Commodities trading outlook: gold, silver, copper futures

Gold futures traded near the highest level in three weeks as escalating tension between Russia and Ukraine limited investors risk appetite and boosted the metals safe haven demand. Silver and platinum tracked the yellow metals upward movement and palladium surged to a three-year high. Copper gained as well as retail sales in the United States jumped by the most in 1-1/2 years.

On the Comex division of the New York Mercantile Exchange, gold futures for settlement in June traded at $1 328.00 per troy ounce at 14:41 GMT, up 0.68% on the day. Prices shifted in a daily range between a three-week high of $1 330.80 and $1 318.70 an ounce. The precious metal fell 0.14% on Friday to settle the week at $1 318.60 an ounce, its second straight weekly advance.

Silver futures for delivery in May were up 0.40% at $20.025 per troy ounce, while platinum for settlement in July traded at a four-week high of $1 469.80 an ounce, up 0.49% on the day.

Gold extended its upward momentum as mounting tensions between Russia and Ukraine limited investors’ risk appetite, boosting the metal’s safe haven appeal. Kiev gave pro-Russian separatists a deadline until Monday morning to yield or face an anti-terrorist operation by its armed forces, while the European Union and the United States work on tougher economic sanctions, if Russia continues its course.

Georgette Boele, an analyst at ABN Amro, said, cited by CNBC: “You have tensions between Russia and the West over Ukraine again which is giving support to gold, although the strength coming from expectations interest rates in the U.S. will stay low for a prolonged period is a more dominant driver overall.”

The minutes of FOMC’s latest meeting, which were released last Wednesday, revealed that the Federal Reserve played down anticipations of some of its own members that interest rates might be raised faster than projected. This pressured down the US dollar and provided support for the yellow metal.

The US dollar index, which measures the greenback’s strength against a basket of six major currencies, fell by 1.2% last week.

However, recent signs of robust performance of the US economy could imply a readjustment in the interest rate expectations, which would have a negative impact on demand for precious metals.

Copper

Elsewhere on the Comex, copper futures for settlement in May rose by 0.28% to $3.0500 per pound, having shifted in a daily range between $3.0615 and $3.0355 a pound. The red metal fell by 0.1% on Friday but settled the week 0.6% higher, offsetting the previous 5-day periods decline.

The Commerce Departments Census Bureau reported that retail sales in the US jumped by 1.1% in March, the most since September 2012, exceeding analysts expectations for 0.8% growth. Moreover, Februarys reading received an upward revision to 0.7% from initially estimated at 0.3%, adding to recent data points which showed the US economy has overcome a slowdown due to inclement winter weather.

Ten of thirteen categories included in the calculation of the indicator showed an improvement. Sales at auto dealers jumped by 3.1% in March, up from 2.5% the previous month. Retail sales excluding autos rose by 0.7% from 0.3% in February, beating expectations for a 0.5% rise.

Elsewhere on the precious metals market, palladium futures for settlement in June traded at $815.60 per troy ounce at 14:45 GMT, up 1.09% on the day. Prices jumped to $816.30 an ounce earlier in the day, the highest level since August 2011, as tensions in Ukraine spurred concerns over supplies of the metal from Russia, the world’s biggest producer, while prolonged labor strikes in No.2 producer South Africa further added to supply fears. The metal has gained around 14% this year due to growing demand from the auto industry and fears of supply disruptions.

James Moore, an analyst at FastMarkets Ltd. in London, said for Bloomberg: “It’s a double-edged sword for palladium, we’re seeing robust demand and also supply constraints. You’ve got the South African strikes and concern regarding Russian sanctions as tension bubbles along. Investment demand is strong.”

Investors are now awaiting the release of key economic data from the US to gauge the strength of the economy, including consumer inflation, housing data, initial jobless claims and New York and Philadelphia manufacturing gauges.