Commodities trading outlook: gold, silver and copper futures

Gold and silver futures remained higher during midday trade in Europe today, ahead of the release of the minutes from the Feds June meeting. Meanwhile, copper futures were also higher as Goldman predicts prices will lower through to next year.

Gold futures for delivery in August traded for $1 325.8 per troy ounce at 11:40 GMT on the COMEX in New York today, up 0.71%. Daily high and low stood at $1 327.2 and $1 318.7 per troy ounce, respectively. The contract dropped 0.04% on Tuesday, after a further 0.27% loss the previous session.

Meanwhile, silver contracts for September stood at $21.190 per troy ounce, for a gain of 0.84%. Daily high and low were at $21.205 and $21.065 per troy ounce, respectively. The silver contract was unchanged yesterday after dropping 0.28% on Monday.

“Stocks pulled back and the dollar remained weak, which supports gold,” Sarah Xie, Hong Kong-based analyst at Wing Fung Financial Group Ltd, said for Bloomberg. “Though investors expect an early rate hike, the Fed Reserve might be conservative. Gold may rebound if the minutes let investors down.”

Minutes from the Federal Open Market Committee (FOMC) June meeting will be released this Wednesday. The log is closely monitored by traders, since it reveals the plans and direction of the US most-senior monetary policy body.

The meeting, which took place some three weeks ago, resulted in decisions to keep the benchmark lending rate unchanged at 0.25%, while reducing assets purchases through its monetary stimulus program by another $10 billion to $35 billion a month, expressing limited confidence in the US economic recovery.

Stocks, dollar

US stocks continued downwards on Tuesday, with all major indices closing for sizable losses. S&P 500 dropped 0.70% as Wall Street trading closed on Monday, Dow 30 declined by 0.69%, while Nasdaq 100 was down 1.19%.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, added about 2 tons on Tuesday to stand at 800.28 tons, after gaining more than 16 tons over the last two weeks. Assets were recently pressured to multi-year lows by a recovering US economy.

The US Dollar Index, which measures the greenback’s performance against six other major currencies, dropped 0.06% on Tuesday, after a further 0.10% drop on Monday, and by 8:19 GMT today was down 0.02% at 80.20.

Copper

Copper futures for settlement in September added 0.49% to trade at $3.2730 per pound at 11:40 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.2470 and $3.2730 per pound. The contract lost 0.12% yesterday, though it reached a four-month peak of $3.2940 per pound, after a further 0.56% drop on Monday.

Goldman Sachs predicted that copper prices will “grind lower” over the next 6 to 12 months, as Chinese housing-related demand, which accounts for more than 50% of Chinese copper consumption wanes. Supply will outpace demand by some 385 000 tons this year and 454 000 tons next year, Goldman said, cited by Bloomberg.

Previously, copper inventories monitored by the London Metal Exchange increased 1.8 percent to 159,350 metric tons, Bloomberg reported yesterday.

“With the inventories increasing, we’re seeing a little bit of a negative tone in the market, especially since the rally we had last week was a little bit overdone,” Tom Power, a senior market strategist at RJO Futures in Chicago, said for Bloomberg. “I’m not too concerned of any major pullback. The price drop may be “a buying opportunity.”