Copper spurred higher by Chinese data, gold market idle

Base and precious metals turned positive Wednesday in the US with copper leading the way before Chinese investors head to the sidelines for an extended vacation.

Copper for December delivery on the Comex division of the New York Mercantile Exchange jumped 5.20 cents or 2.5 percent to $2.1535 per pound. Earlier, the price touched $2.1615, the highest since August 21.

Comex gold for December settlement inched up $2.10 or 0.2 percent to $1,325.80 per ounce. Trade has ranged from $1,316.60 to $1,329.80.

Throughout the past week, various Chinese data has painted a mixed picture. But overnight new loan and money supply roundly exceeded expectations and led to a broad-based base metals recovery.

Chinese M2 money supply for August at 11.4 percent beating the expected 10.5 percent gain while new loans at 949 billion yuan were significantly better than the forecast of 725 billion yuan.

Prices also benefitted from the latest inventory data with copper stocks falling a net 1,875 tonnes to 351,500 tonnes although a further 1,575 tonnes arrived in Hull. Cancelled warrants fell 3,500 tonnes to 52,875 tonnes.

Chinese investors will be absent on Thursday and Friday for national bank holidays; short-covering and book-squaring were evident in today’s trading.

Here in the US, the Federal Reserve’s policy board sees signs of improved wage growth and a robust labour market, inflation remains below the Fed’s two-percent target.

With the presidential election approaching, the committee has only three remaining dates to lift interest rates – chair Janet Yellen has expressed a desire to increase rates at least once in 2016.

Still, market participants are doubtful – the odds of a September rate increase stand at just 15 percent while December is at 56.5 percent, according to the CME Group FedWatch tool.

“The precious metals look set to continue to consolidate while awaiting further information,” Andy Farida, an analyst at FastMarkets, said. “We expect volatility to return as the September FOMC meeting nears but strong directional moves may well have to wait until after the meeting.”

The FOMC’s statement will be released on Wednesday afternoon next week.

In US data, import prices month-over-month in August came in at -0.2 percent, missing the forecast of -0.1 percent.

Meanwhile in the US, the Dow Jones industrial average and S&P were both down 0.1 percent, while the dollar softened 0.2 percent to $1.1244 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex declined $1.23 or 2.7 percent to $43.67 per barrel while the most active Comex silver contract stood at $19.035 per ounce, up 60 cents

 

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