Written Commentary
The Ghost in the Machine Q2 2025
July 2, 2025
SILVER
September silver futures are higher and are near the 31.16 level on Tuesday, recovering from a two-day decline, as dovish comments from Federal Reserve Chair Powell bolstered the case for interest rate cuts, increasing the appeal of precious metals.
Limiting gains are reports of tepid global demand. However, in the longer term view there is upside potential for silver in light of expectations of a wider supply deficit in 2024, which is likely to be the fifth consecutive year of shortfall.
COPPER
September copper futures are lower but held at the 4.4375 level, which is a two- week low as rising global inventories suggests weak demand. Recent reports show copper inventories have been increasing in July. In addition, disappointing second quarter gross domestic product data from a large copper consuming country in Asia weakened the demand outlook.
Federal Reserve Chair Jerome Powell on Monday said recent data “add somewhat to confidence” that inflation is returning to target and that the central bank will not wait until inflation hits 2.0% before cutting interest rates.
Increasing prospects of the Federal Reserve pivoting to accommodation this year could boost economic growth and overall demand, which is a bullish longer term influence for copper and industrial commodities in general.
GOLD
August gold futures advanced to just above the 2448 level and are not far from record highs. Much of the strength is linked to comments from Federal Reserve Chair Powell when yesterday, speaking before the Economic Club of Washington, said the central bank will not wait until inflation hits 2.0% before cutting interest rates. Financial futures markets are currently predicting there is almost a 100% chance of the Federal Open Market Committee lowering its fed funds rate by 25 basis points at its September 18 policy meeting. In addition, there is a 68% chance of another rate cut of 25 basis points at the November7 meeting.
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