Written Commentary
SILVER
Silver futures are sharply lower on dollar strength and after various countries showed a decline in manufacturing activity, weighing on silver, which sees half of its demand come from the industrial sector.
The long-term outlook for silver remains supportive, as silver is a key ingredient in semiconductors, solar panels, and other clean-energy technologies, which have seen high investments from governments across the globe. New data shows China’s wind and solar capacity has risen significantly in Q1 of 2025, while solar power output in Europe rose by 30% annually in the first quarter.
GOLD
June gold futures are lower following a series of gains this week, pressured by dollar strength trade and profit taking.
Strong central bank demand and investor demand from China remain supportive of gold’s upside. The inflow into gold-backed ETFs in April was the largest since March 2022. China’s central bank added gold to its reserves in April for the sixth straight month. Chinese customs data showed gold imports surged 73% in April to an 11-month high of 127.5 metric tons, as Beijing expanded import quotas during a period of trade tensions with the US.
A lowering of interest rates by the Federal Reserve would be supportive of gold prices, which benefit in a lower interest-rate environment. Markets are anticipating two 25 bps rate cuts this year, with the first cut coming at the September meeting. Weakening economic data will raise pressure on the Fed to cut rates and also spur safe-haven demand for gold. The long-term outlook of a weakening dollar will also be supportive of gold prices.
COPPER
July copper futures sank in overnight trade after eurozone and UK manufacturing PMI readings came in lower than expected, showing a contraction of manufacturing activity. Eurozone manufacturing PMI was 48.4 vs. expectations of 49.2, while the UK also posted a decline in manufacturing activity with a reading of 45.1 vs. expectations of 46.2.
In recent weeks, copper has flowed into the US from around the globe, causing CME copper stocks to rise over 81% since the beginning of the year and reach an eight-year high of 152,919 tons. The growing supplies of copper in the US have weighed on copper prices and shrunk the premium of CME copper over LME copper from $1,600 per metric ton to $600 per ton. According to U.S. government data, copper imports in March rose to more than 123,000 tons compared with around 58,000 tons in February and 76,000 in January.
Expectations of copper surpluses continue to hang over investors’ heads. The International Copper Study Group doubled down on forecasts of surpluses to reach 289,000 tons in 2025, noting that international trade policy is likely to weaken the global economic outlook and negatively impact copper demand. Abundant ore production from South America has exacerbated the oversupply situation; global mine production is expected to increase by 2.3% in 2025.
The US purchasing managers’ surveys for May will be released at 8:45 a.m. Central Time and will give an up-to-date indication of the health of U.S. manufacturing.
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