Commodities trading outlook: gold, silver and copper futures

Precious metals were pressured during trading in Europe today, ahead of Fed’s minutes release. Assets at the SPDR dropped to a five-year low on Tuesday. Elsewhere, Ukraine saw further confrontations on Tuesday. Meanwhile, copper futures dropped on profit-taking and construction outlooks in top-consumer China, ahead of factory data from China and housing reports from the US.

Gold futures for delivery in June traded for $1 290.4 per troy ounce at 13:40 GMT on the COMEX in New York today, dropping 0.32%. Daily high and low stood at $1 296.3 and $1 288.0 per troy ounce, respectively. Yesterday the yellow metal added 0.06% and so far this week the contract has gained 0.09%.

Meanwhile, silver contracts for July stood at $19.370 per troy ounce, losing 0.15%. Daily high and low were at $19.500 and $19.280 per troy ounce, respectively. Yesterday silver rose by 0.24% and so far this week the contract has added 0.37%.

Later today the Federal Reserve will release the minutes of its last meeting. The records are closely followed by investors, since they indicate the Fed’s sentiment, and as such are a primary source of dollar speculation. Janet Yellen, Chairwoman of the Federal Reserve will also speak in New York today.

The US dollar index, which measures the greenback against six other major currencies, recorded a 0.15% increase, to stand at 80.22 at 13:41 GMT. Yesterday US stocks recorded drops, with all three major indices losing between 0.40% and 0.80%, though all remain within 1-3% of record highs. Last week saw both S&P 500 and Dow 30 score all-time highs.

Assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, dropped to 780.19 tons, registering the lowest level since December 2008. The fund has lost 26 tons in the last month, as investor interest in havens dwindles, pressured by the recovering global economy.

“There are really no fundamental reasons to be invested in gold,” said for Bloomberg James Cordier, founder of Optionsellers.com in Tampa, Florida. “The safe-haven premium has dropped because the economy is improving.”

Tomorrow the weekly report on jobless claims will be released. Forecasts suggest initial claims have grown from last week’s seven-year low.

Also tomorrow, existing homes sales are projected to have increased, adding on positive sentiment for the US housing market, after last Friday building permits recorded a six-year high and housing starts were at a six-month peak. Friday will feature news on new homes sales, with expectations of growth there as well.

Yesterday the World Gold Council reported that China, the world’s top consumer of gold, has seen an 18% quarterly drop in gold demand for the first three months of 2014. The decline was 55.4% on a yearly basis. Meanwhile, India, the second-top consumer of the precious metal, saw its demand fall 26%, while imports plunged by 52% for the same period, after restrictions imposed by the recently-replaced government.

Ukraine

Hundreds of people attended staged rallies in Donetsk yesterday, after Ukraine’s richest man, Rinat Akhmetov, whose wealth is estimated at more than $11 billion, urged for a mass protest for peace. His Donbass Arena stadium hosted a crowd of several hundred chanting the Ukrainian hymn and waving the blue and yellow, in a peaceful unity demonstration.

The pro-Russian separatists threatened to nationalize Mr Akhmetov’s assets. His enterprises are based in the Donetsk region, and the leader of the “Donetsk People’s Republic”, one of the breakaway provinces, Denis Pushilin expressed disappointment in Mr Akhmetov’s “choice of allegiance.”

“Akhmetov has made his choice. Unfortunately, he chose against the people of Donbass. Paying taxes to Kiev means financing terrorism in Donbass,” Mr Pushilin was quoted as saying, the BBC reported.

Yesterday, Ukrainian officials asked Moscow to put off air-force military drills planned for Wednesday through Sunday in districts bordering Ukraine. The exercises will possibly fuel the confrontation between pro-Russian separatists and authorities as the government prepares to hold a presidential election on Sunday, May 25.

Copper futures

Copper futures for settlement in July fell by 1.22% to trade at $3.1065 per pound at 13:42 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.0985 and $3.1480 a pound. Yesterday the red metal lost 0.69%, after on Monday the contract reached the highest peak in almost three months at $3.1840 per pound.

Moodys lowered Chinas housing outlook from stable to negative. The sector consumes more than 30% of the copper in China, while the country accounts for more than 40% of global demand. The news comes amid the peak of construction activities in the worlds second economy, which, in addition to state purchases, drained supplies and bumped up the metal 8% since mid-March.

“After the run weve seen in copper, it should be ready for a correction,” said for Reuters Dominic Schnider, analyst at UBS Wealth Management in Singapore.

Tomorrow HSBC will reveal its preliminary figure for Mays manufacturing PMI in China. Forecasts expect a standing of 48.1-48.3 to record a contraction in factory activities for the fourth month in a row.

Also tomorrow, existing homes sales are projected to have increased, adding on positive sentiment for the US housing market, after last Friday building permits recorded a six-year high and building starts were at a six-month peak. Friday will feature news on new homes sales, with expectations of growth there as well.

Previously, tight supplies and readiness for quick economic reforms in top-consumer China boosted copper contracts on Monday. Stocks at the London Metal Exchange were at the lowest level since 2008, while inventories traded at the Shanghai Futures Exchange were the lowest since 2011.