Feb Gold Futures Sharply Higher

GOLD

February gold futures are sharply higher and have broken out to the upside from an 8-day trading range. Futures advanced 27% in 2024, which is its best performance since 2010.

Underlying support for gold remains due to gold’s appeal as a safe haven asset. There is ongoing support for gold in light of rising geopolitical risks from the ongoing Ukraine-Russia conflict and tensions in the Middle East.

COPPER

March copper futures tested the $4.00 per pound level today, which is the lowest level since early September, 2024. Some of today’s selling can be attributed to the strong U.S. dollar. Also there are expectations that the Federal Reserve might implement fewer interest rate cuts than anticipated based on the hawkish dot plot released at the last FOMC meeting.

However, the lack of detailed action from China on its promises for proactive fiscal support raised doubts. The latest PMI data revealed Chinese manufacturing activity only slightly expanded in November, showing limited impact from the substantial monetary easing initiated in September. Also, the outlook for Chinese manufacturing faced pressure from potential tariff threats by the incoming Donald Trump administration, which dampened demand from the world’s top copper consumer.

SILVER

March silver futures are higher today after recent declines. Underlying support is coming from the recently reported softer-than-expected core PCE prices for November, which eased concerns about an overly restrictive Federal Reserve interest rate policy, which had been fueled by hawkish projections from members of the Federal Open Market Committee.

However, silver’s performance continued to lag behind gold due to an uncertain outlook for silver’s industrial demand. Overcapacity in China’s solar panel industry prompted photovoltaic companies to join a government self-discipline program, which could regulate supply and dampen the prospects for silver input demand. In addition, pressure came from the potential risk of a yuan devaluation, driven by China’s more relaxed monetary policy, which led to reduced asking prices from the world’s leading exporter.

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