Written Commentary
COPPER
July copper futures are down nearly two percent, trading under $4.60 as investors grow weary over the industrial demand outlook across the globe, with recent tariffs set to hurt industrial and manufacturing demand.
Factory activity across the globe has slumped in recent months as manufacturing PMIs in China, the US, and Europe have indicated a decline in activity. The International Copper Study Group forecasts copper surpluses to reach 289,000 tons in 2025, thanks in part to higher mine supply and rising smelting capacity across the globe.
US housing starts were in line with expectations of 1.36 million starts on an annualized basis, an increase over the previous reading of 1.339. Despite the supportive reading, building permits fell 4.7% month-over-month for April as the construction industry braces for tariff headwinds.
Copper inventories at the Shanghai Futures Exchange rose sharply this week, bucking a three-week trend of large withdrawals that led to worries of shortages in the Chinese market as copper has flowed into the US. Inventories jumped 34% to 108,142 tons on Friday, almost 30,000 tons more than last week’s level of 80,705 tons. This is the first weekly net gain of inventories since mid-March.
GOLD
June gold futures are down with weekly losses nearing 3% as easing global trade tensions have dampened safe-haven demand and an overall higher dollar has limited the metal’s upside.
Despite the recent headwinds, gold remains a favored asset, and the dip in price could be attractive to some investors as the long-term demand picture for gold remains strong. Continued central bank purchasing and gold-backed ETFs remain supportive of the metal. Gold-backed ETFs saw inflows of over 115 tons of gold globally in April, the largest inflow since March 2022.
May and June will likely be where inflation pressures from tariffs become more evident in the economy. Markets are currently anticipating two 25 basis-point cuts this year, with the first cut coming in September. Gold benefits from a lower interest rate environment, and cuts from the Federal Reserve would be supportive of gold prices.
June gold futures are trading around $3,175.
SILVER
Silver futures fell in overnight trade as appetite for safe-haven demand waned following the breakthrough in US-China trade relations.
The agreement supported the long-term prospects for silver’s industrial demand, especially in the renewable energy sector, where both the US and China are key players. Silver is a key ingredient in semiconductors, solar panels, and other clean-energy technologies, which are all sectors that would greatly benefit from a continued drawdown in tariffs between the two countries that would support industrial production. Half of the total demand for silver comes from the industrial sector.
While the agreement has eased some concerns over a drawn-out trade war, uncertainty remains over what will happen over the coming weeks as negotiations continue and as more economic data is published regarding industrial demand and activity.
July silver futures are trading just above $32.
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.
