Written Commentary
GOLD
February gold futures advanced as it appears more likely that the Federal Open Market Committee will lower its key interest rate by 25 basis points at its December 18 policy meeting despite the November consumer price index report coming in as expected.
Additionally, China revealed plans for a more accommodative monetary policy in 2025, and the People’s Bank of China resumed gold purchases after a six-month period of inactivity. Meanwhile, ongoing tensions in the Middle East continued to bolster gold’s appeal as a safe-haven asset.
SILVER
March silver futures are lower on Wednesday and are underperforming other bullion assets in light of uncertainty over Chinese industrial demand and weaker currencies for major silver exporters.
In addition, there is skepticism about whether the economic support that China pledged to deliver will drive industrial demand. Reports of overcapacity in China’s solar panel industry encouraged photovoltaic companies to sign up to a government self-discipline program that may regulate supply, limiting the outlook of silver input demand.
COPPER
March copper futures in the overnight trade advanced to its highest level since November 11. However, these gains have been given back along with pressure in other base after the Chinese yuan weakened during late Asian trading.
Reports suggest that the Chinese government may devalue the yuan next year in response to potential tariff threats from the incoming U.S. presidential administration. A weaker yuan would make Chinese exports of refined copper cheaper, lowering the relative price of the metal in dollar-denominated markets.
There is some underlying support due to recent data that revealed Chinese manufacturing activity grew in November, especially among domestically focused companies.
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