Commodities trading outlook: gold, silver and copper futures

Gold prices were deeper in the red during midday trade in Europe today, as investors found risks over Ukraine to be oversold, pressuring the haven metal. Meanwhile, copper futures climbed, despite a reported drop in China house prices.

Gold futures for December settlement on the Comex in New York traded at $1 297.7 per troy ounce at 14:17 GMT, down 0.65%. Prices ranged from $1 296.5 to $1 304.9 per troy ounce. The precious metal dropped ~0.3% last week.

Meanwhile, September silver stood at $19.590 per troy ounce, up 0.33%. Silver dropped about 2% last week.

The conflict in Ukraine took a grizzly turn today, as a convoy of refugees fleeing from the embattled city of Luhansk, escorted by Ukrainian military, came under attack. The convoy was hit by Grad rocket artillery and by mortar fire, Ukrainian authorities reported, adding that many people, including women and children, have died.

Kiev said “terrorists” armed by Russia were behind the attack. Pro-Russian rebels denied allegations, saying the Ukrainian military was responsible.

Earlier, Ukraine reported it has destroyed a column of armored vehicles entering Ukraine from Russia, while another column of rocket launchers was also seen entering rebel-controlled territory from Russia.

The Kremlin has repeatedly denied supplying rebels with weaponry such as the Buk missile launcher, which is thought to have downed the Malaysian airliner in June, killing 298 civilians.

The reports of heavy weaponry entering Ukraine comes as a Russian aid convoy was also poised to enter Ukraine through a rebel-controlled border crossing. Kiev has explicitly said that it would allow such aid only if the convoy passes into Ukraine through a government-controlled crossing. Russian authorities had said the convoy carried only humanitarian supplies and it was agreed with both Kiev and the International Committee of the Red Cross, but both denied to have agreed.

Some western countries suspect the convoy of transporting military supplies to the separatists, and have demanded an international inspection of the cargo before it enters Ukraine, while others warn that the Kremlin might use the convoy as a pretext to intervene militarily in Ukraine.

The confrontation between the West and Russia over Ukraine brought forth the lowest point in relations since the Cold War. Several rounds of economic sanctions were imposed by both sides, as Russia accuses the West of trying to lure Ukraine away from the Kremlin, though any significant impact on either side is yet to be seen. Traders have so far shrugged off risks over a possible escalation, despite some analysts, and NATO, warning of a possible Russian intervention.

Iraq

Iraqi military spokesman Lt-Gen Qassim Atta told state TV that the Mosul dam – Iraq’s largest, has been completely retaken from the Islamic State militants with the help of a joint air patrol. However, journalists reporting from the area said clashes were ongoing and jihadists were still in control of the main gate.

The fighting remains contained to Iraq’s northern regions, well away from the biggest oil-producing and exporting facilities, concentrated in the south. The country pumps around 3 million barrels of crude per day and exports about 2.5 million through its southern terminal at Basra, with outlooks of growing output and shipments.

Meanwhile, representatives from Gaza and Israel were set to resume peace talks in Cairo, Egypt, as the expiration of the latest truce nears.

Palestinian envoys said the “war is behind us now”, signaling an extension of the ceasefire. Israel, however, has demanded a full demilitarization of Gaza, something seen as unacceptable by Hamas, as a precondition to any permanent peace.

More than 2 000 Palestinians, mostly civilians, died in the latest episode of the conflict, with 67 Israelis also killed. The UN and the international community have largely condemned Israels indiscriminate fire in a densely populated area, resulting in an enormous loss of life.

Copper

Copper futures for September delivery traded at $3.1220 per pound, up 0.61%. Prices held between $3.0940 and $3.1265 per pound. The contract lost ~1.5% last week, as below-par economic figures from China, which has a 40% share of global copper demand, and Europe pressured the red metal.

China, the worlds leading consumer of industrial metals with a 40% share of total copper demand, posted declining new-house prices for a third month in a row today. The red metal is widely used in construction, and housing is a major driver for prices, but traders disregarded the news and upped bids, as bargain hunting took hold.

Last week China reported a drop in copper imports, alongside further below-par economic data, pressuring the red metal to lose some 1.5%.

HSBC will post its key manufacturing PMI reading for China later this week, while the Eurozone will also report on factory activity, both markets seen as potential movers for copper prices. Meanwhile, the US, the second-largest copper market, will report key housing figures.