GOLD
March gold futures are higher and are near the record high reached the previous day, as concerns over tariffs fueled safe-haven demand. China announced retaliatory tariffs on U.S. goods following President Donald Trump’s 10% tariff on Chinese imports. At the same time, President Trump agreed late Monday to delay tariffs on Mexico and Canada for a month after both countries took action to address his concerns over border security and drug trafficking. The potential inflationary effects of tariffs could further increase gold’s appeal as a hedge against rising prices and geopolitical risks. However, these tensions could also push interest rates higher, creating a challenge for non-yielding gold.
While the U.S. Federal Reserve is likely to be slow to lower its key interest rate this year, other central banks are on track to more aggressively be moving to accommodation, especially the European Central Bank and the Bank of England. Financial futures markets are predicting the Federal Open Market Committee will lower its key interest rate at its June 18 policy meeting by 25 basis points.
Investors are closely watching labor data this week, especially Friday’s nonfarm payrolls report, which could offer more insight into the U.S. economy’s strength and shape future Federal Reserve policy.
SILVER
March silver futures are higher on Tuesday, nearing their highest level since early December, as the trade war between the U.S. and China drove increased demand for safe-haven assets. In response to President Trump’s 10% tariffs on all Chinese imports, China announced retaliatory tariffs. Earlier, Trump had delayed imposing a 25% tariff on Canada and Mexico for a month, following agreements from both countries to implement tougher measures on migration and drug trafficking.
Manufacturing data from the Institute for Supply Management showed progress in U.S. factory activity, bolstering the outlook for silver, especially in industrial sectors like electrification. On the supply side, the Silver Institute recently projected a fifth consecutive year of significant market deficits in 2025, driven by strong industrial demand and retail investment, which are expected to surpass weaker consumption in jewelry and silverware.
COPPER
March copper futures are higher, reaching a two-week high. Traders are evaluating the effects of trade restrictions between China and the U.S. According to Institute for Supply Management data, U.S. factory activity experienced its first expansion in over two years in January, boosting the outlook for base metal demand. In addition, a survey by Caixin indicated growth in Chinese factory activity, alleviating concerns raised by a contractionary NBS PMI.
Treatment charges at Chinese copper smelters remained reflective of uncertainty about near-term purchasing levels. In addition, Beijing announced plans for fiscal stimulus this year, aligning with rising credit demand driven by monetary easing, which sparked optimism for stronger demand for factory goods.
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