Commodities trading outlook: gold, silver rise ahead of Yellen speech, copper set for big weekly gain

Gold and silver futures were higher during midday trade in Europe today, as tensions in Ukraine stoked some haven bids ahead of speeches from the top US and EU central bankers later today. Meanwhile, copper futures were higher and headed for a sizable weekly gain.

Gold futures for December delivery traded at $1 279.9 per troy ounce, up 0.35%, at 12:47 GMT on the Comex in New York. Prices ranged from $1 277.2 to $1 283.9 per troy ounce. The contract dropped 1.53% on Thursday, reaching a two-month low of $1 273.4, and is headed for a ~1.9% weekly drop.

Silver for September delivery stood for a 0.18% daily gain at $19.450 per troy ounce. Silver dropped 0.4% yesterday, reversing earlier gains.

Several readings on the US economy were released yesterday, boosting sentiment for the dollar and pressuring gold lower. Existing home sales increased more than forecast in July, and so did the Philadelphia Fed Manufacturing Index, while initial jobless claims were fewer.

The upbeat data supported an earlier boost for dollar bulls, as minutes from the Fed’s July meeting were released on Wednesday, revealing a more hawkish stance by some policy makers, who debated whether a rate hike should be introduced earlier than previously expected.

Investors now eye Fed Chair Yellen’s speech later today at a central banks summit in the US, for cues as to the future rate hike and its time-frame outlook.

Also at the summit is European Central Bank President Mario Draghi, who is expected to comment ECB’s stance on monetary easing and accommodation, in light of mixed, though largely downbeat EU data as of late, with the euros value on the table.

The euro reached a one-year low against the US dollar yesterday, raising concerns about a possible monetary easing program.

Since the two currencies share a near-absolute opposite correlation, a drop for the euro directly translates into a stronger dollar and lower prices for gold, and vice versa.

Ukraine, Gaza

The ongoing political and military conflicts in Ukraine and Gaza helped gold cut losses yesterday, and continued supporting today.

The controversial Russian humanitarian convoy was sent forth into Ukraine by Moscow today, despite protests by Kiev. The Russian foreign ministry stated that the delays on account of Ukraine have not been objective, and Russia has unilaterally decided to act. The Kremlin also warned against anyone using force against the convoy.

“The Russian side has decided to act. Our convoy carrying humanitarian aid is beginning to move towards Luhansk,” the Russian foreign ministry said.

International Red Cross said its representatives were not escorting the convoy, and reporters and Ukrainian officials said rebel fighters were accompanying the convoy, as it entered separatist-controlled territory.

Kiev dubbed the action an “invasion” by Russia, though adding that it would not harm or obstruct the convoy to avoid any provocations.

Elsewhere, Israeli PM Benjamin Netanyahu vowed to see the military campaign in Gaza through to its end and “with all means necessary”, as Hamas-fired rockets continued landing in Israel on Wednesday.

The latest exchanges of fire between Hamas, which controls Gaza, and Israel come after peace talks brokered by Egypt crumbled. The principal demand by Israel that Gaza must demilitarize is dismissed by Hamas, while Israel refuses to ease the blockade on the Palestinian enclave and demands it has control over its borders in any case.

The conflict in Gaza has claimed more than 2 000 Palestinian lives, mostly civilians, and 66 Israelis since flaring back to life some six weeks ago.

Copper

Copper futures for September delivery traded at $3.1970 per pound, up 0.66%. The red metal was little changed on Thursday and is headed for a ~3% weekly gain.

“The base metals are looking perky again,” William Adams, an analyst at Fastmarkets.com in London, said in a note. “In the absence of economic data out today, with it being a Friday, a long weekend for the LME and with the central bankers’ symposium going on into the weekend, it would not be surprising to see some consolidation set in.”

Copper was supported by bullish US housing data earlier this week, though a slowdown in Chinas factory growth capped gains. China is the worlds leading copper consumer, with a 40% share of total demand, while the US is second.

More US housing data will be revealed next week, as well as durable goods orders, which will probably boost copper higher.

“The demand outlook [for base metals] in the U.S. is unprecedented,” Wiktor Bielski, head of commodities research at VTB Capital, said for Reuters. “If you go around the base metals there are lots of anecdotal stories of good demand, evidence that suggest the upward rather than downward trend.”