Written Commentary
GOLD
December gold futures traded lower this morning despite expectations of Federal Reserve interest rate cuts this year and increasing geopolitical risks. Last week, Federal Reserve Chair Jerome Powell confirmed an interest rate cut will be announced in September, as inflation approaches the Fed’s 2.0% target.
San Francisco Federal Reserve Bank President Mary Daly said, “the time to adjust policy is upon us.” In addition, Richmond Federal Reserve Bank President Thomas Barkin said that while he still sees upside risks for inflation, he supports “dialing down” interest rates in response to the cooling labor market.
There is a 72% probability that the Federal Open Market Committee will reduce its funds rate by 25 basis points at its September 18 meeting, and there is a 28% probability that the FOMC will cut its key interest rate by 50 basis points in September. Financial futures markets are pricing in a total of 100 basis points in rate cuts from the Fed’s three remaining policy meetings in 2024.
SILVER
December silver futures are steady today after yesterday advancing to the highest level in six weeks as Federal Reserve Chair Jerome Powell reinforced hopes for an interest rate cut in September. Powell said in his Jackson Hole address last Friday that the time has come to adjust policy in light of rising risks to the labor market.
In addition, silver has received support from a safe-haven flow of funds, in light of escalating tensions in the Middle East. However, countering the bullish interest rate influence are prospects of a weakening global economy that may limit industrial demand for silver.
COPPER
December copper futures advanced to new six-week highs in the overnight trade due to ongoing supply risks. Several copper mines in Chile have not yet finalized employee wage agreements.
Federal Reserve Chair Jerome Powell bolstered hopes for a U.S. rate cut in September, signaling a move next month in light of rising risks to the labor market. Lower U.S. interest rates could boost global growth and demand for industrial metals.
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.
