Commodities trading outlook: gold, silver and copper futures

Gold futures were on the downbeat during midday trade in Europe today, after closing last week lower, while silver was steady. Meanwhile, copper futures were higher as traders await key imports data from China later this week.

Gold futures for December settlement were down 0.27% by 13:33 GMT on the COMEX in New York today, to trade at $1 290.6 per troy ounce. Prices ranged from $1 289.5 to $1 295.5 per troy ounce. The precious metal lost some 0.8% last week.

“Even though there’s tension going on in Gaza and Ukraine, it’s on the back burner,” Thomas Capalbo, a metals broker with Newedge in New York, said for the Wall Street Journal. “The U.S. economy and the Fed are what’s directing gold.”

Silver contracts for September were 0.05% higher to trade at $20.380 per troy ounce. Silver lost 1.3% last week.

Palladium for September settlement was down 0.29% to trade at $862.00 per troy ounce, while October platinum was up 0.16% at $1 465.6.

US economy

The Institute of Supply Management will post its read services PMI reading for July tomorrow, after logging a significantly quicker expansion of US factory activity in July last week. The Institute’s figure is forecast at 56.5, standing for an accelerating growth for the services sector, which accounts for 80% of US GDP. ISM’s report will come shortly before the release of US factory orders log for June, which is expected to reveal slight monthly growth at 0.6%.

Last week, policymakers decided to keep the benchmark interest rate unchanged at 0.25%, saying that they still see weakness in the labor market, and that a hike was not to happen for a “considerable time after the asset-purchasing program had concluded”. The Fed kept on track with the cuts to purchases volumes, decreasing them to $25 billion, leading to a close of the program in late 2014.

“The U.S. has entered a monetary-tightening cycle and gold will continue to face downward pressure in the mid to longer term,” Zhang Lin, analyst at Yongan Futures Co. in Hangzhou, China, said for Bloomberg.

Jobless claims and payrolls reports, which were released after the meeting, confirmed the Fed’s concern, as weekly jobless claims were significantly higher than expected, while payrolls thoroughly disappointed, adding just 209 000.

“Gold had a reprieve as the dollar pulled back after the payrolls data,” Lin added.

Meanwhile, consumer confidence grew, according to the Conference Board, reaching a seven-year peak, while the Bureau of Economic Analysis posted a 4.0% quarterly GDP growth, stoking further confidence for the US.

Gaza

The embattled Palestinian enclave in Gaza was offered a brief respite earlier today, as the Israeli military announce a unilateral 7-hour humanitarian ceasefire. The Israeli military added, however, that the truce does not include the town of Rafah, and that its soldiers will return fire if attacked.

The partial suspension of operations comes after more people were killed over the weekend. Yet another UN-run shelter was shelled by Israel on Sunday, killing at least 10 people. UN Secretary-General Ban Ki-moon described the attack as “a moral outrage and a criminal act”, the BBC reported.

The attack is only the last in a number of “incidents”, in which Israeli forces attack civilian shelters, run by the UN, killing dozens every time. Israel said that it is not sure its their fire in all of the attacks, and has added in a number of cases that it was their soldiers only returning fire to the origin of militant attacks. Israel also said it is investigating the “incidents”, and that it will apologize if its forces were guilty of misconduct.

The death toll now exceeds 1 800 Palestinians, most of them civilians, while more than 9 000 have been injured, the Palestinian health ministry has said. Israel has lost 66 soldiers and two civilians.

Copper

Copper futures for delivery in September traded at $3.2250 per pound at the COMEX. Prices ranged from $3.1995 to $3.2280 per pound. Last week the red metal dropped some 0.8% last week.

Freeport-McMoRan will resume copper exports from Indonesia by Wednesday, the companys local CEO said on Monday, releasing supplies from the worlds third-largest copper mine. The outlook of surging supplies tipping the market into surplus keeps traders off more long positions.

“The likes of zinc and nickel and have their own bullish supply side story but copper doesnt really. I think copper is in surplus … (though) its relatively small,” Stephen Briggs, analyst at BNP Paribas said for Reuters.

China will report on foreign trade later this week. Analysts expect to see another decrease in copper imports, as investors in China have been reluctant to invest in the metal to use as collateral in financial deals, amid an ongoing criminal investigation in Qingdao. The probe is in relation with lending fraud, closely related with copper consignment as collateral.

Previously, a number of positive factory readings from the US and China, which between them consume more than half of the worlds copper, were outweighed for copper to log losses last week.