Commodities trading outlook: gold holds near 1 week low, copper rises second day

Gold headed for its first weekly decline in three as better-than-expected economic data from the US, China and Europe supported the case of an economic recovery, denting the metal’s safe haven demand. Copper was pressured by falling Chinese house prices but continued to draw support by strong US data, coupled with better-than-expected manufacturing figures from China and Europe.

Comex gold for delivery in December traded at $1 233.2 per troy ounce at 12:26 GMT, up 0.33% on the day, having shifted in a daily range of $1 234.7-$1 229.1. The precious metal fell by 1.3% to $1 229.1 an ounce on Thursday, having earlier declined to a one-week low of $1 226.3. Prices are currently down 0.5% on the week.

A strong dollar weighed on the precious metal. The greenback drew support as better-than-expected US housing and employment data backed the case of a robust economic recovery.

The Labor Department reported on Thursday that the number of Americans who filed for initial jobless benefits in the week ended October 18th rose to 283 000 from the preceding period’s upward-revised 266 000. However, underlying labor market strength was evident as the four-week average of initial jobless claims slipped to 281 000, the lowest since May 2000. No special factors influenced the state level data. A Bloomberg gauge of consumer confidence also marked an improvement.

The US manufacturing sector expanded at a slower pace in October, a preliminary gauge by Markit Economics showed on Thursday, dragged by output and new order growth both easing, while new export sales rose the least since July. However, the pace of expansion remains robust and job creation continued to steadily improve.

The US dollar index for settlement in December traded at 85.840 at 12:34 GMT, down 0.12%, having ranged between 86.015 and 85.810 during the day. The contract rose to 86.050 yesterday, the highest since October 15th, and settled the day 0.1% higher at 85.946.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP and a proxy for investor sentiment towards gold, fell by 0.3% to 749.87 tons on Wednesday, the lowest since November 2008, and remained unchanged at that level on Thursday.

Heightened physical demand from India, however, limited losses. The Asian country celebrated Dhanteras, the biggest gold-buying festival, on Tuesday, while Diwali, the festival of lights, was celebrated on Thursday. October 23rd and 24th are public holidays in India.

According to estimates by the All India Gems & Jewellery Trade Federation, India’s gold imports probably jumped to 95 tons last months from 15-20 tons a year earlier, while researcher CPM Group estimates the holiday generates around 20% of annual purchases.

Nevertheless, long-term sentiment on gold remained bearish as the Fed is broadly expected to end its QE program at its October meeting, while an interest rate hike is anticipated to come at some point in 2015.

Copper

Copper fell earlier on Friday after data showed house prices in China fell in September, but upbeat economic data from the US, coupled with better-than-expected manufacturing figures from China and Europe on Thursday, kept an overall bullish tone.

Comex copper for delivery in December rose by 0.49% to $3.0550 per pound by 12:26 GMT, having earlier touched $3.0565, the highest since October 15th. The industrial metal added 0.75% on Thursday and settled at $3.0400 a pound, the highest since October 14th. Prices are up 1.7% so far this week.

The red metal fell earlier on Friday after Chinas National Bureau of Statistics reported that house prices in the Asian country fell by an annualized 1.3% in September, exacerbating concerns of slowing economic activity in the worlds top consumer of copper.

Nicholas Snowdon, a metals analyst at Standard Chartered, said for CNBC: “Anything that on a short-term basis indicates softness in the Chinese property sector is going to be a concern, but I wouldnt overplay one data point.”

Upbeat housing and employment data from the US, coupled with better-than-projected manufacturing gauges from Europe and China, set the general tone and lifted the metal.

The US manufacturing sector expanded at a slower pace in October, a preliminary gauge by Markit Economics showed on Thursday, dragged by output and new order growth both easing, while new export sales rose the least since July. However, the pace of expansion remained robust and job creation continued to steadily improve.

Market players now eyed the last potential market mover for the week – US new home sales. The Commerce Department is expected to report that sales of newly built residences fell by 6.8% in September to a 470 000 annual pace after they rose by 18% in August to a six-year high.