Written Commentary
SILVER
September silver futures advanced to over the 29.000 level, rebounding further from 12-week lows that were made last week. Some of the recovery can be linked to increasing prospects of the Federal Reserve later this year pivoting more aggressively to accommodation.
Silver also found support from safe-haven bids in light of escalating geopolitical tensions in the Middle East.
COPPER
September copper futures advanced, rebounding from recent four-month lows to the 4.20 per pound area. Much of today’s gains can be linked to reports that a large copper consuming country in Asia promised to increase economic support measures and stabilize market confidence.
In spite of this, global economic uncertainties and trade tensions may cloud the demand outlook for industrial metals.
GOLD
August gold futures advanced to the 2422 level in light of safe-haven demand, driven by fears of escalating tensions in the Middle East. Traders are now focusing on the Federal Reserve’s policy meeting today. There is a 96% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at 5.25% to 5.50% at today’s meeting.
However, financial futures markets are pricing in three 25 basis point cuts in the fed funds rate later this year. There is almost a 100% probability that the FOMC will lower its fed funds rate by 25 basis points at its September 18 meeting. In addition, the probability of an additional rate reduction from the FOMC at the November 7 meeting is 67%, and there is a 65% chance of another 25-basis point rate cut at the December 18 meeting.
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