Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were relatively steady during midday trade in Europe today. Precious metals logged sizable gains last week, as the US central bank, the Federal Reserve, announced interest rates will remain lower. Meanwhile, copper futures were higher, boosted by surprisingly good factory data from top-consumer China.

Gold futures for delivery in August traded for $1 316.1 per troy ounce at 13:06 GMT on the COMEX in New York today, down 0.04%. Daily high and low stood at $1 318.1 and $1 310.4 per troy ounce, respectively. The contract closed for a 3% weekly gain on Friday, reaching a two-month high at $1 322.5 per troy ounce.

Meanwhile, silver contracts for July stood at $20.910 per troy ounce, for a drop of 0.19%. Daily high and low were at $20.920 and $20.735 per troy ounce, respectively. Silver gained more than 6% last week, with the July future logging a three-month high at $20.990 per troy ounce on Friday.

Economic outlook

The Eurozone reported preliminary PMI for June earlier today. Both services and manufacturing in France contracted more than expected, with readings at 48.2 and 47.8, respectively. A reading of 50 or higher means expansion, and vice versa. The greater the distance from 50, the more sizable an expansion or contraction.

Germany also logged worse than expected, with services PMI at 54.8 and manufacturing at 52.4. The Bloc as a whole posted readings between those of its two main economies, with services PMI at 52.8 and manufacturing at 51.9. About 70% of EU GDP is generated in the services sector, with industries adding about 27%.

The US will post housing data today. The existing home sales annualized rate has probably increased by 2.2% on a monthly basis in May, after 1.3% in April, for a figure of 4.73 million since a year before. New home sales for May will be reported tomorrow, with expectations of gains there as well. The real estate sector accounts for 13% of US GDP.

Consumer confidence in the Eurozone and in the US will also be reported tomorrow. The German Ifo institute will probably reveal steady sentiment for the EU for July, with expectations for a standing of 110.2, after 110.4 in June. Meanwhile, the Conference Board is set to unveil growing confidence in the US for July, with a forecast reading of 83.5, after 83.0 in June.

Previously, The US Federal Open Market Committee (FOMC) announced key monetary policy decisions last week. Interest rate was kept at 0.25%, while monthly assets purchases were trimmed by $10bn for the fifth straight time. Fed’s Chair Janet Yellen expressed the Committee’s views that rates are likely to stay low “for a considerable time”.

Stocks

US stocks added on the Fed’s commitment to supporting the economy, reaching new peaks. S&P 500 added about 1.3% last week and closed for the record-high of 1962.87. Dow 30 also logged the highest close of all time on Friday at 16 947.08, after a 1% weekly gain, while Nasdaq 100 added 0.7% to reach a closing all-time high of 3804.61 on Wednesday. Dow Jones Euro Stoxx 50 closed the week about 0.5% higher.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, were unchanged on Friday at 782.62 tons, having dropped more than 4 tons last week. The fund is orbiting multi-year lows, amid a recovering US economy.

The US Dollar Index, which measure the greenback’s performance against six other major currencies, was pressured by the Fed’s firm tone on keeping rates lower for as long as necessary. The gauge dropped about 0.3% last week, and was at 80.44 as Friday’s session closed, and by 12:55 GMT today was down 0.09%.

Meanwhile, the euro, the dollar’s main competitor, has gained more than 0.5% against the dollar last week, closing at 1.3600 EUR/USD, and by 12:56 GMT today was up 0.06%.

Copper

Copper futures for settlement in July added 0.85% to trade at $3.1480 per pound at 13:08 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.1170 and $3.1570 per pound. The contract added more than 2% last week.

HSBC released its preliminary reading on China’s manufacturing PMI for June earlier today. The figure surprisingly beat expectations to stand at 50.8, to log the first monthly expansion in the factory sector since January. Later this week, Chinese industrial profits will be reported on Friday.

The industrial sector accounts for nearly half of Chinese GDP and the bulk of copper demand, while China itself consumes about 40% of all copper in the world.

“Chinese data has started to improve,” Mark Pervan, global head of commodity strategy at Australia & New Zealand Banking Group in Melbourne, said by e-mail today. “There is still a healthy level of caution on its sustainability.”

Previously, China, which accounts for about 40% of total copper consumption, expanded the reserves ratio cut to include more banks last week. The move is a part of the program, aimed at revitalizing economic growth, which is set to expand at the slowest rate since 1990, according to a Bloomberg survey.