Commodities Trading Outlook: Gold, silver and copper futures

Copper futures traded little changed after yesterday’s Fed minutes suggested policy makers will be cautious when raising interest rates, while at the same time Chinese exports unexpectedly declined for a second straight month, raising concerns over the economic outlook of the worlds largest consumer of the metal. Meanwhile, gold futures rose to a two-week high, while silver advanced to the strongest level in three weeks.

On the Comex division of the New York Mercantile Exchange, copper futures for settlement in May traded little changed at $3.039 a pound by 13:40 GMT, adding 0.06% for the day. Prices shifted in a daily range between $3.047 and $3.022 a pound. The metal plunged 0.6 percent last week, capping the first loss in three weeks.

Demand for the red metal was supported after minutes of FOMC’s latest meeting revealed some of its own members played down forecasts that interest rates might be raised faster than previously estimated.

According to the release, “several participants noted that the increase in the median projection overstated the shift in the projections. Some expressed concern the rate forecasts could be misconstrued as indicating a move by the committee to a less accommodative reaction function.”

“Copper was supported by easing concern over higher U.S. interest rates,” said in a Bloomberg interview, Hiroyuki Kikukawa, the general manager of research at Nihon Unicom Inc. in Tokyo. “Higher rates strengthen the U.S. dollar, which makes commodities priced in the currency more expensive. Investors will watch Chinese trade data for direction”, he added.

However, China’s General Administration of Customs reported today that the country’s exports unexpectedly contracted by 6.6% in March after a 18.1% decline in February, compared to analysts’ expectations for a 4.0% growth.

Prices of the red metal are 9.8% 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 surged by 1.04% to trade at $ 1 319.50 an ounce by 13:41 GMT. Prices shifted in a daily range between $1 324.90 an ounce, the strongest since March 24, and $1 311.20 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 soared by 2.24 percent to trade at $20.212 an ounce by 13:26 GMT, after touching a three-week high at $20.388 an ounce. Platinum futures for July delivery added 1.33 percent to trade at $1 458.00 an ounce, after hitting $1 461.90, the strongest since March 19. Palladium futures for June delivery traded at $789.90 an ounce, gaining 0.94 percent. The metal has risen 10.2% 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.