Written Commentary
COPPER
Copper futures declined to their lowest level since July 3. Today’s pressure can be linked to prospects of increased U.S. trade restrictions, adding to the concerns about the overall global demand situation.
The next major chart support for the September copper futures contract is 4.3950.
Increasing prospects of the Federal Reserve pivoting to accommodation this year could boost economic growth and overall demand down the road, which is a bullish longer term influence for copper and industrial commodities in general.
SILVER
Silver futures were higher in the overnight trade but came under pressure on renewed concerns about global demand, especially in light of prospects of increased U.S. trade restrictions in the high tech area.
However, pressure was limited by recent comments from Federal Reserve officials indicating a more accommodative monetary policy this year.
Also underpinning the long term bullish outlook for silver are expectations of a wider supply deficit in 2024, which is likely to be the fifth consecutive year of a shortfall.
GOLD
August gold futures advanced on Wednesday, hitting a new record high. Much of the strength is due to increased optimism that the Federal Reserve will lower its fed funds rate as early as September. Federal Reserve Chair Jerome Powell on Monday said June’s lower-than-expected inflation reports increased confidence that the Federal Reserve will not wait for inflation to hit its 2.0% target before starting rate cuts. In addition, there were similar comments from Federal Reserve Governor Adriana Kugler who expressed cautious optimism on Tuesday that the rate of inflation is moving towards the Fed’s target.
And it is not just the Federal Reserve. There are expectations that other major central banks in Europe and Asia will also deliver rate interest rate cuts, which is providing underlying support for precious metals.
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