the CME continue to break record highs as traders and producers rush to get copper in the US before an expected tariff is levied. CME copper stocks as of today are at 197,361 tons, a seven thousand ton increase over the last week.
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