Written Commentary
GOLD
In light of increasing tensions in the Middle East, flight to quality buying has supported gold prices. December gold futures are now closing in the record high of 2570.4 that was made on August 20. In addition, there is support after Federal Reserve Chair Powell, at his speech at the Kansas City Federal Reserve’s annual Jackson Hole Economic Symposium speech on Friday, indicated the central bank is on track to lower its key interest rate at its September policy meeting.
There is a 66% probability that the Federal Open Market Committee will reduce its funds rate by 25 basis points at its September 18 meeting, and there is a 34% probability that the FOMC will cut its key interest rate by 50 basis points in September. Financial futures markets are pricing in a total of 100 basis points in rate cuts from the Fed’s three remaining policy meetings in 2024.
SILVER
December silver futures are trading above the $30.65 per ounce level and are hovering near the highest levels in six weeks as Federal Reserve Chair Jerome Powell reinforced expectations for an interest rate cut in September. Fed Chair Powell said in his Jackson Hole address that the time has come to adjust policy in light of increasing risks to the labor market.
Prospects of a weakening global economy may limit industrial demand for silver.
COPPER
December copper futures advanced to the highest level in six weeks. Some of the recent strength is linked to prospects of the Federal Reserve pivoting to accommodation at its September policy meeting. Lower U.S. interest rates could boost global economic growth.
However, countering the bullish interest rate influence is the bearish influence of a weakening global economy, which could limit demand for industrial commodities, including copper.
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