Written Commentary
COPPER
September copper futures fell to the $4.3290 per pound level, hitting its lowest levels since mid-April. Much of the weakness is linked to signs of reduced demand from major consumers. Copper and other commodities have come under pressure from a stronger U.S. dollar and rising U.S. Treasury yields in light of hawkish remarks from Federal Reserve officials.
There has been some recovery in prices today in light of the on balance weaker than expected U.S economic reports, which put pressure on the Federal Reserve to lower its fed funds rate sooner.
SILVER
Precious metals have recently come under pressure due to the growing uncertainty on the outlook for interest rate cuts in the U.S. Recent pressure can be attributed to a strong U.S. dollar and firming U.S. Treasury yields. In addition, hawkish comments from Federal Reserve officials have pressured prices. Earlier this week Federal Reserve Governor Michelle Bowman said inflation will remain elevated for some time, so it is not yet appropriate to begin cutting rates.
Today September silver futures briefly dipped under the $29.00 per ounce level, near a six-week low, before rebounding. Traders continue to assess the outlook for demand, which appears to be slowing.
GOLD
August gold futures held the 2306 area, although still hovering near the lowest level in over two weeks, weighed down by a stronger U.S. dollar and higher U.S. Treasury yields. Traders are now focusing on Friday’s core PCE index data for clues as to when the Federal Open Market Committee may pivot to accommodation. Currently there is a 64% probability that the Federal Open Market Committee will lower its key interest rate at its September 18 policy meeting. In addition, traders expect another interest rate reduction before the end of the year.
Analysts anticipate several major central banks will become more accommodative this year, and some already have, which remains a bullish long term fundamental for gold prices.
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