Written Commentary
PRECIOUS METALS
Gold: August gold contracts are higher, trading at the upper-end of their overnight range following this morning’s GDP and PCE data and yesterday’s Fed hold. Wednesday’s Fed hold was interpreted as dovish by markets, as Warsh talked about a “period of watchful thinking” and gave little sense of urgency to hike, while only three policymakers voted for a hike in policy. The Q2 GDP estimate revealed a notable growth downshift driven by weaker government outlays and investment despite solid domestic private demand. Headline PCE -0.1% MoM to land at 3.7% YoY; core PCE +0.1% MoM at 3.3% YoY. Despite the “benign” reading, resilient consumer spending powered by wages, asset income, and benefits, point to sustained inflationary risks. Warsh reiterated that the market was pricing the risk of inflation, reacting in real-time. This raises some questions: is the market doing the Fed’s job for it? And has that reduced the optionality of the Fed and chances that it will raise rates this year? However, we believe this is a symptom of his preference for a lack of forward guidance, which has left Warsh with few to little words to describe the Fed’s thinking on inflation. In turn, the market took this as a dovish signal as it still feels a hangover from the Powell-led era.
Silver: September contracts are up 0.23 % to $58.22.
BASE METALS
Copper: Copper prices rose as falling inventories and a weaker dollar supported prices. Benchmark copper on the LME was up 1.4% to $13,767, breaking above its 50-day moving average near $13,600. Total LME warehouse inventory fell to 255,400 tons, the lowest since February with only around 100,000 tons of that being available inventory, sending the cash copper contract to a $25 premium over the three-month forward. SHFE inventory sits at less than 70,000 tons, the lowest since February 2024. Meanwhile, COMEX stocks are at a record 644,465 tons, almost double the LME and SHFE inventories combined, as copper continues to flow into the states ahead of possible import tariffs. In recent weeks, the copper market has been dictated by macro sentiment, though recent price action has suggested sentiment is now being driven more so by supply tightness. COMEX prices are up 2.45% to $6.46. In China, the Yangshan copper premium held near $112 a ton, easing from last week’s $115, indicating still elevated demand.
Zinc: Zinc rose 0.9% to $3,600.
Aluminum: Aluminum nudged up 0.2% to $3,185.
Tin: Tin added 0.6% to $54,200.
Lead: Lead edged down 0.1% to $1,898.
Nickel: Nickel nudged up 0.1% to $17,160.
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