Written Commentary
GOLD
December gold futures advanced to the 2455 area due to ongoing expectations of upcoming easier credit policies from the Federal Reserve. Currently there is a 61% probability that the Federal Open Market Committee will lower its fed funds rate by 50 basis points at its September 18 meeting, and there is a 39% chance that the Fed will lower rates by 25 basis points. Probabilities of rate cuts were slightly diminished in light of today’s jobless claims report that showed a total of 233,000 claims when 240,000 were expected. Additional interest rate cuts are anticipated at subsequent meetings this year. In addition, the bullish flight to quality influence remains in light of increasing geopolitical tensions in the Middle East.
SILVER
September silver futures are higher and are near the 27.25 level. However, in the overnight trade silver tested yesterday’s low, which was also the lowest level since April 2. The dominant bearish influence of a weakening global economy is dampening demand for industrial commodities, including silver. Economic reports last week showed the U.S. economy added substantially fewer jobs in July than predicted, which caused traders to believe the Federal Reserve may be behind the curve and already may be too slow in averting an economic downturn.
COPPER
September copper futures are lower today, testing yesterday’s lows, which were the lowest since March 7. The dominant bearish fundamental is the increasing perception that the global economy is weakening. Demand for base metals, including copper, is likely to be limited by a major copper consuming country in Asia.
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