Metal market: gold and copper quotes prone to moderate upturn

23.07.2013 16:13
Metal market: gold and copper quotes prone to moderate upturn

YEREVAN, July 23./ARKA/. Gold quotes were teetering from 15 to 19 July and macroeconomic statistics was supporting the gold quotes. China’s GDP for the second quarter met the forecasts at 7.5% thus comforting the investors who were earlier concerned about China’s possible economic slowdown. The consumer price index in the USA hit 1.8% in June against 1.4% a month earlier pointing to acceleration of inflation rates. U.S. labor statistics was contradictory.

However, the focus of the investors was attached on a two-day report of Mr. Ben Bernanke, chairman of the U.S. Federal Reserve, at the Congress. Even though Mr. Bernanke has been mentioning the plans for further monetary and credit policy earlier, the investors expected him to speak about the program terms in details. However, this time either Mr. Bernanke said just general things and noted the terms depended on the U.S. economic stability.

As a result, the gold quotes have approached the resistance benchmark of 1,300.0 USD per troy ounce several times throughout the last week. Inflationary expectations aroused more actively last week, and the USD was dropping amid uncertainty around the terms of QE3  termination.  Thus, the gold prices got support. Also, at lower gold prices, the demand for physical metal gets higher.

New concerns around the European debt crisis can also prompt hikes in gold prices. The program on saving Portugal’s economy can fail, and the debt crisis will show up again. Portuguese government coalition and opposition failed to agree on a single political and economic crisis solution. The resistance benchmark for the  gold may be  1,337.0 USD per troy ounce this week.
This week gold prices will be depending on macroeconomic statistics, but not many structures are expected to release it. Of the U.S. statistics we should highlight housing market and the number of orders for durable goods for June. Of the European news we should focus on PMI for industrial sector of Germany, France and eurozone, as well as business climate indicator of Germany published by IFO for July.

The statistics from the USA and eurozone is expected to be optimistic. However, the statistics for orders for durable goods and number of primary unemployment allowance applications are not expected to improve, therefore the gold quotes can overcome 1,300.0 USD per troy ounce. If this statistics is stronger than expected, the investors can get concerned around the terms for stimulus program termination, and the gold quotes can somehow fall. The supporting benchmark can be 1,253.0 USD per troy ounce this week.

The analysis has also showed NCF for gold have slightly grown due to the fact that the reduction in short positions exceeded that of long positions. Further reduction of short positions may touch off short-term increase of gold prices this week.

Copper prices decreased by 0.11% to 3.1430 USD per pound as a result of Mr. Bernanke’s speech and all the consequences mentioned above. Moreover, weak macroeconomic statistics from China has also deteriorated the demand for this asset.

Nevertheless, the quotes got support from the industrial output of the USA that rose by 0.3% in June against expected 0.2%. The market dealers also accepted appropriately China’s GDP for the second quarter.  Another reason for stability of copper prices was decreased reserves of this asset at Shanghai Futures Exchange (down by 947 tons to 167,429 tons). This week the copper price may be rising.

Business activity index in manufacturing sector of China by HSBC, manufacturing activity index of Germany and the eurozone are expected to increase. Thus, the copper quotes may also rise.

If macroeconomic statistics doesn’t meet the expectations and the political crisis in Portugal continues, the copper quotes may tumble. The prices may vary within 3.05 – 3.25 USD per pound.
The analysis showed that NCF for copper increased as the short positions reduced sharper than long ones. There is an uncertainty at the copper market. As there is no tendency to increase of long positions, copper may be sold at 3.1660 USD per pound.

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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