Commodities trading outlook: gold, silver and copper futures

Copper futures rose on Tuesday, trading close to the strongest level in three weeks after official data showed a gauge of manufacturing activity in China, the worlds biggest consumer of the metal, advanced more than expected last month. Meanwhile, gold futures traded close to the weakest level in seven weeks as further signs of recovery in the US backed the case for the Federal Reserve to keep cutting stimulus, while silver advanced.

On the Comex division of the New York Mercantile Exchange, copper futures for settlement in May rose by 0.25% to trade at $3.033 a pound by 12:38 GMT. Prices shifted in a daily range between $3.040, and $3.018 a pound. Yesterday, copper futures touched $3.050 per pound, the strongest level since March 11. The metal settled 3.1 percent higher last week, the biggest weekly advance since the 5-day period ended August 9.

Government data showed early on Tuesday that manufacturing activity in China rose to 50.3 in March, up from 50.2 in February and defying analysts projections for a slowdown to 50.1. A reading above the key level of 50.0 is indicative of expansion in the sector.

“The official PMI data was positive,” said Chae Un Soo, a metals trader at Korea Exchange Bank Futures Co. in Seoul, cited by Bloomberg. Still, that’s “not enough to convince investors that China’s growth is steady.”

Copper prices settled the three months through March 10.6% down, the biggest quarterly drop since the second quarter of 2013, 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 $1 285.10 an ounce by 12:40 GMT, adding 0.09% for the day. Prices shifted in a daily range between $1 288.40 an ounce and $1 278.30 an ounce, the weakest level since February 11.

Bullion has lost 3.1% in March 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.

However, the precious metal rose 7 percent this quarter as demand for haven assets was boosted amid a rout in emerging markets and Russia’s annexation of Crimea, which left Russia and the West involved in their worst conflict since the end of the Cold War.

Elsewhere on the Comex, silver futures for May delivery rose by 0.16 percent to trade at $19.783 an ounce by 12:41 GMT. The precious metal, has lost 7% in March, registering a second monthly decline since the start of the year. Platinum futures for July delivery rose by 0.6 percent to trade at $1 429.15 an ounce. Palladium futures for June delivery traded little changed at $777.30 an ounce, adding 0.03%. 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.