Written Commentary
SILVER
After sharp declines yesterday, December silver futures are higher today. Much of today’s gains can be linked to this morning’s release of U.S. employment numbers, which are exerting additional pressure on the Federal Reserve to be more aggressively easing credit conditions.
Pressure on silver over the last few weeks, with the exception of today’s trade, has been linked to a stronger U.S. dollar and the belief that the Federal Reserve may be slower to lower its fed funds rate. Pressure on silver prices earlier this week was linked to economic data from the U.S. and euro zone, along with the U.K.’s new government budget, which raised borrowing costs and dampened expectations for imminent interest rate cuts.
Bond yields, especially on 10-year U.S. Treasuries, increased to levels not seen since early July. This uptick in yields indicates increasing investor caution, which has affected silver and other precious metals. Market focus remains on upcoming economic data that could further influence silver’s volatile price movements.
GOLD
December gold futures are higher today after the weaker than expected U.S. employment numbers were released. A weaker employment report is bullish for commodity prices due to the belief that the Federal Reserve will be influenced to become more accommodative.
Nonfarm payrolls in October increased 12,000 when a gain of 125,000 was expected. Nonfarm payrolls in the previous month were revised substantially lower to an increase of 78,000 when up 254,000 were previously reported. Private payrolls in October fell 28,000 when an increase of 90,000 was estimated. September private payrolls were also revised lower to an increase of 192,000 when up 223,000 was originally reported.
Currently there is a 98% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its November 7 policy meeting, and there is a 2% chance that the FOMC will reduce its key interest rate by 50 basis points.
Meanwhile, political uncertainty in the U.S. has also bolstered the price of gold, as a hedge against long-term inflation risks. Additionally, ongoing tensions in the Middle East and the war in Ukraine have enhanced gold’s status as a safe-haven asset.
COPPER
December copper futures advanced to the 4.4100 per pound level on Friday, as positive manufacturing data increased demand expectations in China, which is the metal’s largest consumer.
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