Commodities trading outlook: gold, silver and copper futures

Gold futures were slightly lower during midday trade in Europe today, while silver slumped, after the US services sector was reported to be gaining pace. Meanwhile, copper futures fell, after Chinas services were seen as weakening.

Gold futures for December settlement traded for $1 286.8 per troy ounce at 14:09 GMT on the COMEX in New York today, down 0.16%. Prices ranged from $1 286.0 to $1 294.3 per troy ounce. The contract dropped 0.46% on Monday, after losing some 0.8% last week.

Meanwhile, silver for September had dropped 1.05% to trade at $20.020 per troy ounce. Silver lost about 0.6% yesterday, after a further 1.3% loss last week.

Palladium for September delivery was down 1.40% to trade at $843.10 per troy ounce, while October platinum was down 0.94% at $1 452.80.

Economic outlook

ISM posted its US services PMI reading for July today. The gauge was logged at 58.7, a 3.1/2-year high and well above expectations. The services sector accounts for nearly 80% of US GDP, and ISMs report offered sizable support to the already year-high dollar.

Improving US economic readings boost the value of the dollar and improve outlooks for US stocks, lowering appetite for gold as an alternative investment.

Elsewhere, the Eurozone also posted a couple of economic figures today. Retail sales have gained 0.4% on a monthly basis in June, which was in line with expectations, and 2.4% annually, which doubled forecasts. Meanwhile, the Blocs services PMI for July was recorded at 54.2, slightly less than expected, but still standing for a sizable expansion of the sector. Investors now eye the key ECB interest rate decision this Thursday.

A weakening EU economy lessens the value of the euro, which raises the value of the dollar and diminishes golds attractiveness.

A key reading on the Chinese economy was reported earlier today. HSBC logged its services PMI reading for July at 50.0, well below last month’s 53.1 standing, and significantly under the government’s figure of 54.1, which was posted on Sunday. The worse-than-expected reading prompted a retreat for Asian equities, supporting gold.

Previously, last week featured a number of key readings, with the US reporting significant Q2 GDP growth, and disappointing employment figures, while the Fed kept on track with the cuts in the governments monthly purchases, and kept the benchmark interest rate unchanged at 0.25%. Meanwhile, the EU projected declining CPI for July, with the advanced reading logged at 0.4%.

Copper

Copper futures for September delivery stood at $3.2080 per pound, down 1.11%. The contract added 0.92% on Monday, after a 0.8% loss for last week.

The worse-than-expected HSBC reading on Chinese services pressured the red metal lower.

“Given the weak Chinese services PMI data and the potential for equity weakness, we would not be too surprised if the base metals struggled to hold on to yesterday’s gains,” William Adams, analyst at Fastmarkets.com in London, said in a note.

China, which accounts for about 40% of total copper demand, will report on foreign trade figures on Friday. 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.

Previously, Freeport-McMoRan will resume copper exports from Indonesia by Wednesday, the company’s local CEO said on Monday, releasing supplies from the world’s third-largest copper mine.