Commodity markets ended the Wednesday session on a downbeat note with positive US data and a softening dollar unable to lift prices from their lows, while investors appear content to wait until a clearer picture emerges from the US labour market.
Copper for July delivery on the Comex division of the New York Mercantile Exchange slipped 2.25 cents to close at $2.0730 per pound. Earlier, the price touched $2.0515, the lowest since May 23.
Comex gold for August settlement fell $4.50 or 0.4 percent to $1,213.0 per ounce. Trade has ranged from $1,208.20 to $1,222.90.
“It is getting into the summer period now, so things are getting quieter, and most of the business is two-way short-term funds stuff,” a trader said. “It depends on the news headlines and reaction to Friday’s US jobs, but for now things are drifting a bit.”
Mixed data out of China kept base metals pressured with Caxin manufacturing PMI coming in at 49.3 – below the forecast, although the official manufacturing PMI was as expected at 50.1.
Still, Beijing injected billions of capital and has taken historic measures to stabilise the yuan and equity markets in order to prevent a manufacturing downturn, which is close to resuming.
“We suspect that the base metals group might retrace a little lower over the next several days, as fundamentals seem to be reasserting themselves, with the confusing situation with Chinese metals demand again looming large over the complex,” Edward Meir, an analyst at INTL FCStone, said.
From the US, the final manufacturing PMI for May came in at 50.7, above the expectation of 50.5. ISM manufacturing PMI and prices over the same period were at 51.3 and 63.5 respectively, both besting economic consensus.
Though, construction spending month-over-month in April disappointed at -1.8 percent, a major miss from the 0.5 percent estimate. Looking ahead, Friday’s US employment report is due, which is expected to show 160,000 jobs were added in May.
US data has grown in importance since the FOMC was hawkish in its April meeting minutes, saying it is prepared to raise rates as soon this month. If the labour market continues to show improvement while inflation and wages tick higher, the likelihood of an increase at its June meeting grows.
“From the Fed’s perspective, this morning’s improvement in the ISM is just another feather in the cap of the hawks arguing in favor of a near-term rate increase,” Lindsey M. Piegza, Chief Economist at Stifel, said. “Coupled with yesterday’s outsized pop in consumption, further headline improvement in domestic manufacturing suggests the US economy may indeed be shrugging off weakness at the start of the year.”
“Add in a strong employment report this Friday and a rate hike come June may be all but a done deal,” Piegza added.
Turning to US markets, the Dow Jones industrial average and S&P were each up 0.1 percent, while the dollar softened 0.5 percent to $1.1184 against the euro.
In other commodities, light sweet crude (WTI) oil futures on the Nymex fell 12 cents or 0.2 percent to $48.98 per barrel.
Oil prices have been retreating since touching $50 per barrel – the highest since November – and are now in consolidation mode ahead of the Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna.
After the Doha, Qatar meeting, it is unlikely an oil production freeze or cut will take place, but investors will be focused on any potential headway made between Iran and Saudi Arabia.
The post Copper, gold end session in negative territory appeared first on The Bullion Desk.
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Source: Bullion Desk News
