Written Commentary
SILVER
July silver futures continued lower as safe-haven demand weakened, and a stronger dollar pressured prices downward.
Long-term demand for silver remains strong as the metal is a key ingredient in solar panels, semiconductors, and other clean-energy technologies. While record-high industrial fabrication and global photovoltaic production are set to support demand, slowing Chinese solar production and recession fears could contribute to potential downside risks. In the long term, positive trade news will be supportive of industrial manufacturing and provide support for silver prices. Half of the total demand for silver comes from the industrial sector.
COPPER
Copper futures fell to a five-day low in overnight trade as volatility continues to grip the market.
High US copper imports are expected to draw down stocks from outside the US for the remainder of the second quarter as exporters race to get copper in the country before potential levies are placed on the metal. The potential tariffs have disrupted global copper flows and created a supply bottleneck outside of the US. Copper stocks at the Shanghai Futures Exchange have dropped nearly 70% since late February, as China has placed tariffs on scrap copper from the US, causing producers to switch to the pricier refined copper instead.
A U.S. federal judge said he will rule by May 14 on whether to block the Trump administration from transferring Arizona land to Rio Tinto to build a major copper mine opposed by Native Americans. The site is a sacred Apache worship ground and sits atop 40 billion pounds of copper.
GOLD
Gold futures fell after President Trump announced news of a potential trade deal with the United Kingdom, easing trade worries and dampening safe-haven demand. Moreover, a strengthening dollar contributed to gold’s decline. Positive trade news from US-China negotiations and further developments with the UK have the potential to limit safe-haven demand upside.
The Fed maintained its benchmark interest rate while warning that risks of higher unemployment and inflation have risen, clouding the US economic outlook.
Strong central bank purchasing of gold continues to remain as an underlying support to gold prices. China’s central bank added gold to its reserves in April for the sixth straight month, per official data. China’s gold reserves rose to 73.77 million troy ounces by the end of April, up from 73.7 million troy ounces in March. Its reserves were valued at $243.59 billion at the end of last month, up from $229.6 billion at the end of March, the central bank said.
On the geopolitical front, India struck Pakistan and Pakistani Kashmir on Wednesday over the terrorist attack in Kashmir last month. Pakistan vowed to retaliate and said it shot down five Indian aircraft in the worst clash in more than two decades between the nuclear-armed neighbors.
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