Written Commentary
SILVER
September silver futures held near the $29.49 per ounce level and are now higher on the day, advancing for three consecutive sessions, as traders await today’s remarks from U.S. Federal Reserve Chair Jerome Powell to assess the monetary policy outlook. Futures have recently found support due to soft inflation numbers and weaker-than-expected manufacturing data, which boosted hopes that the U.S. central bank will lower interest rates one or two times this year.
Financial futures markets are predicting there is a 69% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 policy meeting. In addition, analysts anticipate several other major central banks will become more accommodative this year, and some already have, including the European Central Bank, the Swiss National Bank and the Bank of Canada.
September silver futures on the daily chart are close to a major downtrend line that started in May.
GOLD
August gold futures declined to near the $2327 per ounce level, as traders await U.S. economic reports and comments from Federal Reserve officials for hints on the Fed’s monetary policy path. Federal Reserve Chair Jerome Powell will speak at a European Central Bank forum at 8:30 central time. In addition, the Federal Reserve will release the minutes from the June 12 Federal Open Market Committee meeting on Wednesday. And on Friday will be the release of the nonfarm payrolls report.
Economic reports yesterday were supportive to the gold market coming in mostly weaker, suggesting the Federal Open Market Committee could lower its key interest rate sooner rather than later. The ISM manufacturing index declined in June, and a measure of prices paid by factories for inputs fell to a six-month low.
The long term fundamentals for gold are bullish on balance.
COPPER
There was some pressure on futures in the overnight trade although the September copper futures were able to hold at the $4.39 per pound level before a bounce to currently higher on the day. However, futures are still close to the lowest levels since mid-April due to ample inventories along with uncertainties about demand. Copper production in Chile is expected to increase as a result of increased mine operating efficiencies.
In addition, some of the recent pressure on copper prices is due to a rallying U.S. dollar and firming U.S. Treasury yields. Recent hawkish commentary from several Federal Reserve officials also undermined prices.
September copper futures are looking better technically. September copper futures on the daily chart appears to be rolling above a major downtrend line that started in mid-May.
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.
