Commodities trading outlook: gold, silver and copper futures

Gold and silver futures climbed during midday trade in Europe today, as the US posted consumer inflation readings, Ukraine offering background support. Meanwhile, copper futures were higher amid bargain hunting, following last weeks slump.

Gold futures for delivery in August traded for $1 311.6 per troy ounce at 12:12 GMT on the COMEX in New York today, 0.18% lower than Monday’s close. Prices shifted between $1 302.2 and 1 316.8 per troy ounce. The contract added 0.34% on Monday, after losing some 2% last week.

Meanwhile, silver futures for delivery in September were at $21.000 per troy ounce, down 0.06%. The contract added 0.60% yesterday, after losing some 3.7% last week.

US reports

US CPI for June was posted earlier today. Consumer inflation was logged at 2.1% on an annual basis, as predicted and matching the Feds target, and 0.3% on a monthly basis. Meanwhile, core CPI stood at 1.9% annually and 0.1% month-on-month, both just below expectations. Consumer inflation is a major indicator for the health of the economy, as it gauges consumer spending, which generates about 80% of US GDP.

Federal Reserve Chair Janet Yellen testified before Congress last week, suggesting the US benchmark interest rate might be raised sooner than previously projected, in light of robust economic recovery. The speech boosted the dollar and pressured gold.

The Fed’s last meeting kept the rate at 0.25%, while monthly assets purchases were again trimmed by $10 billion to $35 billion, leading to a steady closing run of the program through October.

Also to be reported today, existing home sales are projected to have added 2.0% on a monthly basis in June, after a further 4.9% increase was reported in May. The real estate industry accounts for about 13% of US GDP.

Ukraine crisis

The UN Security Council voted unanimously in favor of a “full, thorough and independent international investigation” of the downing of flight MH17. It also demanded that those responsible “be held to account and that all states co-operate fully with efforts to establish accountability”, the BBC reported.

The Malaysian Boeing 777 was shot down over rebel-held territory in Ukraine on Thursday, killing all 298 people on board.

British Prime Minister David Cameron reaffirmed the widely shared view that it was a Russian-supplied Buk missile, fired by pro-Russian separatists, which shot down the Malaysian airliner.

Moscow dismissed any liability again on Monday, denying it has supplied rebels with missiles or “any other weapons”, the BBC reported.

“Geopolitical risks could escalate further and add to the upside, but these usually only have a temporary effect on the market,” Andrey Kryuchenkov, analyst at VTB Capital in London, said in a note today, cited by Bloomberg. “We do not expect a sustained price rebound here with hardly any support from the physical side at the moment.”

Copper

Copper futures due in September traded for $3.2135 per pound at 13:13 GMT in New York today, up 0.45%. Prices ranged $3.1960 to $3.2360 per pound. The contract added 0.46% on Monday, after a 2.5% drop last week.

Traders increased net long, or buy, positions to their highest level since 2006 in the week through July 15, according to the Commodity Futures Trading Commission and Reuters data.

The metal was pressured low enough to spur bargain hunting, as China, which accounts for 40% of worldwide demand, posted a slowdown in housing price inflation last week, while also reporting a sizable drop in copper imports.

HSBC will post its preliminary reading on Chinese manufacturing PMI for July, and analysts expect a confirmation of the positive turn, for a standing of 51. A reading higher than 50 means an expansion of the sector, while below 50 means contraction.

Nic Brown, head of commodities research at Natixis, said for Reuters: “Commodities have seen a clear increase in investor interest but we are negative on copper. Our current forecasts anticipate copper surpluses of 225 000 tonnes in 2014, followed by 285 000 tonnes in 2015.”

Worldwide refined copper deficit amounted to 183 000 tons in April, following a 84 000 ton shortage in March, the International Copper Study Group said, cited by Reuters.