GOLD
February gold futures advanced to the highest level since November 6, extending a more than 1% increase from the previous session. The precious metal has been supported by a weaker U.S. dollar and rising demand for safe-haven assets in light of ongoing concerns about trade wars. This followed President Trump’s announcement of potential new tariff policies, including plans to impose tariffs on the European Union and his consideration of a 10% tariff on China, after previously discussing the possibility of substantial tariffs on Canada and Mexico.
Traders are closely monitoring inflation risks, which could cause the Federal Reserve to slow its pace of accommodation in an attempt to control rising prices, which might reduce gold’s attractiveness due to the increased opportunity cost of holding non-yielding assets.
In the longer term view, the precious metal remains supported by expectations of continued central bank buying.
SILVER
March silver futures were higher in the overnight trade and neared their highest level in six weeks, as President Donald Trump’s tariff threats increased demand for safe-haven assets.
Silver’s upward momentum is also supported by expectations of additional interest rate cuts by the Federal Reserve this year, which could weaken the U.S. dollar and increase demand for commodities.
In addition, ongoing supply concerns, particularly in London vaults, and industrial demand, especially from manufacturing, continue to strengthen the bullish price outlook for silver.
COPPER
March copper futures declined to below $4.30 per pound on Wednesday, marking their third consecutive decline as President Donald Trump threatened China with a 10% tariff, intensifying concerns of a potential global trade war. President Trump also raised the possibility of a 25% tariff on Mexico and Canada, although no concrete actions have been taken so far.
Market sentiment is being weighed down by caution ahead of China’s Lunar New Year holiday and upcoming interest rate decisions from the U.S. Federal Reserve and the Bank of Japan. However, there is still some optimism that China may deliver on its promise for additional economic stimulus, with state media reporting that the People’s Bank of China could lower the reserve requirement ratio for banks later this month.
On the supply side, it was recently reported that Chile revised its copper production forecast, now projecting 5.54 million tons by 2034, which is down from an earlier estimate of 6.34 million tons.
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