Commodities trading outlook: gold, silver and copper futures

Gold prices were lower during midday trade in Europe today, as investors assessed worse-than-expected EU economic figures. Meanwhile, copper futures also declined, in light of slowing EU growth.

Gold futures for delivery in December on the Comex in New York traded at $1,312.0 per troy ounce at 12:24 GMT today, down 0.19%. Prices ranged from $1,310.0 to $1,319.8 per troy ounce.

Meanwhile, silver for September settlement was up 0.03% to trade at $19.850 per troy ounce. The contract closed Wednesday for a loss of 0.3%.

Eurozone economic outlook

The Eurozone posted key economic readings earlier today. Flash GDP growth figures revealed a 0.0% Bloc-wide Q2 growth, with a -0.2% figure for Germany and 0.0% for France, all readings below expectations. Eurozone CPI was logged at -0.7% on a monthly basis in July, also below expectations. Surprisingly, though, the euro actually rose in effect of the reports, as traders had already priced a quite bearish outlook, and many saw a higher prospect of an ECB intervention.

“There’s a big chance [the ECB] will have to revise their growth and inflation figures in September,” Thomas Harjes, senior European economist at Barclays Plc in Frankfurt, said for Bloomberg. “The ECB is in a tough position” and today’s data “certainly raise the pressure again” to increase stimulus.

The euro has a very strong opposite correlation with the US dollar, meaning a stronger euro directly decreases the value of the dollar.

Since gold, like many other commodities, is mostly traded in dollars, the value of the US currency plays a major role in the metal’s investment appeal, with a stronger dollar lifting the price of gold to foreign currencies and vice versa.

The US Dollar Index, which gauges the strength of the US currency, added 0.12% yesterday, despite being pressured by the lackluster sales. By 12:07 GMT today, the gauge was down 0.06% at 81.62, depressed by a higher euro.

Middle East

Iraqi Kurds are to receive military aid from the US and France, in the form of weapons and supplies, authorities said yesterday. The US have already reinforced their adviser team in the country by 150, and total US personnel in Iraq now numbers several hundred, though none will play any combat role.

Meanwhile, Iraqi politics were also in focus, as incumbent PM Nouri Maliki refused to step down until the Federal Court, Iraq’s supreme judicial instance, rules on his objection to the Presidents actions.

President Fouad Massoum declined to nominate Maliki for a third term, effectively disregarding the constitution. He offered the job to a more consensual figure, the deputy parliament speaker Haider al-Abadi.

Maliki deployed forces personally loyal to him in Baghdad on Monday, and vowed to “fix the mistake” of the President.

Two car bombs killed at least 12 people in the Iraqi capital on Wednesday, in mainly Shia areas, Reuters reported.

Elsewhere, Hamas and Israel agreed to a 5-day truce in Gaza, after intense talks in Cairo, Egypt. The conflict has claimed more than 2 000 lives since flaring back to life more than 5 weeks ago. Most of the casualties have been Palestinian civilians.

Across Egypt, Libyan MPs voted overwhelmingly in favor of calling for international assistance for “keeping civilians safe”, in light of growing tribal and insurgent conflicts. Several hundred people are believed to have been killed since tensions rose mid-July, with heavy clashes in the two main cities of Tripoli and Benghazi.

It is not clear whether the government asks for a peacekeeping mission or not, but the vote comes a day after Tripoli’s police chief was ambushed and killed. Right after the bill was voted, another decree was issued, disarming all militias in the country, though authorities can do little to enforce such a decision, the BBC reported.

Copper

Copper futures for September traded at $3.1080 per pound, down 0.13%, after reaching a seven-week low of $3.1015 earlier. The red metal lost 1.3% yesterday.

“The GDP numbers for France and Germany released today were pathetic,” Naeem Aslam, chief market analyst at Ava Capital Markets Ltd. in Dublin, said in an e-mailed note. “The upside is that [ECB President] Mario Draghi will have to reach deep in his pocket to stimulate growth in the euro zone, which could also lift growth for industrial metals.”

The metal slumped yesterday, on below par economic data from China, the worlds leading consumer of industrial metals with a 40% share of total copper demand. Industrial production was logged to have increased by 9.0% on an annual basis in July, while retail sales growths were slightly lower than expected at 12.2% annually. Fixed asset investments, which include power grid and construction, both major copper-consuming sectors, added 17.0%, also less than forecast. New loans were reported at only 385 billion yuan in July, less than half of forecasts and a third of June’s, and the lowest level in almost six years.

“Were not very positive on the demand outlook because of the property sector, and the data has confirmed what we had been expecting,” Caroline Bain, a senior commodities economist at Capital Economics, said for Reuters.