Written Commentary
COPPER
March copper futures dropped below $4.60 per pound on Tuesday, reversing from the eight-month high of over $4.70 reached the day before, after U.S. President Donald Trump chose not to impose tariffs on copper imports, as he had previously threatened. While tariffs were placed on base and ferrous metals like steel and aluminum, copper was excluded from the executive order. This decision heightened competition for domestic producers, putting downward pressure on prices.
Data from the Institute for Supply Management revealed that U.S. manufacturing unexpectedly expanded for the first time in over two years, easing concerns that the sector’s downturn had been prolonged. Additionally, expectations of strong fiscal stimulus from China continue to support the outlook for higher base metal consumption in 2025.
GOLD
In the overnight trade April gold futures advanced to a new record high. However, prices are lower this morning as traders liquidate long positions in advance of Federal Reserve Chair Jerome Powell’s 9:00 central time testimony to the Senate Banking Committee. Tomorrow Powell will appear before the House Financial Services Committee at 9:00.
Recent strength has been fueled by strong demand for safe-haven assets in light of rising trade tensions and growing economic uncertainties. Recently, President Donald Trump imposed broad tariffs on all steel and aluminum imports to the U.S. and hinted at additional reciprocal tariffs this week.
Futures have been supported by expectations of more accommodative monetary policies from some central banks, especially the European Central Bank and the Bank of England. The U.S. Federal Reserve is also on track to become more accommodative, however at a slower pace.
Financial futures market are predicting the Federal Open Market Committee will keep its fed funds rate unchanged at the March and May meetings. However, financial futures markets are predicting the Federal Reserve will reduce its fed funds rate by 25 basis points either at the June policy meeting or at the July 30 meeting. Also, an additional interest rate reduction from the FOMC this year is becoming less likely.
The January National Federation of independent business small business optimism index in the U.S. fell to 102.8 in January 2025 from 105.1 in December 2024 which was the highest since October 2018, and below forecasts of 104.6.
Central bank demand for gold remains strong, with the People’s Bank of China adding to its reserves for a third consecutive month in January, according to official data.
SILVER
March silver futures are lower today but remain close to three-month highs as demand for safe-haven assets increased following the latest U.S. tariffs. U.S. President Donald Trump signed an executive order imposing a 25% tariff on steel and aluminum imports “without exceptions or exemptions,” sparking concerns about inflation and the potential for a global trade war to escalate.
Investors were also bracing for today’s and tomorrow’s congressional testimony from Fed Chair Powell and the release of the latest U.S. inflation data Wednesday and Thursday, which could affect the outlook for U.S. monetary policy.
Additionally, silver prices have been bolstered by expectations of stronger industrial demand, especially from the renewable energy sector, along with predictions of continuing supply deficits.
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.
