Silver Futures Market News and Commentary
Dec Comex gold (GCZ19) on Thursday closed down -7.2 (-0.48%), and Sep silver (SIU19) closed down -0.111 (-0.65%). Metals prices fell back Thursday on hawkish Fed comments and weak U.S. manufacturing data that bolstered concern about industrial metals demand. Hawkish Fed comments on Thursday weighed on gold prices when Kansas City Fed President George said the U.S. economy "doesn't need more accommodation without seeing an outlook that suggests the economy is getting weaker." Also, Philadelphia Fed President Harker said today that "the labor market is strong, and inflation is moving up slowly" and that he's "on hold" right now for further Fed rate cuts. Higher global government bond yields on Thursday are negative for gold prices since higher yields weigh on demand for gold as a store of value. The 10-year German bund yield rose to a 1-week high today of -0.617% after today's data showed that the Eurozone Aug Markit manufacturing PMI unexpectedly rose +0.5 to 47.0, stronger than expectations of -0.3 to 46.2. The 10-year UK gilt yield today rose to a 2-week high of 0.534% on reduced safe-haven demand on some optimism about a Brexit deal after some favorable comments today from Chancellor Merkel and French President Macron. Thursday's minutes of the July 24-25 ECB meeting were positive for gold as they stated policy makers agreed the Eurozone's economic slowdown was likely to be more protracted than expected and that the prospects for global trade "remained poor." The somber outlook may push the ECB to boost stimulus measures that are bullish for gold prices. Thursday's U.S. economic data was mixed for metals prices. Weekly initial unemployment claims fell -12,000 to 209,000, showing a stronger labor market than expectations of -4,000 to 216,000. However, the Aug Markit manufacturing PMI unexpectedly fell -0.5 to 49.9, weaker than expectations of +0.1 to 50.5 and the first time manufacturing activity contracted in nearly 10 years, which boosted demand concerns for industrial metals and is negative for silver prices. However, the weak manufacturing data may prompt the Fed to keep cutting interest rates and is a bullish development for gold. U.S./China trade tensions remain high, which is bullish for gold, after the yuan fell to a new 11-1/4 year low against the dollar Thursday of 7.0965 yuan/USD. Ongoing trade and geopolitical tensions, along with dovish central bank expectations, have sparked fund buying of precious metals as long gold positions in ETFs rose to a 6-1/4 year high Wednesday and long silver positions in ETFs rose to a new record high Wednesday.