Copper Gains in Wake of Tariff Threats

COPPER

July copper futures edge out gains following President Trump’s tariff threats on Apple and the EU.

Eurozone and UK manufacturing PMI readings came in lower than expected, showing a contraction of manufacturing activity. Eurozone manufacturing PMI was 48.4 vs. expectations of 49.2, while the UK also posted a decline in manufacturing activity with a reading of 45.1 vs. expectations of 46.2. Meanwhile, in the US, May’s manufacturing PMI rose to 52.3, above expectations and rising well above April’s reading of 50.2.

Building permits fell less than expected, with a monthly change of -4% when economists were expecting a contraction of 4.7%. New home sales for April are due at 9:00 a.m. Central Time and are expected to show 694,000 sales, a drawdown from March’s 724,000.

In recent weeks, copper has flowed into the US from around the globe, causing CME copper stocks to rise over 81% since the beginning of the year and reach an eight-year high of 152,919 tons. The growing supplies of copper in the US have weighed on copper prices and shrunk the premium of CME copper over LME copper from $1,600 per metric ton to $600 per ton. According to U.S. government data, copper imports in March rose to more than 123,000 tons compared with around 58,000 tons in February and 76,000 in January.

Expectations of copper surpluses continue to hang over investors’ heads. The International Copper Study Group doubled down on forecasts of surpluses to reach 289,000 tons in 2025, noting that international trade policy is likely to weaken the global economic outlook and negatively impact copper demand. Abundant ore production from South America has exacerbated the oversupply situation; global mine production is expected to increase by 2.3% in 2025.

SILVER

Silver futures edged higher on safe-haven demand, although tariffs on iPhones and the EU could weigh on silver’s industrial demand. Half of the total demand for silver comes from the industrial sector, highlighting its unique position as both a safe-haven asset and industrial metal.

The long-term outlook for silver remains supportive, as silver is a key ingredient in semiconductors, solar panels, and other clean-energy technologies, which have seen high investments from governments across the globe. New data shows China’s wind and solar capacity has risen significantly in Q1 of 2025, while solar power output in Europe rose by 30% annually in the first quarter.

GOLD

June gold futures jumped higher Friday morning after President Trump threatened Apple with 25% tariffs on iPhones not made in the US and 50% tariffs on the EU due to a lack of trade progress between the two economies. The tariff threats fueled demand for safe-haven assets, supporting gold prices. Gold is on track to end the week roughly 3% higher, supported not only by trade concerns but also by growing unease over the US fiscal outlook.

Strong central bank demand and investor demand from China remain in favor of gold’s upside. The inflow into gold-backed ETFs in April was the largest since March 2022. China’s central bank added gold to its reserves in April for the sixth straight month. Chinese customs data showed gold imports surged 73% in April to an 11-month high of 127.5 metric tons, as Beijing expanded import quotas during a period of trade tensions with the US.

A lowering of interest rates by the Federal Reserve would be supportive of gold prices, which benefit in a lower interest-rate environment. Markets are anticipating two 25 bps rate cuts this year, with the first cut coming at the September meeting. Weakening economic data will raise pressure on the Fed to cut rates and also spur safe-haven demand for gold. The long-term outlook of a weakening dollar will also be supportive of gold prices.

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