Commodities trading outlook: gold little changed, copper down

Gold futures were little changed during midday trade in Europe today, as traders hold back big moves ahead of the Feds meeting next week. Meanwhile, copper futures dropped as the strong dollar weighed.

Gold futures for December delivery on the Comex in New York traded at $1 254.7 per troy ounce, up 0.03%, at 13:25 GMT. Prices ranged from $1 253.8 to $1 258.9 per troy ounce. The contract dropped 1.03% on Monday, reaching a three-month low at $1 252.1.

Silver for December delivery stood for a 0.20% daily gain at $18.998 per troy ounce.

“It would seem that for the time being at least, the dollar has once again become the main driver,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note cited by Bloomberg. “Headlines will move prices, but it does seem as though the trouble spots in the world have been quiet as of late.”

The 15 month-high dollar has weighed heavily in investors’ sentiment in regards to gold, as speculation grew that the US Federal Reserve will conduct a rate hike earlier than expected. A disappointing payrolls report on Friday revealed the US economy had added just 143 000 new jobs last month, far below the expected 225 000, underlining Fed Chair Janet Yellen’s cautious approach to a rate hike.

Yet, the dollar continues strengthening, and it puts ever growing pressure on the precious metal.

Since gold is denominated in dollars, a stronger greenback increases the cost of the metal to other currencies, lowering its investment appeal.

Meanwhile, geopolitical tensions around the globe failed to offer meaningful support for the haven metal.

Ukraine

The conflict in Ukraine was in the heart of significant support for gold earlier this year, but by now investors have grown resilient towards speculation that the tensions between Russia, the world’s top energy producer and exporter, and the West will lead to globally negative economic ramifications, pressuring the safe-haven metal lower.

Even the adoption of further economic sanctions targeted at leading Russian oil companies failed to bump up risk-off bids.

The EU said the new measures were agreed upon, but would come into effect “some days into the future” signaling that the real application of the new sanctions depends on Moscow’s stance in Ukraine’s peace process.

Copper

Copper contracts for December, the most-traded contract in New York, stood at $3.1300 per pound, down 1.22%.

The contract kept losing to the strong US dollar, which makes copper unattractive to holders of other currencies.

Data by the Chinese customs administration showed on Monday that China’s exports surged by an annualized 9.4% in August, while imports contracted by 2.4% after sliding 1.6% in July, reflecting lower domestic demand, though also stoking speculation that authorities will undertake a “mini stimulus” program.

Imports of copper, however, were unchanged at 340 000 tons, which proved quite positive for the red metal, as a sharp fall had been expected.

China is the world’s leading consumer of industrial metals, accounting for about 40% of global copper demand.

Investors now turn their attention to upcoming Chinese data on loans, investments and industrial production.