Commodities trading outlook: gold, silver and copper futures

Gold and silver futures climbed during midday trade in Europe today, after muted activities on Monday. Stocks grew for the thirteenth out of the last sixteen sessions yesterday, for another record-high close. Investors now eye upcoming reports on retail sales and jobless claims in the US. Meanwhile, copper futures were unsettled, as investors weighed an ongoing criminal investigation in China, linked with copper consignment, with a newly introduced stimulus plan for the worlds top copper-consuming economy.

Gold futures for delivery in August traded for $1 261.2 per troy ounce at 13:51 GMT on the COMEX in New York today, up 0.58%. Daily high and low stood at $1 263.8 and $1 250.1 per troy ounce, respectively. Yesterday gold added 0.11%, after on Friday the contract closed for a 0.5% weekly gain.

Meanwhile, silver contracts for July stood at $19.195 per troy ounce, for a gain of 0.68%. Daily high and low were at $19.245 and $18.970 per troy ounce, respectively. Yesterday silver gained 0.13%, while last week the contract added about 1.5%.

“Gold appears to be steadying after the May slump,” Howard Wen, analyst at HSBC Securities (USA) Inc., wrote in a note, cited by Bloomberg. “We do expect the recent price decline to encourage some emerging market bullion demand but we do not believe this has fed into more stable gold prices, at least not yet.”

The US economy posted better-than-expected results on a number of indicators last week. Employment was reported near pre-recession peaks, while the services and manufacturing sectors, accounting for the bulk of US GDP, continued to expand more quickly than before.

More US data is due this week. Jobless claims will be posted on Thursday, with expectations of unchanged weekly figures at 310 000 new applications and 2.6 million continuing claims. Also on Thursday, retail sales are expected to post a preliminary 0.4% monthly growth for May, after muted 0.1% increase the previous month. Later, PPI for May will be revealed on Friday, and analysts project a 0.3% gain on a monthly basis and 1.9% year-on-year.

Stocks, SPDR

US stocks extended gains yesterday, for all three major indices to close Wall Street’s session at new highs. S&P added 0.09% for the record-high close of 1951.27. Nasdaq 100, which excludes financial institutions, also registered the highest close on record at 3795.74, with a daily gain of 0.03%. Dow 30 Industrial was at 16 943.10, also at an all-time high, after a 0.11% rise.

Elsewhere, Dow Jones Euro Stoxx 50, a gauge of European stocks, also scored the highest close of all time on Monday. The index stood at 3305.13 after a daily gain of 0.33%. Today, by 12:55 GMT the gauge stood for a further 0.06% gain.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 for a fifth session on Monday. The fund has regained almost 11 tons over the last two weeks, after dropping more than 30 for the previous month, as the US economy scored improving results.

Copper

Copper futures for settlement in July added 0.20% to trade at $3.0495 per pound at 13:52 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.0515 and $3.0215 per pound. Yesterday the contract lost 0.25%, reaching a monthly low at $3.0185 per pound, after last week the red metal lost more than 2%.

China, the biggest consumer of industrial metals, accounting for about 40% of total copper demand, has been generating some negative vibes for copper recently, as authorities have undertaken a criminal investigation on possible lending fraud, linked with copper consignment. The inquiry has prompted a retreat for the red metal, as investors sold assets on the physical market in China, in anticipation of further crackdown on copper deals. Additionally, institutions have become more reluctant to offer financing to metals ventures, with at least one bank stopping new metal financing deals, Reuters reported.

Meanwhile, China posted some economic data earlier today. CPI for May was reported at 0.1% on a monthly basis, beating forecasts for a third month of deflation, while consumer inflation was at 2.5% on an annual basis, also above expectations. PPI for May was logged at -1.4%, after -2.0% in April. The gauge has not seen a positive reading since February 2012.

However, Beijing offered some support for commodities markets today, as authorities introduced measures to help raise growth to earlier levels. Reserve requirements for banks, who lend to farming and small-to-medium sized companies was reduced.

“China’s rate cut decision is another step towards supporting the domestic economy,” Ric Spooner, chief market analyst at CMC Markets in Sydney, said for Reuters.

Earlier data on foreign trade revealed imports were much worse than expected, signaling lagging domestic activities.