Commodities trading outlook: gold, silver and copper futures

Gold remained pressured on Wednesday as the healthy recovery of the US economy continued to boost risk appetite. However, threats by Russian President Vladimir Putin and killings in Ukraine proved strong incentives for safe-haven demand. Copper is on the rise, with robust data from the US complementing surging demand and limited supply in top-consumer China.

Today the COMEX division of the New York Mercantile Exchange saw a sizable gain of 0.58% for gold futures due in June, to record $1292.0 per ounce at 14:05 GMT, after news on Ukraine. The session registered high and low prices at $1299.0 and $1268.0 per ounce, respectively.

Meanwhile, silver futures for delivery in May stood at $19.735 per ounce at 14:05 GMT, a gain of 1.53%, with daily high and low at $19.910 and $19.930 per ounce, respectively.

Late in the European trading day, reports of the killing of five pro-Russian separatists by the Ukrainian military, followed by threats of “consequences” by Russian president Vladimir Putin should Ukraine use arms against its people gave safe-haven demand a significant boost. Gold rallied on the news, after a bearish for the metal report on the US economy pressured the precious metal.

Reported earlier today, the figures on durable goods orders for the month of March in the US beat expectations to score a 2.6% growth from a month before – the biggest gain since November, and well-ahead of a 2.0% expectation. Core durable goods orders added 2.0% to Februarys reading, beating forecasts of a 0.6% rise.

Meanwhile, a separate report shed some light on employment in the US, with initial jobless claims rising to 329 000 for the week through April 19th, up 24 000 from the previous figure, while the 4-week average added only 4 750. Continuing jobless claims, however, shrank to a total of 2.680 million, beating the expectation of a rise to 2.750 million, up from last weeks 2.741 million claims. Overall, the jobless claims report sends positive vibes, aligning with the durable goods orders figure to offer better prospects for the US economy, also lifting risk appetite, which reduces the investment appeal of gold.

The primary force behind the recent down-beat for the precious metal is the strong economic recovery of the US. Last week saw several important indicators for measuring the economic activity score significant improvements, as retail sales, consumer inflation and industrial output posted better than expected results. “We still think the U.S. is on the road to economic recovery, which will pressure gold in the longer term,” said for Bloomberg Lv Jie, analyst at Cinda Futures Co.

The crisis in Ukraine still offers generous support to gold prices, as any escalations boost demand for safe-haven. Yesterday the interim government resumed its “anti-terrorist” operation in the East, while the US began preparations for military exercises in the Baltic states, set for the following months. Russian foreign minister, Sergei Lavrov, kept Kremlin’s firm tone, saying that “if the interests of Russians have been attacked directly, Moscow will respond in full accordance with international law.”

Meanwhile, the UK reported that Russian aircraft were detected approaching northern Scotland, with the Netherlands, Denmark and the United Kingdom all sending jets to escort the approaching aircraft away from their airspace.

Elsewhere, Shanghai volumes for spot gold climbed to near a five-week high on Tuesday, though analysts say physical demand should have been higher. They attribute the lower demand in China – the world’s foremost gold consumer, to the weaker Yuan, as it increases the cost of the dollar-denominated metal. The Chinese currency was at the lowest level against the dollar in 14 months on Tuesday. Also spanning negative sentiment, a report last week indicated as much as 1000 tons of gold may be tied-up in financial deals, rather than to meet demand.

Assets in the SPDR Gold Trust – the largest gold-backed ETF in the world, remained at their lowest-since-January levels at 792.14 tons for the third day, foreshadowing decreasing demand for the precious metal.

Copper

Copper futures for delivery in May recorded a growth of 1.47% today, to trade at $3.1040 per pound at 14:06 GMT, on the COMEX division of the New York Mercantile Exchange. The session registered the highest price since early march at $3.1100 per pound. Total gains for the previous 4 sessions are more than 2%.

Released today, the report on US durable goods orders for March posted figures significantly better than expected, with the main category scoring a 2.6% growth from a month before – the biggest gain since November, well-ahead of a 2.0% expectation, while Core durable goods orders gained 2.0% since February to beat a 0.6% margin forecast. Overall, statistics from the report pose significant bullish outlooks for copper, as the increase in durable goods orders projects higher demand for the red metal.

Additionally, computers and electronics recorded the highest increase of orders since November 2010, while cars and light trucks posted the best annualized rate of sales since May 2007, adding to positive sentiment for the industrial metal.

Earlier today, copper gained as seasonal demand in China is picking up pace, fueled by construction. Additionally, yesterday Reuters reported that, according to several anonymous sources, the Chinese State Reserves Bureau had begun stockpiling bonded copper, amounting to hundreds of thousands of tons. One source put the figure at 200,000, another at 350,000. Whether the SRB has kept a price-triggered plan, or if there is such an operation, is unknown, as officials refuse to comment, though a source hinted a 2-million-ton target for the end of 2015.

“Demand is picking up right now because April is a strong month for copper demand in China. A lot of Chinese refineries are also selling their copper to the bonded warehouses which limited the supply in the domestic market,” said for Reuters Guo Hao, analyst at Jinrui Futures in Shenzhen, analyzing the bullish trend for the metal.