Written Commentary
COPPER
Copper futures are higher, getting some support from PCE inflation data that came in line with expectations as markets look forward to upcoming data.
Copper prices hit a five-month high Friday and are set to end the month near a 3% gain. Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 2.4% this week. However, factory activity in China likely contracted for a fifth straight month in August as manufacturers await further clarity on the trade situation with the US and due to a iffy job market and a property crisis that has blunted domestic demand. Traders await further clues on demand prospects in China, from surveys of purchasing managers in its manufacturing industry due Saturday evening.
Recent data from China has been mixed, industrial profits declined for a third straight month in July against a backdrop of weak demand and ongoing factory gate deflation. However, the declines were less than those seen in May and June. LME copper inventories added another 1,100 tons in data released Wednesday and have surged by 72% since late June to 156,100 tons. COMEX stocks have nearly tripled so far this year. The larger inventories sitting in the US are likely to offer resistance to further gains for US copper, unless demand outside the US is strong enough for an outflow out of the US. Top Chinese copper miner Zijin recently noted that copper demand in China remains robust on datacenters and electrification technologies, despite evidence of softer manufacturing activity per the latest official PMIs.
Chile’s mining regulator Sernageomin is raising its requirements for copper giant Codelco to restart areas of its flagship El Teniente mine after a deadly collapse. Codelco said on Monday it is working to gradually reopen the Andes Norte and Diamante sectors, after approvals from Sernageomin and the labor inspector’s office, but said its Recursos Norte and Andesita units remain closed. The state-run miner now expects 2025 production of 1.34-1.37 million metric tons of copper, down from a March estimate of 1.37-1.40 million tons, a trim of 30,000 tons on both ends. Elsewhere on the supply front, a US federal appeals court temporarily blocked a land transfer crucial for Rio Tinto and BHP to proceed with what could become one of the nation’s largest copper mines.
GOLD
Gold futures edged higher following July’s PCE inflation data that saw prices grow0.2% in July, while core prices rose 0.3%. The data being in line with expectations adds further weight to the August labor report next week for further clues as to how the Fed will move in September. Markets are pricing an 87% chance of a cut in September, up from 85% earlier in the morning before the release. Gold got a boost on Wednesday following comments from New York Fed Bank President John Williams that interest rates could fall at some point, but policymakers will need to gauge upcoming data. Gold is set for a monthly gain. Fed Governor Christopher Waller said late Thursday he favors starting rate reductions next month and “fully expects” further cuts to bring policy closer to a neutral level. Markets are now pricing in an 87% chance of a 25 basis-point cut in September.
On the tariff front, a federal appeals court is expected to rule soon on whether President Trump’s use of emergency powers to impose sweeping tariffs is legally valid. A lower court previously ruled that Trump lacked authority under the 1977 International Emergency Economic Powers Act (IEEPA), which doesn’t mention tariffs, and many analysts expect the appeals court to uphold that decision. If the court strikes down the tariffs, Trump will likely appeal to the Supreme Court, but the ruling could still force a major overhaul of his trade strategy. The Fed may also need to factor in the economic impact of a sudden tariff reversal when considering interest rate decisions this fall.
Trump’s decision to remove Cook is poised to set up a clash over how much power the president has at the central bank. Cook said late Monday night that Trump has no authority to fire her and that she would continue in her job. Cook filed a lawsuit this morning against the president. If the president is successful in his attempt to oust Cook, that would open the door for a Trump-appointee majority board that would have a dovish tilt.
SILVER
Silver futures are lower but on track for a solid monthly gain in August, mainly supported by a weaker dollar and lower Treasury yields.
On the macro-front, China’s industrial momentum remains strong, with recent data showing solar cell exports surged over 70% in the first half of the year, fueled by robust photovoltaic demand from India. This follows a record-breaking installation of more than 93 gigawatts of solar capacity in May—a 300% year-over-year increase—driven by a rush to connect panels ahead of upcoming policy changes that will tighten grid access.
On the supply side, global silver mine production has declined by 7% since 2016, contributing to an estimated shortfall of 800 million ounces between 2021 and 2025. Investor appetite remains resilient, with silver-backed exchange-traded products (ETPs) attracting net inflows of 95 million ounces in the first half of 2025. Since 2019, over 1.1 billion ounces have been withdrawn from mobile inventories.
Silver prices continue to find support from a persistent structural supply deficit and strong investor demand. Industrial usage is expanding, particularly in energy-related sectors such as solar power, electric vehicles, and electronics. Notably, solar applications accounted for 17% of total silver demand last year—triple their share from a decade ago.
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