Commodities trading outlook: gold, silver and copper futures

Gold and silver were pressured by a strong dollar ahead of a longer US weekend, after Germany posted business climate readings for May. Previously, mixed US data was not enough to impact precious metals. Stocks continued to advance, and assets at the SPDR remained at a multi-year low. Meanwhile, copper futures climbed, as tight supplies supported contracts ahead of the weekend.

Gold futures for delivery in June traded for $1 293.0 per troy ounce at 11:32 GMT on the COMEX in New York today, down 0.15%. Daily high and low stood at $1 295.7 and $1 291.2 per troy ounce, respectively. Yesterday the yellow metal rose by 0.54%, while so far this week the contract has added 0.13%, reaching a three-week trough at $1 282.9 per troy ounce on Wednesday.

Meanwhile, silver contracts for July stood at $19.445 per troy ounce, losing 0.38%. Daily high and low were at $19.525 and $19.400 per troy ounce, respectively. Yesterday silver gained 0.94% and so far this week the contract has added 0.99%.

The euro fell earlier today, after Germany posted slightly worse-than-expected economic conditions for May. According to the Ifo institutes Business Climate Index, May records a standing of 110.4, just below the expected 110.6. The news, however, impacted the euro severely, as traders were already quite skeptical, following poor numbers from the EU recently. As a result, the dollar gained, and gold suffered.

The US dollar Index was at 80.44 at 11:33 GMT, up 0.16% for the day, after a further 0.27% gain for the previous four sessions, while the euro traded against the dollar at 1.3627 EUR/USD, down 0.20% for the session, and a further 0.35% for the previous four trading days.

Previously, the US economy posted some mixed signals. Initial jobless claims stood at 326 000, much more than the forecast 310 000, after last week new claims reached a seven-year low of an upward-revised 298 000. Continuing claims were reported at 2.563 million for a 13 000 decrease.

Elsewhere, manufacturing PMI for May grew to 56.2, well-ahead of expectations, while existing home sales also added, but less than expected, for a 1.3% monthly gain. Data on new home sales will be revealed later today.

Despite the mixed signals, US stocks continued to gain on Thursday. S&P 500 added 0.24% on Thursday, for a total of 0.78% increase for the week so far, and is just 0.51% short of the all-time high. Dow 30 gained 0.06% and is 1.15% below the record peak, while Nasdaq 100 rose by 0. 42% to bring the week’s tally to a 1.77% growth, and is 2.20% away from the highest level on record.

Assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 776.89 tons on Thursday, the lowest level since December 2008. The fund has lost over 30 tons in the last month, as investor interest in havens dwindles, pressured by the growing US economy.

Earlier this week, precious metals were also eased by news that India, the second-top consumer, relaxed imports restrictions, allowing 7 more companies to ship to the country. The news came after the World Gold Council revealed demand in China and India had shrunk for the first quarter of 2014.

Ukraine

Ukraine’s military experienced the deadliest attack on its troops early on Wednesday. At least 14 soldiers were killed and a reported two dozen injured. Ukrainian officers told the BBC that the attack was carried out by mercenaries, and not the separatists.

Ukraine is preparing to hold a presidential election on May 25, and in the run-up to the vote all developments will be closely watched. Kiev hopes the election will soften the conflict, though the eastern rebels have long since declared they will boycott the vote, and will try to incorporate the separatist regions in the Russian Federation.

Copper

Copper futures for settlement in July grew by 0.83% to trade at $3.1680 per pound at 11:35 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.1360 and $3.1755 a pound. Yesterday the red metal added 0.61%, with strong support from China and the US. So far this week the contract has lost 0.14%, though on Monday it reached the highest peak in almost three months at $3.1840 per pound.

Tight supplies helped lift copper contracts today. The London Metals Exchange reported availability of the metal of less than 100 000 tons, which is the lowest since 2008.

“Copper remains supported by lower stockpiles and higher premiums for immediate deliveries,” RBC Capital Markets LLC said in a note.

Previously, US and Chinese manufacturing PMIs for May were revealed yesterday. The preliminary data for China put the figure at 49.7, well above expectations of 48.1, though still below the 50.0 contraction/expansion mark. April had recorded a significant slowdown in factory activity, with HSBC logging 48.1. The US logged manufacturing PMI for May at 56.2, well-ahead of expected 55.5.

Also yesterday, existing home sales for the US added 1.3% on a monthly basis, though trailing expectations of a 2.2% growth. Data on new home sales will be revealed later today, and forecasts suggest a monthly growth of about 10%.

Europe’s factory gauges were reported on Thursday. Germany’s manufacturing PMI for May was logged at 52.9, falling short of expectations and lagging behind April’s 54.1 figure. France recorded a contraction in the sector, recording its factory PMI at 49.3. The Bloc’s overall standing was reported at 52.5, signalling stable expansion, though trailing forecasts.