Commodities trading outlook: gold, silver and copper futures

Gold and silver futures price levels were little changed till midday in Europe today, with muted activity due to a holiday in the US and UK. Ukraine held presidential elections on Sunday, and the winner is almost certain to be confectionery billionaire Petro Poroshenko. Elsewhere, a number of important economic figures for the US will be reported this week. Meanwhile, copper futures advanced, backed by tight supply and growth outlooks for top-consumer China.

Gold futures for delivery in June traded for $1 293.4 per troy ounce at 11:35 GMT on the COMEX in New York today, up 0.13%. Daily high and low stood at $1 294.8 and $1 290.9 per troy ounce, respectively. Last week the contract was leveled, recording a 0.12% loss, reaching a three-week trough at $1 282.9 per troy ounce on Wednesday.

Meanwhile, silver contracts for July stood at $19.465 per troy ounce, adding 0.24%. Daily high and low were at $19.470 and $19.385 per troy ounce, respectively. Last week the contract gained 0.47%.

Contracts will be earmarked for settlement tomorrow, when regular sessions begin, as today is a national holiday in the US, where the NYMEX is located.

Ukraine

Ukraine held the presidential vote on Sunday, May 25. With 70% of ballots counted, confectionery billionaire Petro Poroshenko receives 53.75%, according to the BBC. The margin would be enough to claim victory in the first round.

In his first speech after voting had ended, he addressed the need for peace and stability. He pledged his efforts would be aimed at not only ending the conflict withing Ukraine, but also normalizing relations with Russia. He is viewed as a strongly pro-Western politician, but argues that peace in the region would be impossible without cooperation with Russia. He added that he will never recognize Russia’s annexation of the Crimea.

“My first decisive step will be aimed at ending the war, ending chaos, and bringing peace to a united and free Ukraine,” Mr Poroshenko said at a press conference in Kiev.

The US and UK expressed their support for the vote and its result, dubbing it an “important step forward” and a “decisive signal.”

Moscow is “open for dialogue” with the newly elected Ukrainian president, Russian Foreign Minister Sergei Lavrov said earlier today. He added, that the military actions by authorities in the eastern regions must end.

“The relationship between Russia and the newly elected president in Ukraine will be key for gold prices,” said for Reuters Helen Kau, an analyst at UOB-Kay Hian Securities in Hong Kong.

Heavy gunfire was reported from the airport in Donetsk, one of the bastions of pro-Russian sentiment, and a newly self-declared independent “republic.” Other battles were being fought across a number of villages and towns in the region, the BBC reported.

US economy

Tomorrow will bring a number of important economic reports for the US. Foremost, durable goods orders for April are to be reported. Experts suggest total orders have decreased by 0.5% on a monthly basis after gaining 2.5% in March, while core orders, which exclude the more volatile transportation items, have gained 0.3% after a 2.1% growth in March.

Later on Tuesday, Markit will post its preliminary services PMI for May. Analysts forecast a slightly quicker expansion for the services sector, which accounts for almost 80% of US GDP, with a figure of 55.6, up from 55.0 for April.

Lastly, the Conference Board (CB) will reveal its consumer confidence index for May. It is a leading indicator for consumer spending, which generates about 70% of US GDP. Analysts predict the CB will report an improving consumer sentiment, logging the index at 83.0, up from 82.3 for April.

Wednesday will post data from the EU, before on Thursday the US reveals quarterly GDP growth. Analysts expect a slight contraction after the brutal winter halted economic activities for a prolonged period. Also on Thursday, pending home sales for April in the US will be reported, with forecasts of small gains.

On Friday, a report on personal income and spending for April in the world’s top economy will be released. Economists project a minor monthly increase in both.

When outlooks for the economy improve, they draw investments away from havens and towards equities, and there is often a strict opposite correlation between stocks and precious metals.

US stocks rallied on largely positive economic data last week. S&P 500, which is a broader measurement for US stocks, added 0.42% on Friday to settle at 1900.53, for a total of 1.20% increase for the week. The index is just 0.09% short of the all-time high. Dow 30 Industrial gained 0.38% to close at 16606.27 and is 0.77% below the record peak. The tally for the week for Dow 30 is a growth of 0.70%. Meanwhile, Nasdaq 100, which excludes financial institutions, rose by 0.73% to stand at 3677.33, bringing the week’s gain to 2.50%, and is 1.63% away from the highest level on record.

Assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 776.89 tons, the lowest level since December 2008, as the trading week closed on Friday. The fund has lost over 30 tons in the last month, as investor interest in havens dwindles, pressured by the growing US economy.

Copper

Copper futures for settlement in July grew by 0.52% to trade at $3.1840 per pound at 11:35 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.1640 and $3.1925 a pound, reaching the highest level in almost three months. Last week the contract added 0.67% with support from robust US data and reforms outlooks in China.

The Chinese government expressed its commitment to supporting the economy towards sustained growth at previous levels, a statement on the official government site revealed today. China consumes about 40% of all copper in the world, and every piece of economic news impacts copper.

“The momentum should continue unless China posts disappointing economic data again and concerns over China’s physical demand arise,” said for Bloomberg Lian Zheng, analyst at Xinhu Futures in Shanghai.

Last week, the London Metals Exchange reported availability of the metal of less than 100 000 tons, which is the lowest since 2008. Total volumes across the exchanges in New York, London and Shanghai were also at a multi-year low, which helped support copper contracts amid peak construction activities in China.