Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were higher during midday trade in Europe today, as fighting in Iraq continued, with militants making more advances. Meanwhile, copper futures were steady as China posted declining volumes of copper imports.

Gold futures for delivery in August traded for $1 322.5 per troy ounce at 13:07 GMT on the COMEX in New York today, up 0.31%. Daily high and low stood at $1 326.6 and $1 314.5 per troy ounce, respectively, reaching a two-month high. The contract added 0.14% yesterday, after it closed for a 3% weekly gain on Friday.

Meanwhile, silver contracts for July stood at $21.005 per troy ounce, for a gain of 0.43%. Daily high and low were at $21.170 and $20.810 per troy ounce, respectively. The contract dropped 0.16% on Monday, after silver gained more than 6% last week, with the July future logging a three-month high at $20.990 per troy ounce on Friday.

Economic reports

Consumer confidence in the Eurozone was reported earlier today. The German Ifo institute will revealed lowering Business Climate Index for the EU for July, with a standing of 109.7, after 110.4 in June. Later, the Conference Board is set to unveil growing confidence in the US for July, with a forecast reading of 83.5, after 83.0 in June.

Later today, the US will also post new home sales. Analysts suggest an annualized rate of 440 000 in May, for a slight increase to April’s 433 000. The real estate sector accounts for about 13% of US GDP.

Previously, key economic reports were released yesterday. The Eurozone reported preliminary services and manufacturing PMI for June, with Germany, France and the Bloc as a whole scoring worse than expected. HSBC revealed a surprisingly improving factory sector in China for June, while the US revealed existing home sales improved in May.

Last week saw the US Federal Open Market Committee (FOMC) announcing key monetary policy decisions. Interest rate was kept at 0.25%, while monthly assets purchases were trimmed by $10bn for the fifth straight time. Fed’s Chair Janet Yellen expressed the Committee’s views that rates are likely to stay low “for a considerable time”, in light of a fragile economic recovery.

“The U.S. has entered the monetary tightening cycle and will continue to reduce stimulus as economic data improves,” Zhang Lin, Hangzhou-based analyst at Yongan Futures Co., said for Bloomberg. “Interest rates will rise at some point, so the longer-term outlook for gold remains bearish.”

Iraq

Sunni militants, led by a group of extremists called ISIS (Islamic State in Iraq and the Levant), continued advancing throughout Iraq. Tribal fighters loyal to the Islamists captured Baiji refinery, Iraq’s foremost source of refined fuels, supplying about a third of the country’s fuel. A tribal spokesman said his tribe had “fully captured” the refinery, and that the advance towards Baghdad would continue, the BBC reported.

Elsewhere, insurgents seized all official border crossings in Syria and Jordan. The Jordanian army has been on full alert, protecting its borders against incursions, the Jordanian military said.

The Iraqi government insisted insurgents do not threaten Baghdad, nor the southern oilfields, which account for more than 75% of Iraqi oil output.

Iraq is OPEC’s second-top oil producer, and exports some 3 million barrels per day from its main southern terminal at Basra.

Copper

Copper futures for settlement in July added 0.11% to trade at $3.1530 per pound at 13:09 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.1325 and $3.1590 per pound. The contract added 0.90% yesterday, after gaining more than 2% last week.

Copper imports in top-consumer China, which accounts for 40% of world demand, dropped 17% in May, a government report revealed earlier yesterday.

“China’s trade data showed a slowdown in the country’s demand for metals, clouding the demand outlook,” Kazuhiko Saito, analyst at Fujitomi Co., said for Bloomberg.

Previously, HSBC released its preliminary reading on China’s manufacturing PMI for June on Monday. The figure surprisingly beat expectations to stand at 50.8, to log the first monthly expansion in the factory sector since January. Later this week, Chinese industrial profits will be reported on Friday.

The industrial sector accounts for nearly half of Chinese GDP and the bulk of copper demand.