Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were steady during midday trade in Europe today, keeping near last weeks close, as investors eye economic data later this week. Meanwhile, copper futures hovered near a three-month low ahead of key figures.

Gold futures for December delivery on the Comex in New York traded at $1 221.0 per troy ounce by 13:21 GMT, up 0.46%. Prices ranged from $1 215.8 to $1 223.9 per troy ounce. The contract closed for minimal growth last week, while it also reached a nine-month low at $1 206.6.

Silver for December delivery stood for 0.13% daily drop at $17.560 per troy ounce. Silver logged a four-year low last week.

The street protests in Hong Kong spooked some traders this session, hitting Asian equities, which dropped some 2%. Investors also eye possible physical demand curbs, as street clashes fend off much of any jewelry demand in one of the top centers in the biggest gold market in the world.

The Hong Kong factor was, however, seen as a brief respite for the precious metal, and the strength of the US dollar remains the main plot.

“The dollar remains the driver of gold direction,” Sun Yonggang, a macroeconomic strategist at Everbright Futures Co. in Shanghai, said for Bloomberg. “What happens with equity markets and geopolitical tensions may drive day-to-day sentiment.”

The US dollar climbed to a new four-year high against a basket of other major currencies today, after receiving generous support from US economic data. The strong US currency weighed heavily on the whole precious metals complex, pressuring futures to multi-month lows.

A rising US currency makes dollar-denominated commodities, such as gold or copper, more expensive, and less attractive, to holders of other currencies.

Final readings on US GDP growth for the second quarter of 2014 were released today, meeting expectations of a 4.6% growth on an annual basis, logging a 4.1/2-year high and reinforcing confidence in the recovery of the US economy.

Investors now eye key US employment data and a European Central Bank meeting as the highlights through October 3rd. More US housing data, factory orders and a key consumer confidence gauge, alongside retail sales, employment and CPI figures for the EU will add to economic outlooks on both sides of the Atlantic.

Reflecting the lowered investor interest in the precious metal, the SPDR Gold Trust, the largest exchange-trade gold fund, saw its bullion assets drop to 772.25 tons, the lowest level since December 2008.

Air strikes

The US-led coalition made further air strikes against ISIS refineries over the weekend, destroying four of the insurgent’s facilities in Syria, as well as checkpoints in Iraq. The coalition was joined by France and the UK last week, while Australia also sent a squadron of fighters, and is awaiting lawmakers’s official approval to join air strikes.

The Islamic State (ISIS, IS, ISIL) claimed vast swathes of territory in Iraq and Syria over the past few months, banking on sectarian confrontation between Muslims, as well as anti-US and anti-Semitic rhetoric. The extremists spooked markets in June, after beating a numerically superior Iraqi army to gain control of the northern regions of the country.

The insurgents have failed, however, to threaten the major southern oilfields in Iraq, and successful counterattacks by Kurdish fighters, in addition to wide Western backlash, have calmed markets and erased most of any safe haven demand.

Copper

Copper contracts for December, the most-traded contract in New York, stood at $3.0300 per pound, down 0.18% for the day. The contract reached a three-month bottom at $3.0125 earlier today.

The strengthening dollar was the main protagonist, or antagonist, in coppers recent slump, with the red metal losing some 7% over the past three months.

“I strongly think that the dollar will remain strong and this is going to keep the pressure on the demand side for metals,” Naeem Aslam, chief market analyst at Ava Trade, said for Reuters. “A stronger [payrolls] number on Friday could push the dollar further higher.”

Investors now eye US pending home sales figures, due for release later today. Analysts expect a minor monthly drop. An average home contains about 300-500 pounds of copper in wiring and plumbing, making housing data a key gauge for copper demand.

Also on traders radar is upcoming readings on Chinese manufacturing PMI. China accounts for 40% of global copper demand.