Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were still lower during midday trade in Europe today, as investors were sifting through ECB data and speculation, while holding big moves for after US payrolls on Friday. Meanwhile, copper futures were also losing, with US data eyed.

Gold futures for December delivery on the Comex in New York traded at $1 215.1 per troy ounce by 13:41 GMT, down 0.03%. Prices ranged from $1 209.1 to $1 224.0 per troy ounce. The contract added 0.32% on Wednesday.

Silver for December delivery stood for 0.95% daily drop at $17.095, near a four-year trough reached on Tuesday.

The dollar reached a four-year high against a basket of currencies this week, though it pared gains yesterday, allowing gold to edge higher, after ISM logged a below-par month of manufacturing sector growth in the US. Earlier, ADP had posted its readings on US jobs creation for September, suggesting the economy had added 213 000 jobs, rebounding from the disappointing growth in August. The official Bureau of Labor Statistics September payrolls report is due for release on Friday. Jobless claims figures will be posted today, meanwhile, set to log little change at ~300 000 new applications.

Elsewhere, investors had focus on the European Central Bank (ECB) meeting today, for details as to the bank’s ambitious €3tn stimulus program. ECB President Mario Draghi revealed that the program will last at least two years and will start with covered bonds in second half of October.

The ECB announced the measure last month, which would add to a central lending rate cut to a historic 0.05% low in efforts to revive growth in the Eurozone. The latest batch of economic data also proved bearish, with manufacturing in the Bloc dropping to a 14-month low, while disappointing unemployment and CPI readings added to negative sentiment earlier this week.

The euro is hovering near a two-year low against the dollar, which in turn increases the overall value of the greenback, diminishing the investment appeal of dollar-denominated commodities, such as precious metals.

Holdings at the SPDR Gold Trust, the largest exchange-traded gold-backed fund, dropped 1.2 tons to 768.66 yesterday, the lowest since December 2008, as investor interest in the yellow metal drops.

End-of-quarter technical dynamics and a strong dollar weighed heavily on the whole precious metals complex Tuesday, with gold losing about 9% this last quarter, platinum closing for a 12% loss, palladium down 8%, while silver shed 19%.

Copper

Copper contracts for December, the most-traded contract in New York, stood at $3.0020 per pound, down 1.12% for the day, also logging the lowest price in five months at $2.9955.

“There has been some bargain buying in the copper market, which has bounced from oversold levels. However there is a lot of noise about the Fed increasing the interest rate,” Naeem Aslam, chief market analyst at Ava Trade, said for Reuters. “With the U.S non-farm payroll data painting the employment picture tomorrow, a strong number could increase the echo of this noise.”

Previously, key data on China was posted this week, with both HSBC and the Chinese government seeing growth in China’s factory sector last month. However, HSBC saw disappointingly minimal growth, barely into the positive, which pressured the red metal sharply to the downside yesterday. The factory sector activities gauge is a leading indicator for copper demand, while China itself accounts for 40% of global copper demand.

Upcoming data on US factory orders is also on investor radar, with the metric set to log a month of drastic 9.5% contraction on a monthly basis after August expanded 10.5%, the most on record, on the back of booming orders for aerospace giant Boeing.