SILVER
March silver futures are higher on Tuesday. The potential for tariffs, particularly after President Trump’s inauguration, also increased premiums for silver futures as traders anticipated possible supply disruptions.
Silver prices are being supported by ongoing worries about potential supply shortages, particularly in London storage vaults. Strong industrial demand, especially in the manufacturing sector, along with expectations of Federal Reserve interest rate cuts, which could weaken the U.S. dollar, could spur commodity demand and bolster silver’s value.
In addition, geopolitical uncertainties, especially regarding U.S.-China relations, enhance silver’s appeal as a safe-haven asset.
The metal’s value remains supported by improving industrial demand, especially in renewable energy and electronics, as well as ongoing concerns over supply.
GOLD
February gold futures advanced to the highest level since December 12 in the overnight trade. However, some selling pressure has developed more recently despite weakness in the U.S. dollar. Traders remain focused on the potential effects of U.S. President Donald Trump’s policies during his second term. Trump suggested the possibility of imposing 25% tariffs on Mexico and Canada starting next month, although he did not offer a timeline for tariffs on China. These tariffs could spark a trade war, boosting demand for safe-haven assets like gold.
At the same time, investors are considering inflation risks and increased government spending, which could fuel price pressures, potentially limiting the Federal Reserve’s ability to ease monetary policy and reduce gold’s attractiveness.
In the longer term view, the precious metal remains supported by expectations of continued central bank buying.
COPPER
In the overnight trade March copper futures advanced to the highest level since December 12. However, futures declined to the $4.270 level per pound on Tuesday morning, reaching a one-week low after U.S. President Donald Trump threatened tariffs on major economies, including China, as part of a broader negotiation strategy. This raised concerns about the potential for a global trade war, which could reduce demand for industrial metals like copper, especially since the metal’s demand is closely aligned with economic growth in China.
Market sentiment was also cautious ahead of China’s Lunar New Year holiday and key interest rate decisions from the U.S. Federal Reserve and the Bank of Japan in the coming days. Hopes remain that China will announce additional stimulus measures, with reports from state media suggesting that the People’s Bank of China may lower the reserve requirement ratio for banks later this month.
On the supply side, 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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