Written Commentary
GOLD
Gold futures are lower, easing from all-time highs reached on Wednesday as investors locked in profits. Gold extended its record-breaking rally on Wednesday, climbing to an all-time high of $3,578.50 per ounce, driven by softer US jobs data that reinforced expectations of a Fed rate cut later this month. The surge was further supported by safe-haven demand amid growing concerns over the Fed’s independence regarding speculation around Governor Lisa Cook’s removal. Traders now see a 97% chance of a 25 bp rate cut at the September policy meeting, with attention turning to upcoming labor data for further confirmation. On the tariff front, a federal appeals court ruled on Friday that most of the president’s tariffs were illegal. The judges, however, allowed the tariffs to remain in place while the case moves through an appeals process. Treasury Secretary Scott Bessent said on Monday that he is confident that the Supreme Court will back President Trump’s use of emergency powers to implement tariffs.
Gold also continues to draw strong demand from central bank purchasing and geopolitical uncertainty regarding the situations in Ukraine and the Middle East. Central bank holdings of gold have topped holdings of US Treasurys for the first time since 1996. ISM services PMI data out of the US this week will also give an update as to how the economy has continued to weather under tariffs. Tuesday’s manufacturing PMI data showed a sixth straight month of contraction in activity. Nonfarm payroll data will be the decisive figure of data, potentially offering clues to the extent of easing the economy could see from the Fed this year.
COPPER
Copper futures are lower. Markets are now focused on upcoming US labor data, which could shape expectations for Fed policy. Meanwhile, concerns over demand in China and a lackluster peak season are weighing on sentiment, though supply-side disruptions like scrap copper rod mill shutdowns have offered some support.
Chile’s state-owned copper producer Codelco warned that national output may stagnate around 5.5 million tonnes annually due to mounting industry challenges. Chairman Máximo Pacheco cited deeper mining operations, declining ore grades, and rising costs as key obstacles—raising concerns that a prolonged plateau in production could tighten global supply just as demand surges from the energy transition.
China’s refined copper production is expected to decline by 4–5% in September, marking the first drop for this period since 2016. The fall is driven by new tax regulations that reduce profitability for scrap copper smelting and increased maintenance shutdowns at smelters. Despite the seasonal peak in demand, tight anode copper supply is capping output, which could support copper prices amid expectations of a US rate cut. While the dip may persist into October, analysts still anticipate record annual output.
ISM Manufacturing PMI data in the US showed activity remained in contractionary territory for the sixth straight month, with the index coming in at 48.7, which was an uptick from last month’s reading of 48.0. New orders, however, rose to 51.4, a strong rebound from July’s 47.1. Production saw a sharp drop in activity, falling into contractionary levels with a reading of 47.8, down from 51.4. Employment continued to fall, though at a slightly slower pace, while customers’ inventories and order backlogs shrank, pointing to weaker demand conditions. The gauge for input price inflation eased to 63.7 from 64.8 but remains at a historically elevated level. Survey respondents continued to point to tariffs as a drag on business conditions, citing higher costs, supply chain disruptions, and reduced competitiveness. Services activity on Thursday will also provide further clues on how the US economy is currently faring, especially after the implementation of hefty tariffs.
Purchasing managers surveys in China’s manufacturing sector showed an expansion of activity in August due to a rise in new orders, indicating healthier demand prospects for industrial metals. However, higher copper stocks outside of China have pointed to weaker demand elsewhere. LME-registered warehouses have seen copper inventories rise 75% since late June. 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.
SILVER
Silver futures fell sharply in the overnight session due to profit-taking ahead of Friday’s nonfarm payroll data. Interest rate cut expectations from the Fed have lifted the white metal recently. Safe-haven demand has also lent support amid concerns over Fed independence and renewed uncertainty surrounding President Trump’s tariffs. Geopolitical nerves heightened after President Xi Jinping warned the world faced a choice of “peace or war” and “dialogue or confrontation” during a military parade, while President Trump alleged on social media that China was conspiring against the US.
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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