Commodities Trading Outlook: Gold, silver and copper futures

Copper futures declined on Wednesday amid speculation an official scrutiny of debt proceeds in China, the worlds largest consumer of the red metal, may lead to potential defaults, curbing demand for copper. Meanwhile, gold and silver futures both declined ahead of the release of the Federal Reserve minutes from its latest policy meeting, as investors assessed when the central bank will start raising interest rates.

On the Comex division of the New York Mercantile Exchange, copper futures for settlement in May fell by 1.24% to trade at $3.012 a pound by 13:24 GMT. Prices shifted in a daily range between $3.057 and $3.007 a pound. The metal plunged 0.6 percent last week, capping the first loss in three weeks.

The National Development and Reform Commission began a special inspection of corporate bonds last month, two people with direct knowledge of the matter said today, cited by Bloomberg. The Chinese government outlined steps last week in an attempt to spur economic growth, including spending on railroad. A government report due tomorrow, may show nations exports rose 4% last month, after an 18.1% unexpected slump in February. Strong export data would probably have a negative effect on copper as it will ease pressure on policy makers to add stimulus.

“The room for monetary and fiscal policy to promote growth is getting smaller,” Vicky Sanders, the head of analytics sales at Marex Spectron in London, said in a report, cited by Bloomberg. “While ensuring growth remains on track, the government will step up supervision of local-government debt-raising and stop illegal fundraising activities.”

Prices of the red metal are 9.3% lower since the start of the year, touching the weakest level since July 2010 last month, on concern a slowdown in China will damp global demand, at a time when global supplies are starting to pile.

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.

Last week, a separate report by the International Copper Study Group showed an even bigger projected global surplus of 400 000 tons as demand lags behind the output growth.

Meanwhile, on the Comex division of the New York Mercantile Exchange, gold futures for settlement in June lost 0.43% to trade at $ 1 303.50 an ounce by 13:25 GMT. Prices shifted in a daily range between $1 314.30 an ounce and $1 302.00 an ounce. The precious metal settled last week 0.6 percent higher, snapping two straight 5-day periods of declines.

Elsewhere on the Comex, silver futures for May delivery plunged by 1.63 percent to trade at $19.730 an ounce by 13:26 GMT. Platinum futures for July delivery lost 0.2 percent to trade at $1 438.95 an ounce. Palladium futures for June delivery traded at $776.60 an ounce, gaining 0.1 percent. 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.