Commodities trading outlook: gold, silver and copper futures

Gold and silver futures dipped during midday trade in Europe today, as the dollar gained, supported by worsening sentiment in the Eurozone. Meanwhile, copper futures were steady as investors eye US housing data.

Gold futures for December delivery on the Comex in New York traded at $1 220.8 per troy ounce by 11:55 GMT, down 0.10%. Prices ranged from $1 220.5 to $1 226.7 per troy ounce. The contract has added 0.4% so far this week, though it also reached a nine-month low at $1 208.8.

Silver for December delivery stood for a 0.58% daily drop at $17.675 per troy ounce. The contract logged a 4.1/2-year low at $17.325 on Monday.

Precious metals were little changed from the start of US-led air strikes on IS targets in Syria on Tuesday. Gold usually gains investment appeal in times of political or economic trouble, being a so-called “safe haven” asset, whose value remains relatively stable.

Meanwhile, economic data was back on the agenda, with EU and US manufacturing gauges posted yesterday. Eurozone’s readings were below par, while the US’ was also just below expectations, though still logging a massive monthly growth. The data was not enough to impact currencies, and commodities, very much, however, as traders await more key data later this week.

Earlier today, the German Ifo institute posted its monthly economic sentiment report, logging the key “business climate” gauge to the downside for the fifth straight month and at the lowest level in almost 1.1/2 years. The news pressured the euro, and gold, lower, while supporting the dollar.

Later today, US new home sales are expected to log a month of moderate growth, adding 4.4% in August. New home sales are a leading indicator for the health of the retail market, which is the largest single sector in the US, accounting for 13% of US GDP.

US durable goods orders are set for a rebound after last month’s all time-high increase. Orders soared 22.6% on a monthly basis in July on the back of massive orders for Chicago-based airplane-manufacturer Boeing. Now orders are looking at a ~18% decrease on a monthly basis, still a significantly lower drop than the jump last month.

GDP figures on Friday are projected to confirm a bullish story for the dollar and US stocks, with the preliminary reading on quarterly growth for Q214 set to log at 4.6%, beating the earlier flash figure of 4.2%.

Betting on an improving recovery in the US, the Fed announced a steeper-than-earlier rate rise in 2015 last week, heavily supporting the US dollar and weighing on dollar-denominated commodities, such as gold.

The Federal Open Market Committee (FOMC) September meeting produced another $10bn cut in monthly government spending on quantitative easing (QE), keeping on track to close the program at its next meeting. Meanwhile the central lending rate was also kept at 0.25%. However, the targeted rate by the end of 2015 was increased from 1.125% to 1.375%, boosting the greenback to a new four-year peak.

Clocking the lowered investor interest in the precious metal, the SPDR Gold Trust, the largest exchange-trade gold fund, saw its bullion assets drop to 773.45 tons, the lowest level since December 2008.

Copper

Copper contracts for December, the most-traded contract in New York, stood at $3.0375 per pound, up 0.08% for the day. The red metal is down ~1.8% this week.

Copper traders keenly awaited new some sales data from the US later today. Analysts expect the annualized rate to log a 4.4% monthly growth. An average home has some 300-500 pounds of copper, making the real estate sector one of the top copper markets, and housing data a leading gauge for copper demand.

Previously, the red metal was supported by a better-than-expected reading on Chinese factories by HSBC and Markit. The companies put their manufacturing PMI at 50.5, signaling an expansion in the sector, which accounts for a significant chunk of Chinese copper consumption.

China itself accounts for 40% of global copper demand.