Commodities trading outlook: Gold, silver and copper futures

Gold extended gains on worries about Ukraine while silver remained steady during European trading today. Russian President Vladimir Putin warned the pro-western interim government in Kiev of “consequences” yesterday, after reported killings of at least 5 militants in the eastern parts of the country, immediately driving gold to reverse earlier losses on upbeat data from the US. Copper sustained last sessions gains, when reports of improving demand outlooks in the US, alongside upcoming seasonal demand surge in China added 2.01% to futures for the red metal.

Gold futures due in June traded for $1 301.0 per troy ounce at 12:32 GMT in New York, adding 0.81% to the contract. Earlier today the precious metal recorded the highest price this week at $1 303.1 per ounce. Yesterday prices dropped to as little as $1 268.4 per ounce – the lowest since early February, before rallying on Ukraine, to settle for a close of $1 290.6 per ounce, gaining 0.47% on the previous session.

Meanwhile, silver futures due in May stood at $19.700 per troy ounce at 12:32 GMT, adding 0.06% on the previous close. The high and low of the day were at $19.730 and $19.515 per ounce, respectively. Previously, the silver contract recorded three days of growth for a total of 1.74%.

Ukraine remains the sole strong support to safe-haven demand. The deaths of pro-Russian separatists amid the “anti-terrorist” operation in eastern Ukraine yesterday prompted Russian President Vladimir Putin to scold the agenda of the pro-western interim government in Kiev. He threatened of “consequences, should the Ukrainian military again use arms against its people,” while a Russian TV station quoted Vitaly Churkin, Russia’s ambassador to the UN, as saying that Moscow would have legal basis to send “peacekeepers” to the troubled state.

Meanwhile, the Kremlin urged the US to exercise its influence on the Ukrainian government, to halt the crackdown on the eastern separatists, while the US accused Moscow of inciting the unrest. US Secretary of State John Kerry said: “Not a single Russian official has publicly gone on television in Ukraine and called on the separatists to support the Geneva agreement.” He added that US intelligence was certain Russia was “playing an active role in destabilizing eastern Ukraine with personnel, weapons, money and operational planning,” the BBC reported.

Yesterday the UK said that Russian aircraft were detected approaching northern Scotland, and the Netherlands, Denmark and the United Kingdom all sent jets to escort the approaching aircraft away from their airspace.

US recovery

The economic recovery in the US cements bearish outlooks for gold. According to the monthly report on durable goods orders for the US, released yesterday, March brought improving demand for lasting products, registering a 2.6% growth from February. Orders for Core durable goods, which exclude transportation items bids, also rose to record a growth of 2.0% on a monthly basis, exceeding the 0.6% forecast. Figures on jobless claims added to positive outlooks for the worlds largest economy on Thursday as well, as the 4-week average of claims added only 4 750, while continuing jobless claims shrank by 61 000 to a total of 2.680 million, down from last week’s 2.741 million claims.

The quarterly Gross Domestic Product report for the US is due next week. Forecasts project a growth of 1.1%, though recent strong data is set to push the figure up. “We still think the U.S. is on the road to economic recovery, which will pressure gold lower in the longer term,” said for Bloomberg Lv Jie, analyst at Cinda Futures Co. Every significant positive outlook for the US economy increases equities demand, which in turn reduces appetite for gold as an alternative investment. The stronger US currency also increases the foreign cost of the dollar-denominated precious metal, further lowering its appeal.

Assets at the SPDR Gold Trust remain at 792.14 tons, the lowest level in almost three months, maintaining bearish outlooks for the precious metal.

Copper futures

Copper futures for May stood at $3.1180 per pound at 12:33 GMT in New York, losing 0.08%. The contract marked the highest price since early March at $3.1290 per pound. Yesterday the red metal added 2.01% after reports of increasing bids for US long-lasting goods mounted on surging demand in China. The previous two sessions added a total of 0.53%.

Released yesterday, 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, which exclude transportation items bids, 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 outlooks for the industrial metal.

Also building bullish sentiment, seasonal demand for copper in China is growing, as construction activities pick up pace. Additionally, the state reserve is buying massive amounts of bonded metal. An anonymous source, quoted by Reuters, said there was a target of 2 million tons of supplies by the end of 2015, though it is more likely the purchases are a price-triggered action: “We know that were there to be large surpluses, it is likely that the State Reserves Bureau(SRB) would absorb some of that; and when the price falls, the SRB is likely to be an opportunistic buyer.”said for Reuters Stephen Briggs, metals strategist at BNP Paribas in London.