Commodities trading outlook: gold, silver and copper futures

Gold and silver futures traded higher after the US revealed new payrolls were not better than expected. Previously, precious metals gained yesterday, as the ECB unveiled plans to stimulate the economy. Meanwhile, copper futures were lower amid an ongoing lending fraud investigation in top-consumer China.

Gold futures for delivery in August traded for $1 257.5 per troy ounce at 13:03 GMT on the COMEX in New York today, up 0.34%. Daily high and low stood at $1 258.2 and $1 251.4 per troy ounce, respectively. Yesterday the contract added 0.72%, and so far this week gold has gained about 0.6%, reaching a four-month low at $1 240.2 per troy ounce on Tuesday.

“The rally is a reaction to the increased liquidity environment that ECB announced,” said for Reuters Barnabas Gan, analyst at OCBC Bank.

Meanwhile, silver contracts for July stood at $19.130 per troy ounce, for an increase of 0.25%. Daily high and low were at $19.200 and $18.995 per troy ounce, respectively. Yesterday the contract gained 1.55%, and so far this week silver has added about 2%.

US economic outlook

The US posted key employment data for May today. New nonfarm payrolls stood at 217 000, as predicted, after 288 000 were added in April. Unemployment rate stood same as last month at 6.3%, which is the lowest level since September 2008, beating expectations of a slight increase.

Yesterday the weekly jobless claims report for the seven day through May 31 was posted. Initial applications for unemployment benefits increased more than expected to 312 000, after 300 000 were logged for the previous week. Meanwhile, continuing claims for the week ended May 24 were reported at 2.603 million, improving on expectations and on the previous standing.

Eurozone

Earlier today, Germany, the Bloc’s top economy, posted seasonally adjusted industrial production for April. The figure was logged at a 0.2% monthly growth, after a downgraded -0.6% for March.

Yesterday the European Central Bank revealed the long-awaited interest rate decision. Borrowing costs were moved downwards to 0.15%, which is higher than the forecast 0.10%. Meanwhile, deposit rates were moved to negative territory, and now stand at -0.10%, which means ECB will tax commercial banks for keeping their money in deposit. The measures are aimed at revitalizing the European credit market, in order to breathe life into the economy and spur growth.

Also yesterday, the Eurozone logged retail sales for April at 0.4% on a monthly basis, beating expectations and improving on the downgraded 0.1% growth from March.

Previously, the Eurozone posted more disappointing data and GDP at a muted 0.2% quarterly growth, while services PMI logged a slowdown in expansion of the sector.

Stocks, SPDR

US stocks continued to score big gains. S&P logged a 0.65% increase as trading on Wall Street ended on Thursday, for the all-time high close of 1 940.46. Nasdaq 100, which excludes financial institutions, also registered the highest close on record at 3776.95, with a daily gain of 0.89%. Dow 30 Industrial was at 16 836.11, also at an all-time high, after a 0.59% daily gain.

Elsewhere, Dow Jones Euro Stoxx 50 added 0.89% yesterday, on ECB’s decision to support the economy, to close for an all-time high of 3267.39. By 7:20 GMT today the index was up by a further 0.03%.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 on Thursday. The fund has regained almost 11 tons this past week, after dropping more than 30 for the previous month, as the US economy scored improving results.

Copper

Copper futures for settlement in July fell by 1.78% to trade at $3.0355 per pound at 13:04 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.0260 and $3.0940 per pound, reaching a monthly low. Yesterday the contract lost 0.08%, and so far this week copper has dropped about 1%.

The investigation of metals storage at China’s Qingdao port will make banks cautious about commodity financing, and any lending curbs might weigh on copper, Macquarie Group Ltd. said, according to Bloomberg. Furthermore, investors turned to selling their copper assets on the physical market, further pressuring contracts.

On Wednesday, Chinese authorities reported that they were conducting an investigation in Qingdao, on possible lending fraud, linked with copper consignment.

China accounts for about 40% of total copper consumption.

“The ongoing investigation about the China Qingdao port is still impacting the metal,” said for Bloomberg Naeem Aslam, chief market analyst at Ava Capital Markets Ltd. in Dublin.