Written Commentary
SILVER
May silver futures are lower, influenced by uncertainty in demand. Hecla Mining, the largest silver producer in the U.S., reported a 13% increase in silver production for 2024, reaching 16.2 million ounces.
On the demand side, U.S. silver coin purchases fell 27% year-over-year in January to 3.5 million ounces, marking the lowest January demand since 2018.
Weaker U.S. economic data boosted expectations for further interest rate cuts from the Federal Reserve, providing some support to precious metals. Investors also monitored trade developments after President Donald Trump initiated a probe into potential tariffs on copper imports to increase U.S. production.
GOLD
April gold futures declined to under $2,900 per ounce on Thursday, continuing its retreat from Monday’s record high, weighed down by a stronger U.S. dollar. On Wednesday, President Donald Trump introduced uncertainty regarding tariffs on Canada and Mexico, suggesting they would take effect on April 2, rather than the previously scheduled March 4, while also proposing a 25% “reciprocal” tariff on EU cars and products.
U.S. durable goods orders in January increased 3.1% when a gain of 1.9% was expected. The gross domestic product in the fourth quarter increased 1.3%, which compares to the predicted gain of 2.3%. Jobless claims in the week ended February 22 were 242,000 when 224,000 were anticipated.
Signs of weakening physical demand have surfaced, with China’s gold imports from Hong Kong dropping to a nearly three-year low in January, while Swiss data from last week revealed a 99% year-over-year decline in gold exports to China.
COPPER
May copper futures are higher, outperforming other base metals. Strength can be linked to a decision by U.S. President Donald Trump to launch an investigation into potential tariffs on copper imports, aiming to boost domestic copper production. This move is seen as part of President Trump’s broader strategy to challenge China’s growing influence in the global copper market, since the metal is crucial for electric vehicle manufacturing, military equipment, and consumer goods.
Analysts expect copper prices to continue to increase due to strong demand for electrification, while supply growth is likely to be limited by years of underinvestment in mining capacity. However, copper supply in China remains plentiful, with stocks increasing to over 260,000 tonnes, which is three times the amount at the beginning of the year, while bonded stocks have doubled to 33,000 tonnes.
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