Commodities trading outlook: gold steady, copper rebounds on China monetary easing

Gold was steady in quiet trade on Thursday as investors weighed global stimulus against prospects of rising rates in the US, while assets in the SPDR Gold Trust fell to the lowest in six years. Copper recovered from an eight-month low supported by monetary easing in top consumer China.

Comex gold for delivery in February fell by $1.9 to $1 195.6 per troy ounce by 12:21 GMT, having shifted in a daily range of $1 199.3-$1 185.2 an ounce, the lowest since November 20th. The precious metal dropped 0.03% on Wednesday to $1 197.5.

“Gold is stuck on either side of $1,200 with a break of $1 190 or $1 205 needed for the next leg in either direction,” said Jason Cerisola, metals dealer at MKS Group.

Investors are waiting for the results of Sunday’s referendum in Switzerland, where voters will decide whether the Swiss National Bank will be forced to keep its gold reserves and even increase them from 8% to 20% of total assets.

In the case of a positive outcome of the vote, the bank will have to purchase around 1 500 tons of gold over the next few years. Such large transactions will ultimately increase bullion prices, analysts have said.

However, a recent opinion poll showed that support for the new gold policy fell to 38% in November, compared to the 44% of all votes in October. The recent data also displayed a 15% portion of undecided votes.

“The Swiss vote should be monitored even though the probability of ‘yes’ is low. When this supportive factor is removed, precious metals will be pressured lower” Mark To, head of research at Wing Fung Financial Group, said for Bloomberg.

The US dollar index climbed 0.18% by 12:17 GMT on Thursday to 87.810 and remained in proximity to a recent 4-1/2-year high. The December contract closed 0.36% lower at 87.649 yesterday, having ranged between 88.105 and 87.560 during the day.

Landing support for the precious metal, the US Labor Department reported yesterday that initial jobless claims rose to 313 000 in the week ended November 22nd, the highest since early September. Separate data showed that pending home sales unexpectedly contracted in October, while the annualized growth pace of new home sales came in below expectations.

Separately, the Thomson Reuters/University of Michigan Consumer Sentiment Index unexpectedly slid in November, confirming a drop in consumer confidence reported by the Conference Board on Tuesday.

After four days of unchanged assets in the SPDR Gold Trust, holdings fell by 2.09 tons to 718.82 tons on Wednesday, the lowest since September 2008.

Copper

Copper rebounded from yesterdays eight-month trough as the Peoples Bank of China reinforced its commitment for monetary easing, while upbeat data from Europe also sounded a positive tone.

Comex copper for delivery in March was unchanged at $2.9565 per pound bt 12:29 GMT, having shifted in a daily range between $2.9705 and $2.9420. The industrial metal slid 0.71% on Wednesday, having earlier fallen to an eight-month low of $2.9350, pressured by downbeat housing data and consumer confidence in the US, while orders for business equipment unexpectedly fell.

However, the industrial metal received a boost after the PBOC refrained from pulling money out of the money market today, the first time it didnt conduct open market operations in four months. The move reaffirmed the central banks commitment to jump-start the cooling Chinese economy after it surprisingly cut rates last Friday for the first time since 2012.

However, movement to the upside was capped amid persisting speculations that easy money supply wont have a sufficient impact on demand for base metals and only underscores policy makers worries about the Chinese economys growth outlook.

Producers and investors were more optimistic about the governments plans to speed up the completion of $100 billion worth of infrastructure projects, which it approved late last month and early November.

Also fanning positive sentiment, business and consumer confidence in the Eurozone rose for the second straight month in November, the European Commission reported, while unemployment in manufacturing powerhouse Germany fell to a record low of 6.6%, while consumer sentiment in the leading EU economy picked up as well.