Written Commentary
GOLD
Gold is trading higher and is holding above the $2,300 per ounce level. Traders are focusing on the Wednesday release of the Federal Open Market Committee meeting statement and Fed Chair Powell’s press conference. Traders will scrutinize tomorrow’s FOMC statement for clues on when the Fed might begin reducing interest rates. In addition, the May consumer price index report will be released on Wednesday, and on Thursday the May producer price index report will be released. Some traders are anticipating that the FOMC will change its “dot plot” to reflect an anticipated one or two interest rate cuts for this year. The likelihood of a rate reduction from the FOMC in September has increased to 53% after being at 49% yesterday.
There was some support for gold due to a survey conducted by the Official Monetary and Financial Institutions Forum, which showed that central banks planned to continue to increase their exposure to gold in the next 12-24 months.
The main trend for gold is higher.
SILVER
Silver prices are lower today and remain under $30.00 per ounce, retreating sharply from the 11-year high registered last month. Some of the recent selling pressure is linked to the U.S. economy that appears to be holding up relatively well, suggesting the Federal Reserve may be slower to pivot to accommodation.
In addition, recent lower prices for gold pressured other precious metals on news that a large Asian central bank abruptly stopped adding to its gold reserves after an 18-month streak of buying.
The longer term supply and demand situation remains supportive, since silver is headed into its fourth consecutive year of deficit in light of tightening supplies.
Major support for July silver on the daily chart comes in at $29.00.
COPPER
Copper futures extended their downturn to below $4.45 per pound, which is the lowest price in over one month and fully erasing May’s rally that took prices to a record high of near $5.20. Reports of a slowdown in demand accounts for recent price pressure.
Copper’s role in electrification through grid-scale energy and data-center infrastructure remains a supportive long term fundamental. This is being magnified by the difficulty of starting new projects for fresh ore supply.
There is major long-term support for July copper futures on the daily chart at the $4.40 area.
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