Written Commentary
GOLD
February gold futures are trading higher and are closing in on the $2650 area. Trading volumes are expected to remain low due to the ongoing holiday season. Investors continue to focus on the U.S. Federal Reserve’s monetary policy outlook for 2025 and the expected tariff policies under the incoming Donald Trump administration, both of which could influence gold’s price direction in the coming year.
Last week, the Federal Open Market Committee indicated fewer interest rate cuts in 2025, but this outlook was called into question by recently released softer than expected PCE inflation data, which increased the possibility of additional interest rate cuts that could support gold, which does not offer yields.
Gold is on track to close this year with a 27% gain, marking its strongest annual performance since 2010, driven by central bank buying, escalating geopolitical tensions and monetary easing from major central banks.
SILVER
March silver futures are higher today and have recovered from a three-month low reached on December 19, as markets reassessed the expected level of hawkishness from the Federal Reserve in 2025. Recently released weaker than expected core PCE prices for November eased concerns about excessively restrictive interest rates, which had been fueled by hawkish projections from the December 18 Federal Open Market Committee meeting. However, silver’s outlook remained uncertain due to its role as an industrial metal, which kept it underperforming relative to gold. In China, overcapacity in the solar panel industry led photovoltaic companies to join a government self-discipline program aimed at regulating supply, which could limit silver demand.
Additionally, concerns about a potential yuan devaluation, driven by China’s more relaxed monetary policy, recently pressured silver as the world’s top exporter lowered its asking prices.
COPPER
March copper futures made an outside trading range today on the daily chart. Copper futures have been able to recover from the three-month low that was reached on December 19. This increase was supported by a slight pullback in the U.S. dollar as analysts evaluated the outlook for Chinese industrial demand. Recently released softer U.S. PCE inflation data for November raised expectations that the Federal Reserve could implement more interest rate cuts than initially suggested in its hawkish dot plot assessment released last week, boosting U.S. dollar-priced assets and alleviating concerns about weak manufacturing in the U.S.
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