GOLD
February gold futures are on track for a weekly decline, as a hawkish stance from the Federal Reserve put pressure on prices. On Wednesday the Federal Open Market Committee indicated a more cautious approach to interest rate cuts, with its dot plot projections showing just two interest rate cuts next year. Recent U.S. gross domestic product data also pointed to the economy’s resilience, with consumer spending revised higher, supporting the case for slower easing. This outlook has dampened gold demand, as reduced monetary easing diminishes the appeal of non-yielding assets like gold.
Additionally, gold’s short-term outlook could face further pressure from weakening physical demand in major consumer India, where government officials are forecasting a significant drop in gold imports in December.
Higher prices for gold futures today are primarily due to the release of personal income in personal consumption expenditures reports.
Safe-haven demand and central bank purchases remain underlying supportive influences on gold.
SILVER
Yesterday March silver futures fell to the lowest level in three months. This decline was driven by a hawkish stance from the Federal Reserve and an uncertain outlook for silver’s role in industrial applications. The Fed’s projection of fewer rate cuts for the coming year indicated that the Federal Open Market Committee was responding to persistently high inflation and the inflationary risks posed by expansionary fiscal policies and tariffs under the incoming Donald Trump administration. This fueled concerns about weak demand for silver as an industrial component.
In China, overcapacity in the solar panel sector led photovoltaic companies to join a government self-regulation program aimed at controlling supply, which is further limiting demand for silver. Additional pressure came from fears of a potential yuan devaluation as China adopted a more relaxed monetary policy, which led to lower asking prices from the world’s leading exporter.
COPPER
March copper futures stabilized at around $4.07 per pound on Friday, although they were set to fall by over 2.0% for the week, as a hawkish Federal Reserve outlook and demand concerns in China pressured prices.
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