Commodities trading outlook: gold, silver and copper futures

Gold and silver futures traded higher during midday in Europe today, as safe-haven demand climbed, stemming from conflicts in Ukraine and Gaza. Meanwhile, copper futures were lower, as traders priced in an increase in output projections.

Gold futures for delivery in August traded at $1 308.2 per troy ounce at 13:05 GMT in New York today, up 0.38%. Prices ranged from $1 303.2 to $1 312.1 per troy ounce. The contract was unchanged yesterday after losing 0.5% last week.

Geopolitical tensions “should lend support to demand for gold as a safe haven,” analysts at Commerzbank AG wrote today in a report. “Significant upward leaps in price are unlikely in view of the two-day meeting of the U.S Federal Reserve that begins today, since market participants will first want to wait and see what its outcome is.”

Silver futures for September stood for a 0.60% gain, at $20.690 per troy ounce. The metal lost 0.33% on Monday, after losing further 0.6% last week.

Spot platinum was down 0.03% at $1 490.15 per troy ounce, while palladium added 0.49% to trade at $885.10.

Ukraine, Gaza

Ukrainian security sources said on Monday that the Malaysian airliner, which crashed over rebel-held territory in eastern Ukraine this month, killing all 298 on board, was shot down by a missile, citing data from the “black boxes”. Dutch officials, who possess the data after a UK-based analysis, did not confirm.

Meanwhile, US President Barack Obama said on Monday that Russia had broken the Intermediate-Range Nuclear Forces Treaty signed in 1987, which prohibits the use of 500-5500 kilometer-range missiles.

The allegations come as the confrontation between Russia and the West intensified over the civil strife in Ukraine. The US announced that after talks, EU leaders have agreed on more and stronger sanctions against Russia. Analysts believe a new round of measures will be coming through in the immediate future, this time targeting the Russian defense and energy sectors, a major part of Russia’s economy.

Elsewhere, Gaza saw more bitter fighting on Monday, as Israeli ground forces continue the operation in the Strip. Israeli PM Benjamin Netanyahu warned of prolonged warfare, but reaffirmed of Israel’s commitment.

“We will continue to act aggressively and responsibly until the mission is completed to protect our citizens, soldiers and children,” Netanyahu said.

More than 1100 Palestinians, most of them civilians, and 50 Israelis have died since the conflict sparked back to life last month.

US reports

On the economic side of things, gold is facing a possible retreat as the US will post a plethora of economic data this week, with expectations of significant gains throughout.

Advanced GDP figures for Q2 will be reported tomorrow, and experts suggest a reading of 3.0%, after the -2.9% for Q1. Later on, unemployment rate and nonfarm payrolls for July will be posted on Friday, with projections of steady readings after last week’s eight-year low for initial jobless claims.

The US will also post personal spending and income and manufacturing PMI this week, while the EU will reveal CPI and unemployment.

The key moment this week is the Federal Open Market Committee (FOMC) two-day meeting, which starts today. The Fed will probably decide to keep the benchmark interest rate unchanged at 0.25%, while trimming monthly assets purchases by another $10 billion to $25 billion, analysts say. FOMC decisions are the most influential factor on dollar pricing, and as such are followed with utmost attention by traders.

Copper

Copper futures for September were 0.54% lower, to trade at $3.2260 per pound in New York. The contract added 0.09% on Monday, after a further 1.7% gain last week.

“Investors surely want to wait for the big events.. such as the outcome of the FOMC (Federal Open Market Committee) and the U.S non-farm payroll data this week. No one wants to bet big,” Naeem Aslam, chief market analyst at Ava Trade, said for Reuters. “On top of that Russian sanctions are very much back on the forefront, and the new sanctions by the European Union, which could be announced as soon as tomorrow, are also weighing on the sentiment.”

The red metal was into the positive earlier, as traders saw recent upbeat reports from Ford, Nissan and GM as bullish for the industrial metal.

“The sentiment was boosted by better-than-expected earnings reports from major automakers, signaling demand for copper will remain strong,” Hwang Il Doo, a senior metals trader at Korea Exchange Bank Futures Co. in Seoul, said for Bloomberg.

Previously, Indonesia allowed Freeport-McMoRan Inc. to restart exports from its Grasberg mine, the third-largest copper mine worldwide, the company said late on Friday. Freeport is expected to export 756,000 tonnes of copper concentrate in the second half of this year, probably tipping the market into surplus and pressuring the red metal, Reuters reported.