Supply Issues Support Copper

COPPER

Copper futures advanced to a four-month high, due to worries about a tightening supply from Chile, which is the world’s largest copper producer. In addition, Chile’s forecast for increasing demand due to the energy transition and expanding electrical networks further contributed to the price advance. However, Chile’s copper commission, Cochilco, warned that geopolitical tensions and U.S. tariffs could increase risks that might negatively impact the copper market.

U.S. President Donald Trump and Chinese President Xi Jinping are expected to discuss trade matters in an upcoming call, sparking hopes that further escalation could be avoided and tariffs potentially reversed.

Prospects of easier credit conditions from most of the world’s major central banks have underpinned the copper market.

GOLD

Gold futures are approaching record highs and are on track to achieve its sixth straight weekly gain. The precious metal has been supported by increasing central bank buying and a rise in safe-haven demand in light of escalating global trade tensions and economic uncertainty. President Donald Trump proceeded with plans to impose a 10% tariff on all Chinese imports, prompting China to retaliate with tariffs on U.S. energy products, effective next week.

Easier credit conditions from major central banks, including the European Central Bank, the Bank of England and the Bank of Canada have bolstered the market. Financial futures markets are pricing in two 25 basis points rate cuts from the Federal Open Market Committee this year. Interest rate cuts from the FOMC currently are anticipated to take place in June and December.

Today’s U.S. employment numbers were mixed to on balance on the weaker side. Non-farm payrolls in January were up 143,000 when a gain of 168,000 was expected. Private payrolls were up 111,000 when an increase of 140,000 was anticipated, and manufacturing payrolls increased 3,000, which compares to the forecast gain of 5,000. The unemployment rate was 4.0% when 4.1% was predicted. Average hourly earnings increased 0.5% when up 0.3% was expected, and the average workweek declined to 34.1 hours when 34.3 hours was anticipated.

The precious metal remains supported by expectations of continued central bank buying.

SILVER

March silver futures are higher and are heading toward its fifth weekly gain in six. The precious metal continues to be supported by easing concerns about escalating global trade tensions. Both the U.S. and China have adopted a more cautious approach to tariffs, with Presidents Donald Trump and Xi Jinping set to discuss trade developments, potentially easing some existing restrictions.

Silver also benefited from expectations that the U.S. Federal Reserve will continue cutting interest rates this year, with markets forecasting two quarter-point reductions. On the supply side, the Silver Institute recently predicted a fifth consecutive year of substantial market deficits in 2025, driven by strong industrial demand and solid retail investment, which are expected to offset weaker consumption in jewelry and silverware.

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