Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were higher during midday trade in Europe today, as the US posted key readings on the economy. Stocks closed lower on Wednesday, for only the fourth daily loss in the last eighteen sessions on Wall Street. Meanwhile, copper futures continue downwards amid a copper-related fraud investigation in top-consumer China.

Gold futures for delivery in August traded for $1 266.0 per troy ounce at 12:47 GMT on the COMEX in New York today, up 0.38%. Daily high and low stood at $1 268.8 and $1 260.0 per troy ounce, respectively. Yesterday the contract added 0.09%, reaching a 10-day peak at $1 265.5 per ounce, and so far this week gold has advanced 0.7%.

Meanwhile, silver contracts for July stood at $19.295 per troy ounce, for a gain of 0.64%. Daily high and low were at $19.350 and $19.150 per troy ounce, respectively. Yesterday the contract was unchanged at closing, though it reach a two-week high earlier at $19.330 per ounce, and so far this week silver has added 0.9%.

Several reports on the US economy were posted today. The preliminary figure on retail sales was logged just below expectations, for a 0.3% monthly growth in May, after an upwards-revised 0.5% for April. Meanwhile, core retail sales, which exclude automobiles, stood at 0.1% monthly increase, also short of expectations, after 0.4% in April. Retail sales are indicative of consumer spending, which generates about 80% of US GDP.

Also today, jobless claims were reported. Initial applications for unemployment benefits in the US for the week through June 7 were logged at 317 000, slightly more than expected. Meanwhile, continuing claims for the week ended May 31 stood at 2.614 million, also slightly adding to the previous reading.

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.

Usually, when outlooks for an economy improve, appetite for stocks of companies present on that market increases. The higher profits prospects stoke greater risk-reward investments, shifting investor demand from safe havens, such as gold, towards equities, and there is usually an opposite correlation between stocks and havens.

Stocks

Yesterday US stocks recorded the fourth session to close lower, out of the last eighteen, after consecutive record-highs over the previous five sessions. Dow 20 Industrial was 0.60% lower, S&P 500 dropped 0.35% and Nasdaq 100 was down 0.08%. Dow Jones Euro Stoxx 50, a gauge of European stocks, also recorded a sizable loss on Tuesday, dropping 0.66%. Today, by 12:18 GMT the gauge stood for a 0.03% increase.

The US dollar index, which measures the greenback against six other major currencies, is up 0.41% this week and is hovering near a four-month high.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 for a seventh session on Wednesday. The fund has regained almost 11 tons over the past 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 dropped 0.16% to trade at $3.0355 per pound at 12:48 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.0475 and $3.0315 per pound. Yesterday copper lost 0.41%, and so far this week the contract has dropped 0.3%, reaching a monthly low at $3.0185 per pound on Monday.

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.

“Traders wait for developments in Qingdao,” William Adams, analyst at Fastmarkets.com in London, said for Bloomberg.

Chinese industrial production for May will be posted on Friday. Experts suggest a steady 8.8% growth year-on-year, after 8.7% in April. The industrial sector accounts for nearly half of Chinese GDP, and the bulk of domestic copper consumption. Also due on Friday, reports on fixed assets investments and retail sales for May are expected to reveal steady annual growth for both.