Written Commentary
SILVER
July silver futures fell in overnight trade as optimism over a potential trade deal with China weakened safe haven demand. Silver posted a one-week high Tuesday as a weaker US dollar was bullish for the safe-haven and industrial metal.
Long-term demand for silver remains strong as the metal is a key ingredient in solar panels, semiconductors, and other clean-energy technologies. Global silver supply is set to grow steadily, with mine production expected to reach a seven-year high in 2025, reflecting increased output from Canada, Peru, Russia, and the US, alongside strong growth of supplies from silver recycling. Half of the total demand for silver comes from the industrial sector.
Investors are keeping their attention on today’s Fed meeting for guidance on the path for future rate cuts. A more accommodative Fed would provide support for silver prices.
COPPER
July copper futures were down almost 2% in overnight trade, reversing gains made on Tuesday.
Factory activity across the globe has slumped in recent months as manufacturing PMIs in China, the US, and Europe have indicated a decline in activity. Expectations of copper surpluses are worrying investors, as a Reuters survey published last week shows a copper market surplus of more than 60,000 tons, while The International Copper Study Group forecasts surpluses to reach 289,000 tons in 2025. These surpluses can largely be attributed to higher mine supply and rising smelting capacity; mine production is expected to increase by 2.3% in 2025.
Copper prices have recently been supported by strong buying from China. China is the world’s biggest copper market and has been experiencing a tight supply market due to high demand. Chinese tariffs on US imports are reducing the flow of scrap copper to the country and causing producers to buy a greater portion of pricier refined copper instead. This shift is driving a rapid decline in copper inventories at the Shanghai Futures Exchange, with SHFE stocks dropping nearly 70% since late February. Copper prices declined even after China’s central bank announced new stimulus measures aimed at supporting growth in the economy in the face of slowing industrial demand.
GOLD
Gold futures fell in overnight trade as news broke that Treasury Secretary Scott Bessent will meet China’s top economic official in Switzerland this week. June gold futures rose to two-week highs Tuesday, supported by a weaker US dollar, concerns over US tariffs, and post-holiday buying from China.
Central bank purchasing of gold has also supported gold prices, as central banks across the globe are looking to limit their exposure away from US assets. In recent days, the dollar has weakened over investors growing impatient over yet-to-materialize US trade deals, making gold less expensive for foreign buyers and thus attracting demand.
Investors now await today’s Federal Reserve policy decision and speeches from several Fed officials, in which the outlook from the Fed will be closely watched for any change in policy tone. The Fed is widely expected to hold rates steady.
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