Markets Look for Clues from Powell

GOLD

Gold futures slipped in the overnight session with markets awaiting Fed Chair Powell’s speech later this morning for any insights into the Fed’s monetary policy path. A rate cut in September is largely priced in, so any hawkish comments from Powell are likely to result in a sell-off in the Treasury market that could weigh on gold prices. Markets will also look for any clues regarding the extent of easing from the Fed, although tariff talk regarding economic uncertainty is likely to be a mainstay of the speech. Fed meeting minutes showed that policymakers remain concerned about both inflation and the labor market, with most voting members agreeing it is too early to lower interest rates.

Several Fed officials gave little indication of support for a rate cut next month in remarks this past week, leaving markets focused on Powell’s speech for guidance amid signs of a cooling labor market, while inflation remains above target and vulnerable to tariff-related pressures. Investors still see the possibility of policy easing in September, with markets pricing in a 70% chance of a quarter-point cut. On the geopolitical front, hopes for a potential Russia-Ukraine peace deal dimmed, as reports said Russia launched its largest drone and missile attack on Ukraine in more than a month, and Moscow accused Kyiv of rejecting the prospect of a “lasting and fair settlement.” For the week, gold is poised to end little changed.

COPPER

Copper futures are little changed, as markets await comments from Powell. Dovish comments from Powell are likely to give the red a metal a boost.

The S&P Global US Composite PMI rose slightly to 55.4 in August, marking the strongest expansion pace of 2025 and the 31st straight month of growth. Services remained solid despite a slight dip, while manufacturing rebounded sharply. Hiring surged, backlogs grew, and input costs spiked due to tariffs, pushing selling prices higher. PMI data outside the US was relatively positive, Eurozone Composite PMI rose to 51.1 in August from 50.9 in July, beating expectations of 50.7. This marks the fastest pace of private sector expansion since May 2024. Growth was driven by a third consecutive expansion in services and a surprise rebound in manufacturing—the first in over three years.

The Philadelphia Fed Manufacturing Index for August fell far below expectations with a reading of -0.3. Economists were expecting a reading of 6.8. July posted a reading of 15.9, signaling a sharp drawdown in manufacturing activity. In the survey, firms reported continued hiring, though at a slower pace. Most reported no change in staffing, and the average workweek lengthened. Input costs surged, with the prices paid index hitting its highest level since May 2022. Selling prices also rose, though more gradually. Businesses forecast a 4.1% increase in their own prices over the next year and expect wage growth to slow slightly. They also anticipate competitors will raise prices within three months. Despite current weakness, firms are optimistic about future activity, with strong expectations for new orders, shipments, and capital spending.

SILVER

Silver futures are lower, tailing moves in gold. Market participants are set to focus on Fed Chair Jerome Powell’s remarks, searching for indications of whether the central bank may push back against expectations for near-term monetary easing.

Silver prices remain well-supported by a persistent structural supply deficit and robust investor demand. Industrial usage continues to expand, particularly in energy-related sectors such as solar power, electric vehicles, and electronics. Notably, solar applications accounted for 17% of total silver demand last year—three times their share from a decade ago.

On the supply side, global mine output has declined by 7% since 2016, contributing to an estimated shortfall of 800 million ounces between 2021 and 2025. Investor interest remains strong, with silver-backed exchange-traded products (ETPs) seeing net inflows of 95 million ounces in the first half of 2025. Since 2019, over 1.1 billion ounces have been drawn from mobile inventories.

Despite recent headwinds from tariff-related developments, silver’s long-term outlook remains constructive. Its critical role in clean energy technologies, underscored by rising solar capacity in China and Europe and resilient semiconductor demand, continues to underpin its strategic importance.

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