Written Commentary
Aug Small Business Optimism Index Falls to Three-Month Low
September 10, 2024
GOLD
December gold futures are higher in advance of Federal Reserve Chair Powell’s 9:00 central time speech at the Kansas City Federal Reserve’s annual Jackson Hole Economic Symposium. Powell is widely expected to signal support for cutting interest rates at its September meeting, following the sharp downward revision to nonfarm payrolls for the year ending in March.
There is a 74% probability that the Federal Open Market Committee will lower its funds rate by 25 basis points at its September 18 meeting, and there is a 26% probability that the FOMC will reduce its key interest rate by 50 basis points in September.
Geopolitical tensions in the Middle East continue to support the bullish trend in gold.
SILVER
September silver futures are higher and are coming up against a steep four-day downtrend line. Some of today’s strength is linked to a weaker U.S. dollar. Market attention is now turning to Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium with expectations for dovish signals.
Yesterday’s release of the minutes from the Federal Open Market Committee’s July 31 policy meeting were bullish but appear to have been fully factored into pricing.
Futures have put in an impressive performance over the past two weeks even though it appears that the Federal Reserve will be less aggressive than predicted a few weeks ago when it pivots to accommodation. Prospects of a weakening global economy may limit industrial demand for silver.
COPPER
September copper futures are higher today after yesterday advancing to the highest level in over two and a half weeks. Futures have been able to recover from the five-month low of $3.9210 that was hit on August 7. Prospects of a Federal Open Market Committee pivot to accommodation has been a supportive influence.
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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