Comex gold recovers but copper price sinks further

The Comex copper price fell further on the morning of Wednesday, October 19 in the US despite easing concerns that the Chinese economy is starting to contract.

Copper for December settlement on the Comex division of the New York Mercantile Exchange slipped 0.55 cents or 0.3% to $2.1000 per pound. The contract has now declined for seven consecutive sessions.

Comex gold for December delivery rose $10.20 or 0.8% to $1,273.10 per oz. Trade has ranged from $1,261.10 to $1,273.50 so far.

Earlier this morning, Chinese GDP growth for the third quarter at 6.7% was as expected, as were fixed asset investment at 8.2% and retail sales at 10.7%. Industrial production, however, at 6.1% fell short of the forecast 6.4%.

Overall, these numbers show that China is maintaining economic growth at Beijing’s targeted range of 6.5-7%, although the disappointing industrial production figure has maintained downward pressure on the base metals, market participants said.

“The stabilisation of the Chinese economy is due primarily to stronger domestic demand, especially in the real estate sector and also in the automotive industry,” Commerzbank said.

“However, because there are signs of overheating on the housing market, the Chinese government has taken steps to cool the market down. These are likely to have a negative impact on China’s economy in the next quarters,” it added.

China’s apparent consumption of major base metals is set to slow over 2016-2020, with annual copper demand growth to ease to an average of 3.3% during this period, the country’s Ministry of Industry and Information Technology (MIIT) said.

In the precious metals, gold prices have been by constrained by a rise in the dollar index to a seven-month high of 98.17 on Monday. But it inched lower this morning to 97.85 after US inflation and housing data fell short of expectations.

The easing in the dollar also follows comments from Fed chair Janet Yellen highlighting the potential benefits of temporarily running a “high-pressure economy” to stimulate business investment and jobs growth, James Moore, a research analyst at Metal Bulletin, said.

While US building permits in September at 1.23 million beat the forecast of 1.17 million, housing starts over the same period at 1.05 million undershot the expected 1.18 million.

Yesterday, the NAHB housing market index at 63 was lower than predicted, as was the CPI at 0.1%. The core CPI was as expected at 0.3%.

Later today, crude oil inventories and the beige book are due.

In European markets, Germany’s DAX and France’s CAC-40 were down 0.2% and 0.1% respectively while the dollar strengthened by 0.2% to 1.0963 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex gained 72 cents or 1.4% to $51.34 per barrel while Comex silver for December settlement was recently at $17.735 per oz, up 9.7 cents.

(Editing by Mark Shaw)

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