Commodities trading outlook: gold, silver and copper futures

Copper futures declined on Monday and were set for the biggest quarterly drop since the three months through June amid concern that the economy of the worlds biggest consumer of the metal is slowing, which will curb demand. Meanwhile, gold futures headed for the first monthly drop this year as further signs of recovery in the US backed the case for the Federal Reserve to keep cutting stimulus, while silver edged higher, trimming its second monthly drop since the start of the year.

On the Comex division of the New York Mercantile Exchange, copper futures for settlement in May fell by 0.46% to trade at $3.028 a pound by 13:22 GMT. Prices shifted in a daily range between $3.050, the strongest level since March 11, and $3.020 a pound. The metal settled 3.1 percent higher last week, the biggest weekly advance since the 5-day period ended August 9.

Official and private gauges of Chinese manufacturing output scheduled to be released tomorrow may indicate further signs of slowing growth in the worlds second-largest economy. The official manufacturing PMI will probably decrease to 50.1 this month, from 50.2 in February, while a report by HSBC Holdings Plc in cooperation with Markit Economics will probably be unchanged at 48.1, which signals contraction.

“Copper has more downside risks,” said Helen Lau, a commodity analyst at UOB Kay Hian Ltd. in Hong Kong, cited by Bloomberg. “The slowdown in China will continue with a crash unlikely, which will mean government stimulus will be limited”, she added.

Copper prices are 10.8% down since the beginning of the year, poised for the biggest quarterly drop since the three months through June, on concern economic growth is faltering and default risks are increasing in the world’s largest consumer, China at a time when global supplies are piling.

According to data compiled by the metals researcher CRU, the global surplus of copper may reach 140 000 tons in 2014, almost four times larger than previously estimated as demand in the biggest consumer, China, slows.

Meanwhile, on the Comex division of the New York Mercantile Exchange, gold futures for settlement in June traded little changed at $1 294.00 an ounce by 13:24 GMT, losing 0.04% for the day. Prices shifted in a daily range between $1 299.10 an ounce and $1 290.90 an ounce. On Friday, gold futures touched $1 286.40, the weakest level since February 13th.

Bullion has retreated 7.1% since reaching a six-month high of $1 392.60 an ounce on March 17 and headed for a 2.4% loss this month as the US economy expanded at a faster-than-expected pace and after Federal Reserve Chair Janet Yellen said the central bank’s bond-buying program may be brought to an end this fall, with borrowing costs starting to rise by mid-2015. The Federal Reserve trimmed its monthly bond-buying program by $10 billion at the last three meetings.

Elsewhere on the Comex, silver futures for May delivery surged by 0.72 percent to trade at $19.932 an ounce by 13:25 GMT. The precious metal, however headed for a 6.1% loss in March, registering a second monthly decline since the start of the year. Platinum futures for July delivery rose by 0.9 percent to trade at $1 419.75 an ounce. Palladium futures for June delivery surged by 0.57 percent to $758.00 an ounce. The metal has risen 8% this year on concern more sanctions by the US and the EU on Russia and a strike at South African mines may reduce supplies. The two countries are the biggest producers of palladium.