Written Commentary
GOLD
December gold futures are higher in response to this morning’s mostly weaker than expected employment reports. The August ADP employment report showed an increase of only 99,000 when up 140,000 were expected. Employers in the U.S. announced 75,891 job cuts in August, which is the most in five months, according to Challenger, Gray & Christmas, Inc. This is up 193% from the job reductions announced in July. Jobless claims in the week ended August 31 were 227,000 when 230,000 were anticipated.
SILVER
December silver futures are higher and are now above the $29.00 per ounce level. Today’s strength in silver is due to increasing probabilities that the Federal Reserve will be forced to be more accommodative.
However, prospects of a U.S. recession are likely to limit price advances for silver as the demand outlook for industrial commodities becomes more in question. Silver has been a major beneficiary of the global trend towards renewable energy, especially from the solar industry, although global economic uncertainties have been weighing on the outlook for the renewable energy sector.
COPPER
December copper futures are higher today with some of the strength due to short covering after severe declines earlier this week in light of weak U.S. manufacturing and labor market data, which reignited fears of recession.
Support today is linked to increasing prospects of a Federal Reserve that is likely to be lowering interest rates at each of its three remaining policy meetings this year.
Traders are now awaiting tomorrow’s employment report that could influence the size of the Fed’s first interest rate reduction. Nonfarm payrolls in August are expected to be up 160,000, and the unemployment rate is anticipated to be 4.2%.
The bearish influence of prospects of weakening global demand for industrial commodities will probably outweigh the bullish influence of a Federal Reserve pivot to accommodation.
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