Written Commentary
GOLD / SILVER
Gold is seeing some strength this morning after hitting a 2 1/2 week low yesterday. Silver is also positive so far today following through on yesterday’s positive close. Comments by Fed Governor Bowman that it is too soon to project when and how much the Fed will cut rates are pressuring metals prices. South Africa’s gold production during December was 3.4% below the previous year’s total while their PGM metals output was 9.4% above the previous year’s total. The IMF reported that in January, Kazahkstan increased their official gold holdings by 6.16 tonnes, Australia increased their holdings by 2.99 tonnes while the Bank of International Settlements (BIS) reduced their holdings by 4.91 tonnes. This morning’s US CPI and core CPI readings for January will provide an updated gauge on consumer inflation. If both readings come in below trade forecasts, it should increase the chances for a rate cut at the May FOMC meeting. This should result in a weaker Dollar and lower longer-term Treasury yields, both of which can provide additional support to precious metals and silver should gain further ground on gold.
COPPER
Copper has made a decisive move away from last Friday’s 2 1/2-month lows but has a long way to go to recover from their February downdraft. LME copper stocks have declined 14 of the last 15 days and are at their lowest level since September and could signal improving near-term copper demand. The Chilean mining company Codelco said that their December copper production came in at 142,000 tonnes which compares with 114,000 tonnes in November and was their largest monthly production since December 2022. The Shanghai Metals Market said that China’s January copper cathode production came in at 969,800 tonnes which was 2.96% below December’s output but 13.65% above January 2023’s output.
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