Metals edge lower, downbeat end of week on the cards

Copper and gold futures were on pace to end the week on a downbeat note, with the absence of Chinese investors for an end-of-week holiday leading to sluggish trading.

Copper for December settlement on the Comex division of the New York Mercantile Exchange slipped 75 cents or 0.4 percent to $2.1520 per pound. Trade has ranged from $2.1495 to $2.1680 so far.

Comex gold for December delivery declined $3.80 or 0.3 percent to $1,314.20 per ounce, its lowest since August 30. The contract has now fallen in six of the past eight sessions.

The red metal reached a multi-week high in recent days despite Chinese investors being sidelined but a rebound in the dollar has extinguished the latest rally. The dollar index was last at a two-week high at 95.76

Markets have turned quieter over the past few weeks after several Federal Reserve members gave different evaluations of the US economy and whether the central bank’s policy board should raise interest rates.

With a media blackout in place since the start of the week, market action has largely dried up and is not expected to return until after the Fed releases its statement on September 21.

Currently, only 15 percent of investors expect a September increase and fewer than 50 percent foresee a single rate rise this year, according to the CME Group FedWatch tool.

But there are signs of mounting investor concern via continued outflows from the exchange-traded funds tracked by FastMarkets. ETF holdings have fallen six tonnes since Monday and are down about five tonnes since the start of the month.

Throughout August, investors moved into paper gold – net inflows reached 16 tonnes – but liquidation since them highlights investor caution until a clearer picture emerges.

“For gold we remain bullish overall but, given the extended long position and the drift lower in prices, there may well be room for more stale long liquidation. That could lead to a sell-off, even if it is short-lived and limited,” FastMarkets head of research William Adams said.

In data, the US CPI month-over-month in August at 0.2 percent was better than the expected 0.1 percent. The core CPI, which excludes food and energy costs, at 0.3 percent was also better than the projected 0.2 percent. Later, consumer sentiment and inflation expectations are due for release.

Turning to European markets, Germany’s DAX and France’s CAC-40 were down 1.2 percent and one percent respectively while the dollar strengthened by 0.4 percent to 1.1202 against the euro.

In other commodities, light sweet crude (WTI) oil futures fell 84 cents or 1.9 percent to $43.07 per barrel while the most active Comex silver contract at $18.925 per ounce was down 11.6 cents.

(Editing by Mark Shaw)

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