Written Commentary
GOLD
April gold futures are higher and are nearing record highs as the U.S. imposed tariffs on major trading partners, which sparked a global rush for safe-haven assets. President Donald Trump followed through on previous threats to impose a 25% tariff on Canada and Mexico, and a 20% tariff on China, which led to retaliatory measures from all affected countries. He also confirmed plans to levy tariffs on the EU and increase duties on agricultural exports. These actions added to worries about global growth, following a series of negative economic data, including a sharp decline in the new orders index from the ISM Manufacturing PMI.
Some of today’s strength can be linked to weakness in the U.S. dollar, making gold more affordable for holders of other currencies.
Demand for safety assets was further fueled by geopolitical risks, including the U.S.’s decision to cut aid to Ukraine and reports of sanctions relief for Russia.
SILVER
May silver futures advanced in light of a weaker U.S. dollar and safe-haven buying due to concerns over the shifting U.S. trade policies. Last week, President Donald Trump announced that tariffs on imports from Canada and Mexico would take effect on Tuesday, alongside an additional 10% tariff on Chinese goods, raising the total tariff on China to 20%. In response, reports indicated that Beijing was preparing countermeasures against U.S. imports.
Gains have been limited by recent news that Hecla Mining, which is the largest U.S. silver producer, reported a 13% increase in silver production for 2024, reaching 16.2 million ounces. In addition, demand showed signs of weakening, as U.S. silver coin sales dropped 27% year-over-year in January.
On the bullish side are increasing prospects of the Federal Reserve becoming more accommodative.
COPPER
May copper futures are higher and are coming up against a major downtrend line as traders assess the possibility of President Donald Trump following through on his tariff threats against the metal. Last week, President Trump instructed the government to explore imposing tariffs on copper imports to boost domestic production. This move is seen as part of his broader effort to counter China’s influence in the global copper market, as copper plays a significant role in the production of electric vehicles, military equipment, and a variety of consumer goods. In addition, President Trump’s proposed 25% tariffs on Mexico and Canada are set to take effect on March 4, along with a 10% tariff on Chinese imports. These developments increase the risk of a global trade war, potentially weakening demand.
In the longer term, analysts expect copper prices will increase due to strong demand for electrification, while supply growth is likely to be limited by years of underinvestment in mining capacity. However, copper supply in China remains plentiful, with stocks increasing to over 260,000 tonnes, which is three times the amount at the beginning of the year, while bonded stocks have doubled to 33,000 tonnes.
Interested in more futures markets? Explore our Market Dashboards here.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
