Copper Strength from Strong Demand

COPPER

On Friday, March copper futures advanced to the highest level since November 11. Much of the recent strength can be attributed to strong buyer demand. However, this bullish influence is now being offset by the impact of a stronger U.S. dollar, as the stronger dollar made commodities priced in greenbacks less attractive to foreign buyers.

New data revealed that China’s imports of unwrought copper and related products surged by 18% to 559,000 tonnes in December, marking the highest level in 13 months. This indicated increased intake by smelters, suggesting higher manufacturing activity in the futures market. At the same time, China’s exports exceeded expectations. The data contributed to a strong month for base metals, as the Chinese government committed to significant economic support measures to boost consumption this year, through both monetary and fiscal policies.

GOLD

February gold futures are lower today after on Friday advancing to the highest level since December 12. Some of the recent gains can be linked to demand for safe-haven assets due to uncertainty surrounding the policies of the incoming U.S. administration.

However, prices are lower today on the belief that the Federal Reserve may slow the pace of interest rate cuts this year. This could put downward pressure on gold, as higher interest rates make the non-yielding asset less attractive.

In the longer term view, the precious metal remains supported by persistent geopolitical tensions and expectations of continued central bank buying.

SILVER

March silver futures are lower today after on Friday advancing to the highest level since December 12. Much of today’s pressure on silver can be attributed to gains in the U.S. dollar, which is now trading at the highest level since November of 2022. A stronger U.S. dollar also makes silver, which is priced in dollars, more expensive for buyers using other currencies, leading to reduced demand. Increasing prospects of a less accommodative Federal Reserve additionally put pressure on silver.

Despite the recent decline, silver climbed nearly 3% last week, marking its best weekly performance since mid-November. The metal’s value remains supported by improving industrial demand, especially in renewable energy and electronics, as well as ongoing concerns over supply.

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