Written Commentary
SILVER
May silver futures are lower despite yesterday’s on balance bullish interest rate comments from the Federal Open Market Committee.
Despite the economic uncertainty sparked by President Trump’s tariffs, silver continues to hover near a five-month high as trade-war concerns escalate. Lease rates have soared in light of declining stockpiles, particularly in London, as silver flows into the U.S. take advantage of higher prices. This shift has led to widening price disparities between major markets. Physical silver transfers, particularly from Canada and Mexico, are strained by tariffs, further tightening supply.
The long-term outlook for silver Is bullish in light of the supply-demand situation. Over the past four years, silver supply has consistently fallen short of meeting demand. Industrial applications account for the majority of demand, making up approximately 60% of total silver consumption.
GOLD
April gold futures advanced to a new record high today after yesterday the Federal Open Market Committee indicated that it may be lowering its fed funds rate two times this year. The Federal Reserve acknowledged rising economic uncertainty but still anticipates a 50 basis point rate reduction this year, which is consistent with its December forecast. This remains a supportive fundamental for non-yielding gold. In addition, the precious metal has been supported by a flight to quality flow of funds in light of ongoing geopolitical issues.
Additionally, concerns over global trade disputes persisted as new tariffs are set to take effect in April, following the U.S.’s 25% tariff on steel and aluminum imposed in February.
Also, there has been substantial central bank buying of gold.
COPPER
After advancing to new highs for the move, May copper futures are lower. Traders shifted shipments from Asia to the U.S. to capitalize on higher prices and avoid potential tariffs. Reports suggest that between 100,000 and 150,000 metric tons of refined copper are expected to reach the U.S. in the coming weeks, which could tighten supplies in China just as demand begins to increase in light of government efforts to stimulate consumption.
At the same time, inventories on both the London and Shanghai exchanges are falling. President Donald Trump recently threatened tariffs on copper imports, potentially exacerbating the country’s already strained smelting capacity. The U.S. currently imports nearly half of its copper and relies on just two major smelters for domestic production.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
