Metal market: gold and copper prices vary, meetings of U.S. and european regulators in limelight

29.07.2013 14:08
Metal market: gold and copper prices vary, meetings of U.S. and european regulators in limelight

YEREVAN, July 29./ARKA/. Gold prices were rising from 22 to 26 July amid optimism after the Federal Reserve announced it was not planning to decrease the purchases of securities at the open market.

Mixed macroeconomic statistics from the world’s largest economy and less confident USD have also increased attractiveness of the gold. Indeed, the number of unemployment allowance applications stopped falling and stabilized at nearly 340,000 per week, the orders for durable goods (without transport) remained the same in June. As a result, gold prices climbed by 1.51% to 1,333.06 USD per troy ounce.

The gold quotes will be varying next week until the market gets some definite orients. The investors will focus on a two-day meeting of the U.S. Federal Reserve to discuss the interest rate. The results of this meeting will become available on Wednesday, July 31. The earlier protocols implied that some members of the Board are still supporting more severe positions regarding monetary policy.

We expect the investors to be careful and look for further orients. If the new statement contains no changes, the gold prices may continue surging. Otherwise, the gold cost may tumble. The supporting benchmark for gold will be 1,275.0 USD per troy ounce this week.

The investors will also monitor the U.S. macroeconomic statistics. Of the American news, they prioritize industrial PMI from Institute for Supply Management, the number of new jobs from ADP, the number of employed in non-agricultural sector for July, as well as preliminary GDP for the second quarter. The macroeconomic statistics is not expected to be positive this time. It is more likely to anticipate economic slowdown there, and the figures from the labor market may be worse from the previous week. Thus, the gold quotes may increase.

The resistance benchmark for the next five days will be 1,396.0 USD per troy ounce.

Of the European news we should highlight the ECB meeting on the interest rate and the traditional press conference of its chairman Mario Draghi. There are some expectations that the European regulator may decrease the interest rates. If these expectations come true, the USD may strengthen its positions thus fueling volatility at the metal market. However, given the macroeconomic statistics, the situation in Europe doesn’t require any dramatic actions, that’s why we can expect the meeting to be a regular one.

Copper prices dropped  by 2.02% to 3.1015 USD per pound last week amid business activity index of China released by HSBC. It dropped to 47.7 points in July versus 48.2 points in June. The mixed macroeconomic statistics from the USA didn’t bring any optimism either.

Some optimism at the copper market appeared as the copper reserves at Shanghai Futures Exchange fell by 5,865 tons to 161,564 tons.

Copper quotes will get pressured amid some negative trade dynamics last Friday. The copper price will also depend on the U.S. macroeconomic statistics as well as USD. This statistics is expected to be weak. If these forecasts come true and PMI and the number of new jobs in non-agricultural sector for July are non-favorable, the copper cost can tumble.

However, the copper quotes may get an impetus if the comments of the American regulator imply the improvements in the U.S. economy, and if the statistics from the overseas is better than expected. The copper prices may vary between 2.98 – 3.25 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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