Written Commentary
GOLD
April gold futures are higher and are benefiting from the uncertainty surrounding U.S. tariffs and overall economic concerns. The potential for new tariffs, especially on China, along with ongoing trade tensions, continue to drive demand for gold as a safe-haven asset.
The trade is subdued in advance of today’s Federal Reserve’s policy decision, which could play a big role in shaping investor sentiment. If the Federal Open Market Committee holds interest rates steady, as expected, it could provide a bit of relief for gold prices, since higher rates make gold less attractive by raising the opportunity cost of holding it.
SILVER
March silver futures are higher despite a stronger U.S. dollar, as traders await the Federal Reserve’s policy decision today. The central bank is widely expected to keep interest rates unchanged, despite increasing pressure from President Donald Trump to reduce borrowing costs.
In addition, traders continue to assess the potential impact of U.S. tariffs. A White House spokesperson confirmed on Tuesday that President Trump plans to impose tariffs on Canada and Mexico this Saturday, while tariffs on China are still under review.
Additionally, overcapacity in China’s solar panel industry has led photovoltaic companies to join a government-backed self-discipline initiative, which could reduce silver demand from one of its major industries.
COPPER
March copper futures declined to the lowest level since January 8 in the overnight trade. However, prices are higher this morning despite a stronger U.S. dollar. Much of the recent weakness over the last few weeks can be linked to growing tariff threats from U.S. President Donald Trump, which dampened market sentiment.
This week, President Trump announced plans to impose tariffs on imported chips, pharmaceuticals, steel, aluminum and copper in an effort to boost domestic production. Traders were also cautious ahead of the February 1 deadline for the first round of U.S. tariffs on China, which is the world’s largest copper consumer.
Adding to the uncertainty, recent data showed an unexpected contraction in Chinese manufacturing activity for January. Trading volumes are anticipated to be lower, with Chinese markets closed for the week-long Lunar New Year holiday.
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