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Commodities trading outlook: gold, silver and copper futures

Gold futures declined during midday trade in Europe today, while silver added, as investors await the key report on US payrolls tomorrow. The US dollar continued upwards, hovering near a one-year peak. Meanwhile, copper futures were also higher, boosted by the US GDP figure from Wednesday.

Gold futures due in December traded at $1 294.7 per troy ounce at 12:34 GMT in New York, down 0.17%. Prices ranged $1 292.9 to $1 298.8 per troy ounce. The contract dropped 0.28% on Wednesday, and was down about 0.6% for the week.

Silver contracts for September added 0.43% to trade at $20.685 per troy ounce. The contract added 0.07% yesterday, and was down 0.2% for the week.

US economy

The Fed concluded its two-day meeting yesterday, announcing a decision to cut monthly assets purchases by another $10 billion to $25 billion, backing on a solid recovery. The move was largely expected and extrapolates to a close of the stimulus program in late 2014. The program was introduced in late 2012 to pump fresh money into the then-slacking US economy.

Meanwhile, policymakers also kept the benchmark interest rate unchanged at 0.25%, adding that a hike was not to happen for a “considerable time after the asset-purchasing program had concluded”, which is in line with market expectations.

The US Bureau of Economic Analysis posted a 4.0% preliminary Q2 GDP growth yesterday, well above the expected 3.0%. Also, the reading for Q1 was revised from -2.9% to -2.1%, adding to positive sentiment for the world’s largest economy.

The US Dollar Index added 0.26% on Wednesday, reaching an 11-month high of 81.64. By 12:00 GMT today the gauge was up 0.10% at 81.59, standing for a weekly gain of about 0.6%.

Initial jobless claims for the week through July 26 were logged at 302 today, highlighting the Feds expressed concern with the instability of the US labor market, ahead of the payrolls report, which will be released tomorrow.

New non-farm payrolls for July will be reported tomorrow, after ADP posted its advanced reading yesterday, suggesting the US economy has added 218 000 new jobs, less than the forecast figure of 230 000. Last month’s 288 000 figure was an eight-year high.

Ukraine, Gaza

Belarus is to host talks between Ukraine, Russia and the Organization for Security and Co-operation in Europe (OSCE) today. A senior rebel leader is also said to attend, in the latest attempt to deescalate the crisis.

Fighting in Ukraine, including at the MH17 crash site, continued on Wednesday. An OSCE team of investigators finally reached the crash site

Meanwhile, the US and EU imposed new sanctions on Russia this week, targeting the energy, defense and high-tech sectors. The Kremlin saw the measures as “destructive and short-sighted”.

The latest round of sanctions comes in light of the downing on Malaysian passenger jet, flight MH17, which was shot down over rebel-held territory in eastern Ukraine. The West has accused the rebels for the act, and Moscow for supplying the insurgents with the weaponry.

The Kremlin has denied any involvement and has instead put the blame for the incident on the Ukrainian military.

Elsewhere, fighting continued in Gaza, with Israeli shells hitting a crowded market on Wednesday, killing at least 17 and injuring dozens. An Israeli shell hit a UN-run shelter earlier, killing at least 15. UN spokesman Chris Gunness saying “the world stands disgraced” by the attack. Mr Gunness told the BBC that Israel had been told 17 times that the school in the Jabaliya refugee camp was housing civilian refugees.

Israel said it is investigating the issues. “If we find that it was errant fire from Israel I’m sure we will apologize,” Israel’s government spokesman Mark Regev said.

The Palestinian death toll now exceeds 1 350, mostly civilians and including women and children, according to the Palestinian Authority Health Ministry. 56 Israeli soldiers and two civilians have also died since the conflict sparked back to life earlier this month.

Copper

Copper September futures traded at $3.2555 per pound in New York, up 0.43%. Prices ranged from $3.2300 to $3.2575 per pound. The contract added 0.70% on Wednesday, reversing losses from earlier this week.

Copper received strong support from The Bureau of Economic Analysis’ preliminary GDP growth figure yesterday, sending the September contract in New York up almost 1%.

“Copper could get a boost on that type of news,” Phil Streible, senior market strategist at RJO Futures in Chicago, said for Bloomberg. “Improving economic conditions should boost demand for all base metals.”

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