Commodities trading outlook: gold, silver and copper futures

Gold and silver futures were higher on safe-haven demand during midday trade in Europe today, ahead of key US economic figures this week. Meanwhile, copper futures trimmed gains after a bearish reading on US pending home sales.

Gold futures for delivery in August traded at $1 304.8 per troy ounce at 14:19 GMT in New York today, up 0.12%. Prices ranged between $1 301.1 and $1 309.4 per troy ounce. The contract dropped about 0.5% last week.

“Gold is clearly in greater demand again as a safe haven” amid geopolitical concerns, analysts at Commerzbank AG wrote in a report today. “The latest price rises were doubtless attributable above all to short-term” trades.

Silver for September was up 0.33% at $20.705 per troy ounce, daily prices between $20.600 and $20.775. The contract lost about 0.6% last week.

Platinum and palladium were also higher, adding 0.83% and 0.67%, respectively, at $1 490.85 and $885.70 per troy ounce.

US reports

US pending home sales and services PMI were revealed earlier today. Pending sales were down 1.1% on a monthly basis in June, while Markit posted a better-than-expected preliminary July services PMI reading at 61.0.

More data is due later this week. Wednesday will see preliminary Q1 GDP figures, with expectations of a 3% annual growth after the -2.9% for Q1.

Every positive account for the US boosts sentiment for the economy, raising outlooks and pricing for both the dollar and US companies’ stocks, pressuring safe-havens such as gold.

The key moment this week will be the announcements following the 2-day meeting of the Federal Open Market Committee (FOMC), which will be revealed on Wednesday. The Fed will decide on benchmark interest rate and monthly assets purchases, with expectations of an unchanged rate at 0.25% and another $10 billion cut to purchases, which will bring the monthly spending to $25 billion. The decisions and Fed’s following comments are closely monitored by traders, as they are the most influential factor for pricing the dollar.

Later this week, the Conference Board will post its July consumer confidence, which will probably be unchanged at 85.3, ahead of personal income and spending data, due on Friday. More importantly, US unemployment and payrolls for July will be reported on Friday.

Last week saw initial jobless claims scoring an eight-year low, boosting stocks and the dollar ahead of the key reports this week.

Stocks, dollar

US stocks opened on the downside today, with all three major indices deep into the negative. By 14:09 GMT S&P 500 had dropped 0.43%, Nasdaq 100 was down 0.45%, while Dow 30 lost 0.38%. Last week both S&P 500 and Nasdaq 100 logged record highs, while Dow 30 was within 1% of its highest-ever value.

Meanwhile, the US Dollar Index, which measures the greenback’s performance against six other major currencies, was down 0.07% at 81.09. The gauge scored sizable gains last week, closing some 0.7% higher.

Holding at the SPDR trust were unchanged at 801.84 tons on Friday, after losing about 4 tons on Thursday and a further 2 tons on Monday.

Ukraine, Gaza

Gold did see some safe-haven demand today, as tensions between the West and Russia over Ukraine were still simmering, analysts expecting a new round of European sanctions. UN human rights chief Navi Pillay said that the downing of MH17 may constitute a war crime, the BBC reported.

“Every effort will be made to ensure that anyone committing serious violations of international law including war crimes will be brought to justice, no matter who they are,” Ms Pillay said.

Meanwhile, Ukrainian security spokesman Andriy Lysenko told reporters on Monday that recovered flight data showed the aircraft crashed due to a massive, explosive loss of pressure after being punctured multiple times by shrapnel.

The US and EU widened measures against the Kremlin in light of the Malaysian airliner, flight MH17, being shot down over rebel-held territory in eastern Ukraine earlier this month, killing all 298 people on board. Both the US and UK have said that they have evidence it was the pro-Russian separatists, who downed the airliner.

Moscow has not stated otherwise, but has fervently opposed allegations that it has supplied the rebels with the powerful weaponry, thought to have downed the passenger flight.

Elsewhere, Gaza fighting was muted on Monday, with the Israeli ground forces saying the active phase of their operation has ended.

Meanwhile, the UN Security Council called for an “immediate and unconditional humanitarian ceasefire” in Gaza. UN Secretary General Ban Ki-moon said Gaza is in a critical condition, adding that people had nowhere to run from the fighting. Violence there must stop “in the name of humanity,” he said.

More than 1000 Palestinians, mostly civilians, have died since the conflict sparked back to life earlier this month, with Israel first bombing then invading the strip.

Copper

Copper futures for September were up 0.19% to trade at $3.2465 per pound. Daily low and high were at $3.2260 and $3.2520 per pound, respectively. Copper contracts added about 1.7% last week, supported by robust Chinese factory figures and steady US housing.

Copper was pressured by the pending home sales figures for the US today. As a main component in housing installations and household appliances, the red metal is closely related with housing trends.

Earlier, 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, Reuters reported.

“We saw last week the copper prices catching up, but the Indonesia story has thrown cold water on a bullish recovery as we move into supply surplus,” said William Adams, head of research at Fast Markets. “We also had good PMI data last week, so I think we are going to remain generally range-bound.”

The news pressured the red metal in London earlier today, but had little effect in New York.

Previously, HSBC logged a better-than-expected preliminary July PMI reading for Chinese factories last week, while the US posted mixed housing data for June, with new home sales dropping and existing home sales adding.