Written Commentary
SILVER
Silver futures traded flat overnight, weighed down by a stronger dollar and easing geopolitical tensions. Alongside China’s plan to increase its gold resources, the country also announced it plans to increase its gold and silver output by more than 5% by 2027. China will promote gold and silver recycling from a range of waste products including electrical and electronic components, the plan said, signaling the heightened demand for silver regarding its use in key technologies.
The long-term outlook for silver remains positive, driven by its essential role in semiconductors, solar panels, and other clean-energy technologies, sectors that continue to attract substantial global investment. That demand has remained robust despite broad headwinds faced in the last few months as a result of tariffs. Recent data highlights this trend, with China significantly increasing its wind and solar capacity in the first quarter of 2025, while solar power generation in Europe surged 30% year-over-year during the same period. Additionally, the structural supply-demand deficit remains favorable for silver.
COPPER
Copper futures are higher, supported by the ceasefire between Israel and Iran, which improved market sentiment. Data by the International Copper Study Group showed that the global refined copper market was in a 50,000 ton deficit in April, compared to a 12,000 ton surplus in March.
New home sales figures are due Wednesday, durable goods orders, the third estimate of US first quarter gross domestic product, weekly jobless claims, and pending home sales are due Thursday, followed by the final June University of Michigan consumer confidence survey Friday. The data will provide key insights to traders who look to gauge demand for copper in the US.
The LME has imposed new restrictions on holders of large positions in nearby contracts amid low inventory levels. LME took action after premiums for nearby copper contracts jumped to their highest levels since October 2022. The restriction requires holders of long positions which are greater than the total stocks levels to lend back to the market at a zero premium. Copper stocks in LME registered warehouses at 94,675 tons have dropped more than 65% since the middle of February and are at their lowest since August 2023 while copper inventories at the CME continue to break record highs. Traders and producers rush to get copper in the US before an expected tariff is levied. CME copper stocks as of today are at 204,316 tons, over a 100,000 ton increase since late March. Although, premiums for nearby copper contracts on the LME have fallen from multi-year highs on expectations that deliveries to LME-registered warehouses will ease tightness. More than 30,000 metric tons of copper are expected to be delivered from China to LME-registered warehouses in July, per a LME-registered warehousing firm.
GOLD
Gold futures are hovering near the session open, after falling yesterday on an improved risk appetite in the markets following the developments in the Israel-Iran ceasefire which appears to be holding. Focus now shifts to the US core personal consumption expenditures price index for May due Friday. This is the Federal Reserve’s preferred measure of inflation and could provide insights on the trajectory for interest rates. Fed Chair Powell told house lawmakers that the Fed is well positioned to wait on any interest rate adjustments until it sees further clarity on data on inflation and the impact from tariffs.
China aims to increase its gold resources by 5% to 10%, the industry ministry said on Monday regarding an implementation plan for 2025 to 2027. According to the plan, China will increase efforts in geological exploration and locating new gold resources while advancing technological and equipment issues associated with gold mining. The plan also called for deepening overseas investment cooperation, encouraging Chinese firms to sign long-term supply agreements with foreign mining companies to expand sources of primary mineral products including gold ore.
Strong central bank purchasing of gold will remain favorable for gold’s upside, a recent survey by the World Gold Council (WGC) revealed that central banks globally anticipate an increase in gold holdings. Central banks across the globe added a net 12 tons of gold to their reserves in April, albeit at a slower rate of accumulation than in previous months. Global central banks are on pace to purchase 1,000 metric tons of gold in 2025, marking the fourth consecutive year of substantial buying. Central banks averaged a 400-500 metric ton rate of accumulation in the previous decade, marking a substantial increase in investment. Several African central banks—including those of Namibia, Rwanda, Uganda, and Madagascar—have recently announced plans to either initiate or expand their gold reserves.
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