Commodities trading outlook: gold, silver and copper futures

Safe-haven metals were pressured during afternoon trade in Europe today, as improving employment data from the US added to previous manufacturing and consumer reports. The figures solidify positive outlooks for the worlds largest economy, after Feds vote of confidence. Copper also felt the major news for the US, but traded above the last close, after strong factory data from the EU.

Gold futures due in June traded for $1 284.4 per troy ounce at 13:17 GMT on the COMEX in New York today, adding 0.08% from last session’s closing price. Daily high and low stood at $1 288.5 and $1 272.0 per troy ounce, respectively, nearing the lowest level since early February.

At the same time, silver futures for July, the most traded contract in New York, stood at $19.165 per troy ounce, gaining 0.64% from the previous close. Prices ranged between $18.905 and $19.250 per troy ounce. Yesterday prices neared multi-year lows at $18.685 per ounce.

Employment figures for April in the US blew past forecasts to register readings unseen in years. Unemployment rate stood at 6.3% – the lowest since the very start of the financial crisis in Autumn 2008. Meanwhile, nonfarm payrolls added 288 000 for the month of April, marking the highest rise since May 2010.

Previously, consumer spending and improving factory activity in the US had further backed-up the Feds confidence in the recovering economy. The US central bank reduced stimulus by another $10 billion, disregarding a weak 0.1% annual growth for economy in the first quarter of 2014.

“The economy is healing, so there is no need for a safe-haven asset,” said for Bloomberg Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago. “People will move to more risky assets.”

Holdings at the SPDR Gold Trust reached the lowest point since January 2009 at 785.55 tons on May 1st. The discouraging outflow suggests investor interest in the precious metal is at a multi-year low, as the US economy recovers.

In Europe, the crisis in Ukraine is hardly cooling. Kiev began an “anti-terrorist” operation against the separatist stronghold of Sloviansk earlier today, and reported the loss of several war machines and the deaths of a number of fighters. Meanwhile, Acting President Olexander Turchinov decreed the reinstatement of military conscription yesterday, in a bid to boost Ukraine’s standing forces. Earlier Moscow assured it has not intention of invading, but NATO and Kiev reported that Russia still has 40 000 troops near the border.

Copper Futures

Copper futures for July, the most traded contract on the COMEX in New York, traded for $3.0330 per pound at 13:21 GMT, adding 0.38%. Prices ranged from $3.0135 to $3.0450 per pound. Previously, the contract lost 2.33% over the last three trading days on poor quarterly figures in the US and weak manufacturing growth in China.

The data on employment in the US is only the last in a number of reports to boost confidence in the US economy. Earlier, ISM’s manufacturing PMI standing for April was recorded at 54.7 yesterday, well-ahead of expectations and above the 53.7 from last month.

A strengthening US economy supports the dollar, lifting the price of copper for foreign currencies, while also attracting investments away from commodities and towards equities. At the same time better industrial output would result in higher demand for the metal.

Elsewhere, Chinese government data on manufacturing output for April revealed a worse-than-expected PMI at 50.4. The figure does, however, improve on last month’s 50.3 reading, and is still above the “50″ mark, which translates into growth. Next week HSBC’s final standing for manufacturing PMI for China will be released. The preliminary report put the figure at 48.3, signaling contraction.

However, with peaking construction activities and a reported 500 000 tons of copper targeted stockpile by the government, demand outlooks for the red metal in China seem positive.

Earlier today the final reports on April’s factory PMI in the Eurozone offered sizable support for copper. Germany recorded a slight slow-down in the pace of industrial activities to stand at 54.1, while Italy and France registered gains on the advance readings, to settle at 54.0 and 51.2, respectively. The Bloc as a whole also added to preliminary data, to log at 53.4.