Written Commentary
The Ghost in the Machine Q4 2024
November 15, 2024
GOLD
December gold futures declined as it appears that the Federal Open Market Committee may be slow to lower its fed funds rate going forward.
Recent data revealed that China, the world’s largest consumer of gold, saw its inflation rate fall to a four-month low in October, while producer price deflation deepened despite ongoing stimulus measures to support the economy.
In other news, Russia’s gold reserves reached a record high of $207.7 billion in October, according to the country’s central bank.
SILVER
December silver futures dropped to $30.64 per ounce, as markets assessed future demand in light of a lackluster stimulus plan from China and expectations that the U.S. Federal Reserve will be slow to reduce its fed funds rate.
The Chinese government unveiled a $1.4 trillion package aimed at allowing local governments to swap off-balance sheet debt with Beijing and reduce future financing costs. However, it stopped short of announcing additional stimulus to directly address weak consumption in the economy. This disappointment weighed on the outlook for industrial metals across the board, especially silver, due to its significant use in electrification, including in solar panels. There are reports that Chinese-owned solar panel companies began scaling back production.
COPPER
December copper futures declined to near the $4.26 per pound level on Monday, following a volatile week as investors continued to evaluate the economic outlook in China. On Friday, China unveiled a 10 trillion yuan debt package aimed at easing local government financing and supporting its economy. However, the absence of direct stimulus measures disappointed markets, shifting focus to the risks of higher tariffs and escalating tensions between the U.S. and China under a Trump administration.
Additionally, new data released over the weekend highlighted ongoing deflationary pressures in China, further weighing on the demand outlook for copper, which is the world’s most widely used industrial metal.
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