Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were lower during midday trade in Europe today, as the US posted shockingly improving employment figures and the ECB revealed its rate decision. Meanwhile, copper futures recovered some earlier losses, after a sizable gain on Wednesday.

Gold futures for delivery in August traded for $1 316.7 per troy ounce at 13:09 GMT on the COMEX in New York today, down 1.07%. Daily high and low stood at $1 329.0 and $1 309.4 per troy ounce, respectively. The contract added 0.32% on Wednesday, and so far this week it has gained about 0.8%, reaching a three-month high of $1 334.9 per troy ounce.

Meanwhile, silver contracts for September stood at $21.080 per troy ounce, for a loss of 1.04%. Daily high and low were at $21.230 and $20.820 per troy ounce, respectively. The contract added 0.88% yesterday, reaching a three-month high of $21.335 per troy ounce, and so far this week silver has added about 0.8%.

US reports

Key US employment data was revealed today. Nonfarm payrolls for June increased by 288 000, which is a four-year peak. ADP posted a 281 000 figure on Wednesday, and analysts had earlier suggested a growth of about 210 000. The unemployment rate dropped to 6.1%, which is the lowest rate since September 2008.

“The job numbers are telling us that the economy is healthy, and people don’t need a lot of safe haven going forward,” Alfonso Esparza, a senior currency analyst in Toronto at Oanda Corp., said in a telephone interview for Bloomberg. “Gold will probably now start weakening again.”

Meanwhile, initial jobless claims for the week ended June 28 were slightly more than before at 315 000, and continuing applications for benefits for the week through June 21 were at 2.579 million, also logging a minor increase.

Later today, ISM will post its non-manufacturing PMI for June, and analysts expect steady growth in the services sector as well, with a suggested figure of 56.3, same as last month. A reading of 50 or higher means expansion of economic activities, and vice versa. The bigger the distance from 50, the greater the pace of contraction or expansion. The services sector accounts for about 80% of US GDP.

Previously, ISM revealed its June manufacturing for the US yesterday, for a slightly worse-than-expected growth, but sizable growth nonetheless.

ECB rates

The European Central Bank (ECB) announced its benchmark interest rate and deposit rate earlier today. The main lending rate was kept at 0.15% after it was reduced from 0.25% the previous month, while the deposit rate for commercial banks which keep their money at the ECB was bumped into positive ground again, at 0.10%. Last month it was pushed to -0.10%, which meant the ECB was taxing banks for keeping their money, in a bid to prompt increased consumer lending.

Copper

Copper futures for settlement in September added 0.14% to trade at $3.2605 per pound at 13:10 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.2465 and a four-month peak of $3.2675 per pound. The contract added 1.90% yesterday, and so far this week it has gained more than 3%.

Payrolls “caught the whole market by surprise,” Tim Evans, the chief market strategist at Long Leaf Trading Group in Chicago, said in a telephone interview for Bloomberg. “When you have employment growing, naturally, the demand for industrial commodities like copper will be higher. You’ll tend to see buying in those markets.”

Elsewhere, two separate reports on Chinese services were released earlier today. HSBCs services PMI for June was logged at 53.1, for a sharp increase after the 50.7 figure for May. Meanwhile, the official government report recorded a services PMI of 55.0, after the 55.5 standing in May.

Previously, HSBC confirmed its positive reading for the factory sector on Tuesday, logging a 50.7 manufacturing PMI reading for June, after its preliminary 50.8 of last week. Meanwhile, the Chinese government posted its own reading on June’s manufacturing PMI, for a standing of 51.0.

China accounts for more than 40% of total copper demand.