COPPER
Copper futures are higher today but remain substantially lower from the record high of near $5.20 that was registered on May 20, as reduced demand in the near term outweighed speculative buying. An unexpected contraction in manufacturing activity, in light of the weak May PMI underscored a weaker demand outlook.
The longer term outlook remains supportive due to copper’s key role in electrification in grid-scale energy storage and data-center infrastructure.
GOLD
Gold prices advanced on Monday as investors continued to assess recent U.S. inflation reports, while looking forward to additional economic data for cues on the timing of when the Federal Open Market Committee will ease monetary policy. Last Friday a report showed core personal consumption expenditures decelerated in April compared to the previous month, while the headline monthly and annual rates remained unchanged as predicted. This suggests the Federal Reserve may have room to lower interest rates this year. Traders will now closely monitor the European Central Bank policy meeting that will be held on Thursday. The ECB is expected to lower its key interest rate by 25 basis points. In addition, the Bank of Canada may lower its key interest rate when it meets June 5.
Prospects of easier credit conditions from major central banks this year continue to underpin the gold market. In addition, increasing geopolitical risks in the Middle East remain a supportive influence due to the safe-haven appeal of gold. The main trend for gold is higher
SILVER
Silver prices steadied near $31.80 per ounce, as investors reassessed the Federal Reserve’s monetary policy outlook following recent comments from Federal Reserve officials. Fed Vice Chair Michael Barr reiterated the need for more time to evaluate restrictive policy effectiveness, while Atlanta Fed President Raphael Bostic repeated his estimate for only one interest rate cut this year.
In the longer term, silver will likely be supported by prospects of lower interest rates this year from the major central banks, including the Federal Reserve, the European Central Bank and the Bank of England.
Also, the longer term supply-demand situation remains supportive as silver is on track for its fourth consecutive year of production deficit.
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