Written Commentary
GOLD
December gold futures are lower today although they remain on track for the biggest quarterly gain since early 2016. Last week’s advance to historical highs was linked to expectations that the Federal Reserve will implement further interest rate cuts. Prospect of additional accommodation, combined with dovish expectations from global central banks, have bolstered the appeal of holding non-yielding precious metals.
Also, gold has been supported by the increasing risk of a broader conflict in the Middle East, which further enhanced its appeal.
SILVER
December silver futures are lower for a second day after last week hitting the highest level since May 30. Precious metals have been receiving support due to expectations of additional accommodation from the Federal Reserve and other major central banks. The Federal Reserve announced a 50 basis point cut in its fed funds rate at its September 18 policy meeting. Since then, Federal Open Market Committee members have observed a deterioration of the labor situation and softening inflation, which may influence the Federal Reserve to ease monetary policy conditions further.
In addition, some of the recent gains are due to last week’s economic stimulus measures from a large silver consuming country in Asia.
COPPER
December copper futures advanced to their highest level since May 30. However, futures have come off of these highs and are currently lower on the session, and now may be forming a one-day reversal pattern to the downside on the daily chart. Much of the recent gains can be attributed to large stimulus measures from a major copper consuming country in Asia that improved the economic and demand outlook for the world’s largest copper consumer.
In addition, the Federal Reserve’s pivot to accommodation has contributed to price gains for industrial commodities, including copper.
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