Copper, gold prices in negative territory; solid data ignored

Copper and gold prices started trading in the US on Friday, October 14 in negative territory despite better-than-expected data from China and the US.

Copper for December settlement on the Comex division of the New York Mercantile Exchange was down 1.05 cents or 0.5% at $2.1110 per pound. The contract has declined for four straight sessions and is trading at its lowest since September 13.

Comex gold for December delivery fell $7.20 or 0.6% to $1,250.40 per oz. The metal has traded in a narrow band between $1,245 and $1,265 so far this week.

In data, the Chinese CPI at 1.9% was stronger than the expected 1.6% while its PPI at 0.1% was also better than the predicted -0.4%.

This helped to offset yesterday’s Chinese import and export figures, which showed the world’s largest end-user of copper is consuming less copper as the second half of the year progresses.

But the dollar index is hovering around its highest point since mid-March – it was recently at 97.90 – which is preventing any rally.

“Surprisingly, the positive Chinese inflation data failed to revive prices this morning – another sign that sellers are very much in control,” Metal Bulletin analyst Andy Farida said. “Copper fell 2% yesterday; we see prices consolidating lower in the short term.”

The precious metal has been under pressure in recent weeks while investors worry about the possibility of higher interest rates and an end to monetary easing, ANZ Research senior commodity strategist Daniel Hynes said.

US central bankers are increasingly confident in the US economy and could be prepared to raise rates as soon as December, according to the latest Federal Reserve meeting minutes.

“In the short term, the impending rate hike in the US will remain a headwind. However, once passed, we expect prices to continue their drive towards $1,375 in the first quarter of 2017,” Hynes said.

In US data, core retail sales rose 0.5% in September, above the expected 0.4%, while retail sales were in line with forecast at 0.6%.

The core PPI and PPI in September both exceeded predictions at 0.2% and 0.3% respectively. UoM consumer sentiment, preliminary UoM inflation expectations and business inventories are scheduled for release later today.

In European markets, Germany’s DAX and France’s CAC-40 were up 1.5% and 1.7% respectively while the dollar strengthened by 0.4% to 1.1017 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex gained 26 cents or 0.5% to $51.11 per barrel while Comex silver at $17.415 per oz was down 4.3 cents.

(Editing by Mark Shaw)

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