Written Commentary
SILVER
May silver futures are sharply higher as trade tensions continued to dominate headlines and investors are awaiting U.S. inflation data to gauge the Federal Reserve’s next moves. Tomorrow’s consumer price index report is expected to show a 0.3% increase, and Thursday’s producer price index report is anticipated to show a gain of 0.3%. Some of today’s gains can be linked to ongoing weakness in the U.S. dollar.
Underlying support for silver remains in light of the ongoing geopolitical situation and trade policies, which are likely to bolster demand for safe-haven assets such as silver. In addition, increasing prospects of the Federal Reserve becoming more accommodative will likely underpin prices.
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.
GOLD
April gold futures advanced in light of weakness in the U.S. dollar, which fell to its lowest level since November 5. Flight to quality buying continues to support precious metals due to growing concerns over the U.S. economic outlook, fueled by escalating trade tensions.
In addition, precious metals are being supported by prospects of a more accommodative Federal Open Market Committee.
COPPER
May copper futures advanced in light of increasing probabilities of a more accommodative Federal Open Market Committee, recovering from two days of losses as investors weighed economic concerns against potential supply disruptions.
Traders remained cautious about the economic outlook in China, the world’s largest copper consumer, as the country deals with weak consumption, deflationary pressures and escalating trade tensions. Despite these uncertainties, copper prices may receive support following Trump’s suggestion of a 25% tariff on copper imports, which could increase reliance on domestic production. However, the U.S. remains dependent on imports for nearly half of its copper and has only two major smelters in operation.
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