Written Commentary
GOLD
April gold futures advanced to new record highs, driven by risk aversion and growing expectations of Federal Reserve interest rate cuts. The surge in gold prices comes in light of the latest escalation in President Donald Trump’s trade conflict, as he threatened a 200% tariff on European wine and other alcoholic beverages in response to the EU imposing a 50% tax on American whiskey exports.
Additional support for the yellow metal comes from strong demand in exchange-traded funds.
SILVER
May silver futures are higher as investors moved funds into safe-haven assets in response to escalating tariff tensions and growing expectations of Federal Reserve interest rate cuts following weaker-than-expected U.S. inflation data. Trade tensions intensified after President Trump threatened to impose 200% tariffs on European wines, champagnes and other alcoholic beverages in retaliation for the EU’s 50% tariff on American whiskey.
The long-term outlook for silver Is bullish in light of the supply-demand situation. Over the past four years, silver supply has consistently fallen short of meeting demand. Industrial applications account for the majority of demand, making up approximately 60% of total silver consumption.
COPPER
In the overnight trade May copper futures surged above $4.95 per pound, reaching a nine-month high. This price increase was driven by expectations that the U.S. will impose tariffs on copper, which would strain the already limited capacity of domestic smelters.
President Donald Trump signed an executive order to begin a review of copper imports after previously mentioning the possibility of tariffing the metal in a speech to Congress. Although tariffs were expected later in the year, there were growing concerns that copper tariffs might be imposed sooner than anticipated. If this were to be the case there would be a greater reliance on domestic smelting capacity, which is limited to only two major smelters, as the U.S. imports nearly half of its copper.
The upside may be limited in light of reports that in China supply remained plentiful, with smelter treatment charges still below zero, reflecting significant overcapacity in the country’s refined copper production.
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