Written Commentary
GOLD
Gold futures advanced to a new record high today. Higher prices for the yellow metal are taking place even though the Federal Reserve in recent weeks is predicted to be slightly less dovish than what was predicted a few weeks ago, and it now appears that the Fed will cut rates in September by only 25 basis points. It was not that long ago that traders were predicting the Federal Reserve would be cutting its fed funds rate by 50 basis points in September. So it appears that some other fundamental is dominating, and that fundamental is likely to be the flight to quality influence that is supporting gold.
SILVER
September silver futures are higher and are closing in on the psychological 30.00 dollars per ounce level, hitting an over two-week high. Last week September silver futures advanced above a major downtrend line that started in mid-July. Futures have put in a strong performance even though it appears that the Federal Reserve will be less aggressive when it pivots to accommodation. Recent data showed that both producer and consumer prices in the U.S. were relatively tame in July.
COPPER
September copper futures advanced to above the $4.20 per pound level, hitting an over two-week high as strike activity in Chile threatens to disrupt global supplies. Some support for copper futures is coming from the belief that the Federal Reserve will begin lowering its fed funds rate in September, followed by additional rate cuts. However, the upside may be limited due to likely decreasing demand for copper from a large copper consuming country in Asia.
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