Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were little changed during afternoon trade in Europe today, after safe-havens advanced confidently yesterday, as Iraq witnessed heavy fighting. Meanwhile, copper futures were up, boosted by steady industrial output gains in China.

Gold futures for delivery in August traded for $1 272.8 per troy ounce at 13:27 GMT on the COMEX in New York today, down 0.09%. Daily high and low stood at $1 277.6 and $1 270.9 per troy ounce, respectively, reaching a 14-day peak. Yesterday the contract added 1.01%, and so far this week gold has advanced more than 1.5%.

Meanwhile, silver contracts for July stood at $19.535 per troy ounce, for a gain of 0.01%. Daily high and low were at $19.640 and $19.470 per troy ounce, respectively, nearing a monthly peak. Yesterday the contract gained 1.88%, and so far this week silver has added more than 2.5%.

“Gold advanced as equity markets declined, boosting the appeal of the precious metal as an alternative investment and on stronger safe-haven demand as tensions escalated in Iraq,” Lachlan Shaw, analyst at Commonwealth Bank of Australia, said for Bloomberg.

Iraq

Iraq was the scene of a bloody religious onslaught over the last couple of days, when a Sunni Islamist organization, boasting some 5 000 troops, according to the BBC, launched assaults on towns in the northern provinces of the country. The group, called ISIS, or ISIL, is linked with al-Qaeda, and is composed of Sunni extremists, who regard Shia Muslims, who represents the majority of the population in Iraq and Iran, as infidels.

Developments shook markets, as the US said they are “considering all options, including military”. Earlier, the Iraqi oil minister had said that the US would provide air support for Iraqi ground troops retaliating against the insurgents.

Meanwhile, the Shia majority have been urged by clerics to take up arms, in response to the Sunni onslaught, which reportedly left hundreds dead.

US economy, Stocks

PPI for May was at -0.2% on a monthly basis, after 0.6% growth in April, while core PPI was at -0.1%, a report revealed today. The PPI standings follow the not-so-good figures from the US recently, after retail sales and jobless claims scored slightly worse than expected yesterday.

US stocks continued downwards during Thursday’s Wall Street session, and are headed for sizable weekly losses. S&P 500 dropped 0.71%, Dow 30 Industrial lost 0.65% and Nasdaq 100 was down 0.90%. Dow Jones Euro Stoxx 50, a gauge for European stocks, fell by 0.11% yesterday, and by 13:49 GMT today was down a further 0.34%.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 for an eighth 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 added 0.46% to trade at $3.0295 per pound at 13:28 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.0405 and $3.0140 per pound. The contract lost 0.82%, reaching a five-week low at $3.0085 per pound, and so far this week copper has dropped about 1%.

China, which accounts for about 40% of total copper consumption, posted key figures today. Industrial production for May was logged at 8.8% annual growth, in line with expectations, after 8.7% in April. The industrial sector accounts for nearly half of Chinese GDP and the bulk of copper demand.

Also, fixed assets investments for May added on forecasts for an annual growth of 17.2%. Retail sales for May in China also improved on expectations and on the previous reading to record an yearly growth of 12.5%, after 11.9% in April.

However, an ongoing probe in copper warehouses in the Chinese port of Qingdao continues to weigh on contracts, as authorities investigate possible lending fraud, linked with copper consignment.

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