Written Commentary
GOLD & SILVER
While gold prices have regained the upper hand on silver, both are holding in relatively tight price ranges this morning. After this afternoon’s Fed meeting results and Fed Chair Powell’s press conference, gold and silver are likely to break out of those tight ranges. The Dollar has rallied to a 3-week high in a “buy the fact” reaction to the first Bank of Japan rate hike in 17 years, and that continues to pressure gold and silver prices. With very little chance of a Fed rate move today, gold and silver will take direction from post-meeting comments by Fed Chair Powell, but more so from the Fed’s quarterly economic projections. If the “dot plot” has a median forecast for 50 basis points in rate cuts by the end of 2024, staying “higher for longer,” could pressure gold and silver prices. The PGM sector remains squarely on the defensive with palladium and platinum having mild early losses this morning, as higher rates in Japan at the same time as the Fed potentially reduces the size of their 2024 rate cuts may weaken demand for new motor vehicles.
COPPER
After a 23-cent rally in less than four sessions (increasing 6% in value), copper prices got ahead of themselves and have given back 13 cents of that rally since midday Tuesday. Increased output from Freeport Indonesia’s mining operations was a source of pressure on the copper market Tuesday as it found little lasting support from better-than-expected US housing starts data. LME copper stocks saw their largest daily increase since early December this morning which has lifted stocks well above Tuesday’s 6-month low, but that was only a fourth daily increase over the past 41 sessions. This has provided little support to the copper market as Chinese demand concerns may have soothed by a stronger than expected industrial production reading for January and February, but they continue to cast a shadow on the copper market following an enormous buildup of Shanghai exchange copper stocks since the start of this year.
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