Gold Advances on a Weaker Dollar

GOLD

Gold futures are higher on a weaker dollar and rising geopolitical tensions in the Middle East, although it is on track for its first weekly loss in three weeks. Retail sales rebounded more than expected in June, while weekly initial jobless claims unexpectedly fell to a three-month low—both signaling resilience in the economy despite the impact of tariffs. Reflecting this strength, Fed Governor Adriana Kugler said it would be appropriate to keep rates steady for some time. However, San Francisco Fed President Mary Daly maintained her outlook for two rate cuts this year. Nevertheless, safe-haven demand for gold remained supported by ongoing trade uncertainties, with President Trump recently announcing plans to notify over 150 trade partners of their tariff rates.

Wednesday’s PPI inflation data saw no change in producer prices in June. Final demand goods prices rose 0.3%, the largest increase since February, with the jump in sector prices attributed to core goods, which are more sensitive to tariffs. The reading follows Tuesday’s data, which saw CPI inflation in June rise 0.3% in June after rising 0.1% in May, while annualized inflation ticked up to 2.7% on an annualized basis. The readings largely reinforce the Fed’s view that prices would rise later in the summer as the effects of tariffs make their way into the economy.

A World Gold Council report outlined that if current macro conditions hold, gold will likely move sideways with some possible upside. However, macro conditions rarely move in line with consensus forecasts. Should economic and financial conditions worsen and exacerbate stagflationary pressures, safe haven demand could increase and push gold 10%-15% higher.

Strong central bank demand continues to support gold prices, with a recent World Gold Council survey showing global central banks expect to increase their gold holdings. In 2025, central banks are on track to buy 1,000 metric tons—well above the previous decade’s average of 400–500 tons—with several African nations like Namibia, Rwanda, Uganda, and Madagascar planning to expand their reserves.

COPPER

Copper futures are higher, bringing US COMEX copper’s premium over LME copper to over $2,600 a ton. The gains were driven by positive economic data in the US, which showed housing starts beat expectations in June with 1.321 million new starts vs. an expected 1.290 million. The reading was also a 4.6% increase over May’s figure of 1.263 million, which declined 9.7% from April. Building permits also beat expectations, albeit narrowly, with 1.397 million new permits vs. an expected 1.390 million. The reading was largely in line with May’s figure of 1.394 million.

On the trade front, China’s commerce minister said on Friday that the country, the world’s biggest metals consumer, wants to bring its trade ties with the US back to a stable footing. Data out of China showed GDP growth met forecasts. China’s GDP grew 5.2% during April-June, slightly lower than the 5.4% in the first quarter, with first-half 2025 GDP growth at 5.3%. Fixed asset investment increased 2.8% year-on-year, according to China’s National Bureau of Statistics. Traders are turning their attention to how China will deal with overcapacity in its industrial sectors for further guidance on copper demand in the world’s largest copper consumer.

Copper previously scheduled to go to the US has been getting redirected after President Trump announced a 50% tariff on the metal beginning August 1. Copper prices outside the US could be weighed down near-term as large copper producers look to shift supplies elsewhere. Global copper traders are offering cargoes to Chinese buyers as they look to offload metal no longer able to reach the US before the copper tariff deadline. China is the world’s largest copper consumer, and the number of offers by overseas sellers has been picking up since late June and is now the highest in months, per a Chinese copper trader.

SILVER

Silver futures are higher; recent momentum behind silver and platinum has suggested that investors are turning to the white metals as pro-growth industrial alternatives to gold.

The long-term outlook for silver remains positive, driven by its essential role in semiconductors, solar panels, and other clean-energy technologies, sectors that continue to attract substantial global investment. That demand has remained robust despite broad headwinds faced in the last few months as a result of tariffs. South Korea’s exports rebounded in June largely on brisk semiconductor shipments, indicating the importance of and demand for the technology, despite challenges from higher US tariffs weighing on global trade. Recent data highlights this trend: China significantly increased its wind and solar capacity in the first quarter of 2025, while solar power generation in Europe surged 30% year-over-year during the same period. Additionally, the structural supply-demand deficit remains favorable for silver, with the market expected to remain in a deficit for the fifth straight year.

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