Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were steady during midday trade in Europe today. The US posted some encouraging data yesterday, boosting stocks and the dollar. Meanwhile, copper futures were steady ahead of a key report from China.

Gold futures for settlement in August were up 0.09% at $1 307.5 per troy ounce by 11:46 GMT in New York. Prices shifted between $1 310.2 and $1 305.4 per troy ounce. The contract lost 0.58% on Tuesday, after adding 0.34% on Monday.

“Without the current geopolitical risks, gold would not be able to hold on to prices above $1,300,” UBS AG analysts wrote in a report today, cited by Bloomberg. “Such risks are holding potential shorts back. Gold reacted to U.S. economic data releases and subsequent movements in the foreign-exchange market, but follow through was lacking. The overall muted tone remained in place.”

Meanwhile, silver futures for September stood at $21.010 per troy ounce, up 0.01%, with daily high and low at $21.070 and $20.955 per troy ounce, respectively. The contract dropped 0.02% on Tuesday, after adding 0.60% on Monday.

US data

Several key US reports were released yesterday. CPI for June was logged at 2.1% on an annual basis, as predicted and matching the Fed’s 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.

Meanwhile, existing home sales added 2.6% on a monthly basis in June to a 5.04 million annualized rate, after a further 4.9% increase in May. The house price index gained 0.4% on a monthly basis in May, after 0.1% more were added in April. The real estate industry is the biggest single contributor to US GDP, accounting for about 13%.

Several more reports will be posted tomorrow. New home sales have probably dropped 5.3% on a monthly basis in June, for an annualized rate of 475 000, analysts say before the report on Thursday. New home sales added 18.6% in May. Elsewhere, Initial jobless claims for the week ended July 19 have slightly increased to 310 000, while Markits preliminary US manufacturing PMI reading for July is expected at 57.5, slightly more than before.

A PMI reading of higher than “50” means an expanding sector, while anything below means contraction. The bigger the distance from “50” the greater the pace of expansion or contraction.

The Eurozone will also post several PMI figures tomorrow, with expectations of steady growth for both services and factories in the Bloc for July.

Stocks, dollar

US stocks regained ground on Tuesday. All three major indices closed higher as trading on Wall Street ended, with S&P standing for a 0.50% gain, reaching the all-time high of 1 986.60, Dow 30 added 0.36%, while Nasdaq 100 was up 0.70%, also logging a record high at 3 961.62.

The US Dollar Index, which measures the greenback’s performance against six other major currencies, closed 0.29% higher on Tuesday, for some 0.8% total gain for the last six sessions. At 8:01 GMT today the gauge was unchanged at 80.86.

Copper

Copper futures for September traded for $3.2100 per pound in New York, up 0.06%. Prices ranged from $3.2170 to $3.1920 per pound. The contract added 0.28% on Tuesday, after a further 0.46% gain on Monday.

HSBC will post its preliminary reading on Chinese manufacturing PMI for July early tomorrow, and analysts expect a confirmation of the positive turn, for a standing of 51. China consumes about 40% of all copper.

Previously, the metal was pressured low enough to spur bargain hunting, as China posted a slowdown in housing price inflation last week, while also reporting a sizable drop in copper imports.

“Commodities have seen a clear increase in investor interest but we are negative on copper,” Nic Brown, head of commodities research at Natixis, said for Reuters. “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.