SILVER
March silver futures are higher for a third day after last week trading at its lowest level since November 14 as markets reassessed the outlook for Federal Reserve policy in the coming year. Softer-than-expected core PCE inflation data for November alleviated concerns about excessively tight monetary policy, which had been fueled by the Federal Reserve’s more hawkish projections. This led to a temporary decrease in U.S. Treasury bond yields and provided support for precious metals.
However, silver’s performance remained weaker than gold due to an uncertain outlook for its industrial demand. Overcapacity in China’s solar panel sector prompted photovoltaic companies to join a government self-discipline initiative, potentially limiting silver’s demand. In addition, concerns over a potential yuan devaluation, driven by China’s more relaxed monetary policy, further pressured silver, as it lowered prices from the world’s top exporter.
GOLD
February gold futures are higher on Tuesday, partially recovering from losses in the previous session in low holiday-season trading volumes.
The World Gold Council reported strong demand from central banks, reinforcing gold’s role as a safe-haven investment. Central banks have been net buyers for over 15 years. Gold is on track for a better than 26% advance this year, and is on track for its best performance since 2010, driven by central bank purchases, geopolitical tensions and easing monetary policies by many major central banks.
COPPER
March copper futures are higher today and were able to trade above the $4.12 per pound level. Futures are higher today despite strength in the U.S. dollar.
The latest PMI data indicated only modest growth in Chinese manufacturing activity in November, with a limited response to the substantial monetary easing initiated in September. The outlook for Chinese manufacturing was further strained by the potential for tariffs from the incoming Donald Trump administration, which could dampen demand from the world’s largest copper consumer.
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