Written Commentary
COPPER
Copper futures are higher, gaining support from a weaker dollar despite industrial production figures that showed a contraction in growth. Industrial production in the US fell 0.1% in July, down from an upwardly revised figure of 0.4% in June. Data from top metals consumer China was also gloomy, showing that China’s factory output growth slumped to an eight-month low in July while retail sales slowed sharply. Prices were supported, however, by hopes that the weak data would raise pressure on Chinese policymakers to roll out more stimulus to revive domestic demand. This follows data that showed that new yuan loans dropped unexpectedly in July. A sign of weak demand in the economy despite Beijing’s efforts to bolster domestic demand, as the level of loans contracted for the first time in 20 years. However, outstanding total social financing, used by analysts as a gauge of industrial metals demand, rose 9%, hitting the highest level since February 2024.
Chile’s state copper commission slashed its 2025 growth estimate for the country’s production, saying it expects an increase of 1.5% from last year, down from the 3% it had forecasted in May. The commission said the slide in forecast growth was due to a June decline in production at BHP’s Escondida mine, the largest copper deposit in the world, and at Collahuasi, which is jointly run by Anglo American and Glencore. It also said that the recent deadly collapse at Codelco’s El Teniente mine could pose a “significant risk of supply disruption.” Chile recently allowed mining to resume at Codelco’s El Teniente mine.
Traders are closely watching the large copper shipments that arrived in the US ahead of broad tariffs. Price spreads between London, New York, and Shanghai will guide metal flows, with US copper futures currently trading about $130/ton above LME prices, narrowing the incentive for exports. Any deviation beyond a $100–$200 spread between CME and LME is likely to trigger shifts in copper movement.
GOLD
Gold futures edged higher, gaining some support from a weaker dollar as the metal is set to end the week on a decline after Thursday’s PPI data dimmed hopes for extended interest rate cuts from the Fed. The sharp rise in PPI inflation is likely to complicate the Federal Reserve’s rate trajectory and reduce the scope for easing this year. Core PPI, which excludes food and energy prices, rose 0.9% in July, marking the largest monthly increase in over three years and pushing the year-over-year rate to 3.7%. If CPI inflation begins to reflect similar trends, businesses may adjust prices upward, reinforcing inflation persistence. With core services inflation still elevated, the Fed may be compelled to maintain its restrictive stance for longer, supporting the ‘higher-for-longer’ narrative, contingent on labor market developments.
On the geopolitical front, President Trump is meeting Russian President Vladimir Putin in Alaska today to discuss the war in Ukraine. Trump warned of “severe consequences” if Putin does not agree to peace in Ukraine but indicated that a follow-up meeting including Ukraine’s leader could quickly follow.
SILVER
Silver futures are lower, pressured by the hotter-than-expected PPI inflation. Silver prices remain supported by a persistent structural supply deficit and strong investor interest. Industrial demand, especially from energy sectors like solar power, EVs, and electronics, continues to grow, with solar alone making up 17% of total demand last year, triple its share a decade ago. Global mine supply has dropped 7% since 2016, contributing to an estimated 800 million oz. shortfall from 2021 to 2025. Investor demand through silver-backed ETPs also plays a major role, with 95 million oz. in net inflows in H1 2025 and over 1.1 billion oz. drawn from mobile inventory since 2019. Despite recent tariff-related headwinds, silver’s long-term outlook remains strong due to its critical role in clean energy technologies, as evidenced by rising solar capacity in China and Europe and resilient semiconductor demand.
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