Written Commentary
COPPER
March copper futures are lower and are trading at their lowest level since February 7. This decline was fueled by growing expectations that copper would not be included in the U.S. trade restrictions, increasing the supply outlook for North America. President Trump had threatened to impose tariffs on copper imports but backed off, choosing only to raise barriers on steel and aluminum. This move was intended to maintain a broader supply base for manufacturers.
Treatment charges for Chinese smelters remained negative, indicating significant overcapacity in refined copper production in the world’s top producer. Beijing announced that new smelters need to source a portion of their supply from domestic mines, which is likely to reduce the number of new smelters being built.
Prospects of a Federal Reserve that is likely to be slow to move to additional accommodation is seen as a headwind to higher prices for industrial metals.
GOLD
April gold futures advanced to a new record high on Monday, fueled by safe-haven demand and recent weakness in the U.S. dollar. The yellow metal gained further support as concerns increased over U.S. President Donald Trump’s proposed tariffs, which could heighten global trade tensions. Weakness in the U.S. dollar makes gold more affordable for foreign investors.
Economic data on Friday revealed a slowdown in U.S. business activity and a decline in consumer confidence, which further bolstered gold’s appeal as a safeguard against economic instability. Traders are now looking ahead to the PCE index, which will be released on Friday, which could provide insights into the Federal Reserve’s interest rate path.
Central bank demand for gold remains strong.
SILVER
April silver futures are lower and remain in a fairly narrow 5-day trading range. A weakening U.S. dollar has been supportive. However, this bullish influence is being offset by prospects of a Federal Reserve that will be slow to add to accommodation.
Some support for silver is coming from a safe-haven flow of funds as geopolitical uncertainties continued to drive demand for the metal as a safe-haven asset. Last week U.S. President Donald Trump’s warning of potential tariffs on key sectors, including automobiles, semiconductors, pharmaceuticals and lumber, which added to market uncertainties.
Price advances have been limited due to comments from Federal Reserve officials who have recently expressed they would like to see more progress on inflation before considering further interest rate cuts.
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