Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were higher during midday trade in Europe today. Investors await the retail sales report from the US, due tomorrow. Stocks continued to advance, logging the fourteenth session of gains out of the last seventeen. Meanwhile, copper futures were down again, amid an ongoing copper-related criminal investigation in China.

Gold futures for delivery in August traded for $1 263.0 per troy ounce at 11:58 GMT on the COMEX in New York today, up 0.23%. Daily high and low stood at $1 264.9 and $1 257.9 per troy ounce, respectively, reaching a 10-day peak. Yesterday the contract added 0.49%, after on Monday gold closed for a 0.11% gain.

Meanwhile, silver contracts for July stood at $19.215 per troy ounce, for a gain of 0.25%. Daily high and low were at $19.295 and $19.160 per troy ounce, respectively, reaching a two-week high. Yesterday the contract gained 0.53%, after adding 0.39% on Monday.

The key report on retail sales in the US will be revealed tomorrow. Analysts expect a preliminary reading of 0.4% monthly growth for May, after muted 0.1% increase the previous month. Retail sales are a leading indicator for consumer spending, which accounts for about 80% of US GDP.

Also tomorrow, jobless claims will be posted. Experts suggest unchanged weekly figures at 310 000 new applications for the week through June 7, and 2.6 million continuing claims for the seven days ended May 31. Later, PPI for May will be revealed on Friday, and analysts project a 0.3% gain on a monthly basis and 1.9% year-on-year.

“With U.S. equities near the peak, it would be difficult for gold to sustain any rallies,” Zhu Siquan, analyst at GF Futures Co., said for Bloomberg. “Physical demand is good but not exceptional.”

Stocks

US stocks mostly extended gains yesterday. Dow 30 Industrial and Nasdaq 100 added, respectively, 0.02% and 0.13% for new record highs, while S&P 500 lost 0.02%, after an all-time high close the previous session. Dow Jones Euro Stoxx 50, a gauge of European stocks, also scored the highest close of all time on Tuesday, after adding 0.17%. Today, however, by 11:22 GMT the gauge stood for a 0.70% drop.

Meanwhile, assets at the SPDR Gold Trust – the largest gold-backed exchange-traded fund, remained at 787.08 for a sixth session on Tuesday. The fund has regained almost 11 tons over the last two weeks, after dropping more than 30 for the previous month, as the US economy scored improving results.

Copper

Copper futures for settlement in July dropped 0.59% to trade at $3.0350 per pound at 11:59 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.0700 and $3.0340 per pound. Yesterday copper added 0.31%, after on Monday the contract lost 0.25%, reaching a monthly low at $3.0185 per pound.

China, the biggest consumer of industrial metals, accounting for about 40% of total copper demand, has been generating some negative vibes for copper recently, as authorities have undertaken a criminal investigation on possible lending fraud, linked with copper consignment. The inquiry has prompted a retreat for the red metal, as investors sold assets on the physical market in China, in anticipation of further crackdown on copper deals. Additionally, institutions have become more reluctant to offer financing to metals ventures, with at least one bank stopping new metal financing deals, Reuters reported.

“Shrinking stockpiles provided support to copper, while investors are concerned that the Qingdao investigation may reduce demand for the metal to use for financing deals,” Yasuo Tanaka, general manager at Toyota Tsusho Metals Ltd., said for Bloomberg.

Earlier, the Chinese government revealed a plan to help boost the economy. Authorities announced reserve requirements cutbacks for banks, which lend to farming companies and small-to-medium sized firms, in attempt to reverse the economic growth slowdown.

Chinese industrial production for May will be posted on Friday. Experts suggest a steady 8.8% growth year-on-year, after 8.7% in April. The industrial sector accounts for nearly half of Chinese GDP, and the bulk of domestic copper consumption. Also due on Friday, reports on fixed assets investments and retail sales for May are expected to reveal steady annual growth for both.