Written Commentary
GOLD
April gold futures were higher in the overnight trade but more recently have come under pressure as the U.S. dollar index firms. There are reports that China’s gold imports from Hong Kong declined 44.8% in January compared to December, and hit the lowest level since April 2022. In spite of this, gold futures remained close to record highs that were hit on Monday as concerns over President Donald Trump’s tariff policies resulted in a flow of funds into safe haven assets such as gold.
Underlying support remains due to most major central banks on a course of easier credit conditions, not the Bank of Japan, which reduces the cost of carry, encouraging the holding of gold investments. The U.S. Federal Reserve remains on a path of lowering its key rate at its June the policy meeting.
Gold also continued to benefit from support from bullion-backed exchange-traded funds, with net inflows last week hitting the highest level since 2022.
COPPER
May copper futures advanced almost 4% today, reaching their highest point in almost two weeks after U.S. President Donald Trump ordered an investigation into potential tariffs on copper imports. This move is intended to boost U.S. copper production. It is seen as part of Trump’s broader strategy to counter China’s efforts to dominate the global copper market, especially as copper is critical for electric vehicle manufacturing, military equipment, and consumer goods.
Analysts expect copper prices will increase fueled by strong demand for electrification, while supply growth is likely to be limited due to years of underinvestment in mining. copper supply in China is plentiful, with stocks increasing to over 260,000 tonnes, which is three times the level at the beginning of the year, and bonded stocks doubling to 33,000 tonnes.
Prospects of a Federal Reserve that is likely to be slow to move to additional accommodation is seen as a headwind to higher prices for industrial metals.
SILVER
May silver futures are higher today and are only partially recovering from yesterday’s sharp decline. Some of the recent weakness in silver can be linked to news that U.S. silver coin purchases declined 27% year-on-year in January, totaling 3.5 million ounces, which is the lowest January demand since 2018.
In addition, softer U.S. economic data raised expectations for further interest rate cuts from the Federal Reserve, providing some support to precious metals.
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