Metal market: Gold and Copper prices May down, U.S. federal reserve’s protocols are in limelight

09.07.2013 16:02
Metal market: Gold and Copper prices May down, U.S. federal reserve’s protocols are in limelight

YEREVAN, July 9./ARKA/. Gold quotes dropped last week pressured by the concerns of the dealers about quantitative stimulus program’s terms. This asset appeared to show a three-week non-stop negative dynamics.

Positive labor statistics from the USA and more confident USD have also reduced attractiveness of this asset. Indeed, the number of new jobs in the non-agricultural sector rose in June by 195,00 versus anticipated 165,000. USD got additional impetus after the European regulator and Bank of Anglia said the monetary and credit policy would stay soft in the near future.

As a result, the gold prices dropped by 1.33% to 1,222.92 USD per troy ounce last week.

This week, the gold quotes are expected to be falling again amid some better macroeconomic statistics from the USA. Moreover, the ongoing outflow of the means from the metal market-focused funds as well as uncertainty around the measures of the American regulator won’t let the investors relax. We don’t also exclude the consolidation option. The resistance benchmark this week may be 1,240.0 USD per troy ounce.

The pressure also comes from investors who reduce the sizes of their long-term positions, according to the last report of the CFTC.

The dynamics of this asset will depend on the macroeconomic statistics from the USA and eurozone this week. Of the American news we should focus on the retail trade statistics for May, preliminary confidence index from University of Michigan for July, and the number of primary unemployment allowance applications. Of the European news we should highlight consumer inflation in Germany for June and the monthly report of the ECB. Moderately positive statistics from the overseas and neutral figures from the eurozone may pressure the gold quotes.

The publication of protocols from the U.S. Federal Reserve meeting may also affect the gold prices. We anticipate these protocols to imply earlier than expected termination period for quantitative stimulus program. If these forecasts come true, the gold quotes may sharply down. The supporting benchmark for gold this week may be 1,175.0 USD per troy ounce.

Copper prices hit 3.0665 USD per pound last week, and there was no exact dynamics for copper.

Copper prices were rising primarily in the first half of the last week. Copper prices jumped to a two-week record of 3.1755 USD per pound as the USD slightly tumbled. Moreover, the sentiments at the market have improved amid positive macrostatistics from China. Even though the Chinese industrial PMI decreased in June, it managed to stay within the threshold of 50 points.

Another driver for copper stability was reduced stock reserve of this asset at Shanghai Futures Exchange. It fell by 9,472 tons to 173021 tons. However, the confident USD at the end of the week negatively affected the copper quotes.

The copper quotes may continue tumbling if USD gets stronger. The dynamics will depend on the protocols from the U.S. Federal Reserve meeting on Wednesday as any turnpoint in the monetary-credit policy will prompt volatility at the copper market.

The copper dynamics will also depend on the news from China, particularly foreign trade statistics. Import statistics is expected to show good results, and the copper prices may rise. However, if our forecasts are wrong and the statistics is worse than expected, the copper quotes may tumble.

Copper prices may vary within 2.92 – 3.13 USD per pound this week.

Mikael Verdyan, an analyst at FOREX CLUB, specially for ARKA news agency.
The opinion of the author does not necessarily reflect that of the agency.—0-

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