SX Gold & Metals Advisor | August 10, 2021

Industrial Metals Are Perking Up

While gold and silver are weighed down by the hawkish tone of the Federal Reserve—along with a rise in longer-dated Treasury yields—traders are increasingly turning their attention to the industrial metals sector.

Beginning with a big up-move in nickel prices in July, other key industrial metals are beginning to show signs of life after months of being dormant. Steel has perked up nicely in recent weeks, thanks to China-related supply pressures and rising global demand.

Meanwhile, copper is showing signs of returning to a position of strength after a two-month slump. And while the red metal will likely remain volatile in the near term, a series of (mostly positive) copper producer earnings reports suggest that the supply/demand balance remains favorable for the red metal from an intermediate-term (3-6 month) perspective.

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The recovery effort in gold has admittedly been a bumpy ride, with bullion prices proceeding by fits and starts since bottoming in March. The latest setback in gold’s turnaround was disappointing to be sure, but not entirely shocking given the persistent strength of the U.S. dollar and the lack of confirming strength in gold’s sister metal, silver.
For the better part of the last 10 weeks, silver just can’t seem to get out of its own way. After peaking at around $29 on May 18, the white metal has been in steady decline and has fallen nearly 17% from its May peak price as of last Friday.

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