Written Commentary
COPPER
September copper futures declined to near the 4.16 per pound level today, falling for the 5th consecutive session to the lowest level since April 3 due to weak industrial demand and a lack of new stimulus measures in a top consumer in Asia. Metal prices came under pressure from a recent rebound in the U.S. dollar, although the Federal Reserve is widely expected to start cutting interest rates in September which could limit U.S. dollar gains. On the supply side of the equation, copper inventories in LME warehouses increased to the highest since September 2021.
The next major chart support for September copper futures comes in at 4.069, which is where futures broke out to the upside from a downtrend line.
Increasing prospects of the Federal Reserve pivoting to accommodation this year could boost economic growth and overall demand.
SILVER
September silver futures fell to the $28.93 per ounce level on Monday. Some of the recent weakness can be linked to the recent recovery in the U.S. dollar index. However, gains in the greenback are likely to be limited in light of increasing prospects of the Federal Reserve pivoting to accommodation this year with the increasing probabilities of two interest rate cuts in 2024.
Silver prices were firm earlier this year on the belief that demand from the clean energy sector would outpace supply. However, there are renewed concerns about the global demand situation in light of prospects of increased U.S. trade restrictions in the high tech area. Some of the pressure was limited by recent comments from Federal Reserve officials indicating a more accommodative monetary policy this year.
GOLD
August gold futures were higher in the overnight trade but recently declined to lower on the session. On Friday the precious metal came under pressure due to the bearish influence of a recovery in the U.S. dollar. Strength in the greenback was linked to stronger-than-expected manufacturing growth in the U.S., although some of this influence was offset by Thursday’s larger than expected jobless claims report.
Traders are now turning their attention to U.S. economic reports due this week, which could reinforce interest rate cut expectations. Potential market-moving reports this week are the PMI composite, new home sales , gross domestic product, durable goods orders, jobless claims, consumer sentiment and the June PCE price index reports.
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