Trump's Latest 'Copper Shock' Cuts Silver Price Gains for July to 0.7%
Thursday, 7/31/2025 15:37
GOLD rallied against the Dollar on Thursday but silver prices continued to fall after the US Fed held interest rates unchanged and President Trump made a sudden about-turn on copper import tariffs, crushing the base metal's US futures price by more than 1/5th.
"Massive market surprise," says senior metals analyst Natalie Scott-Gray at brokerage StoneX.
"Focus [will now] turn to global fundamentals for copper, [with the] market in a surplus."
"Expect these shocks from copper to spill over into correlated assets, ie silver," says a trading note from Chinese-owned bank and London bullion clearer ICBC Standard.
Gold priced in the Dollar added 0.4% across July and silver rose 0.7%, down from mid-month gains of 4.6% and 10.0% respectively, hit amid a surge in
ETF inflows on Trump criticizing Fed chair Powell.
Bullion bars of
gold and silver were exempt from Trump's trade tariffs at the start of April.
But rising almost 25% across the first 6 months of 2025, copper futures on US derivatives exchange the CME then spiked a further 20% in July − and hit records level above global prices − after
Trump declared that 50% trade tariffs would hit US copper imports from tomorrow, 1st August.
Late Wednesday, the Trump White House then
cancelled tomorrow's tariff on refined copper imports, focusing instead only on semi-finished items while vowing again to reverse the USA's "massive trade deficit in, and unsustainable dependence on, many foreign copper products."
US copper futures sank on the news, falling 20.5% in an hour and making the largest-ever intraday plunge.
That erased the premium in US futures versus London Metal Exchange prices, with the Comex-LME spread evaporating from above $2,700 per tonne at Tuesday's finish to less than $30 this morning.
"The announcement was made after the LME Select [platform] closed," says ICBC Standard Bank, "amplifying the price drop amid reduced liquidity and leaving money managers, in particular, with no opportunity to fully unwind the arb triggered by the tariff in the first place."
With London gold bullion clearing at almost exactly $3300 per Troy ounce at Thursday's 3pm auction, up 0.4% from the end of June, Comex gold futures for September settlement rallied $45 from yesterday's 1-month low of $3278 per Troy ounce before dropping back $15.
Silver contracts in contrast lost a further 2.7%, erasing all of the September future's spread above London quotes at $36.60 per Troy ounce as physical bullion ended August with a 0.7% gain.
Silver's fellow 'white' industrial precious metals platinum and palladium also dropped following Trump's copper tariffs shock, hitting 5-week and 2-week lows respectively at $1286 and $1182 before rallying 2.0% and 3.0% in London on Thursday.
The Dollar meantime held flat at 2-month highs on its DXY currency index after the Federal Reserve kept its key interest rate unchanged at 4.33% as universally expected.
Two of the Fed's FOMC policy committee dissented however, with board members Michelle Bowman and Christopher Waller − both widely seen as
now jockeying to replace Jerome Powell as Fed chair when his term expires next year, if not sooner − voting to cut rates.
"We should be the lowest interest rate. And we're not. We're number 38 because of the Fed," said Trump to reporters on Wednesday.
"[Powell] has done a bad job. He's
always too late!"
New US data yesterday said the world's largest economy grew at a 3.0% annualized pace in April-to-June, beating analyst forecasts with inflation slowing beneath expectations.
US employers then made 1/3rd more hires in July than analysts forecast on the ADP Payrolls estimate.
The 20-nation Eurozone also beat economic consensus with Q2 GDP growth of 1.4%, one tick slower than January-to-March, while unemployment held unchanged last month.
But China's manufacturing sector has contracted again in July, the official NBS data agency's new PMI survey said Thursday, while services-sector growth has slowed near zero.
China's CSI300 stock index today sank by 1.8%, cutting its gain across July to 3.5% for Yuan investors.
New York's S&P500 index meantime set another new all-time high Thursday, heading for its 3rd stong monthly rise in a row with a gain of 3.4%.
July's surge in the US Dollar meant that gold priced in other currencies outperformed, rising 3.0% in Euros to €2891 and making its first-ever monthly close above £2500 per Troy ounce for UK investors.
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