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October 3rd, 2014, 6:25 am | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Gold and Silver futures soared during the midday trade in Europe last week, bouncing off multi-month lows. In the meantime, copper futures added on the back of the better-than-expected China factory figures.

With the gold futures for December delivery on the Comex in New York being traded at $1,232.5 per troy ounce which was up 1.20 %, prices ranged from $1,214.7 to $1,237.0 per troy ounce. The contract was able to put in 0.1 % last week, although it also reached a nine-month low at $1,208.8.

Silver for December delivery maintained a 0.4 % daily gain at $17.845 per troy ounce. The contract logged four and a half year low at $17.325 last week.

The U.S. reported fairly disappointing housing data last week. Existing home sales logged a 1.8 % drop in the annualised rate in August to 5.05 million. Moreover, the homes sales were the primary gauge of the retail sector, which was the largest single market in the U.S. which accounts for ~13 % of US GDP.

Additional U.S. gauges are due this week, with durable goods orders to be set for a rebound following last month’s all time-high increases. Orders were able to hit a high of 22.6 % on a monthly basis back in July on support of massive orders for Boeing. Presently, orders are looking at a ~18 % decrease on a monthly basis, still losing substantially less than the jump a month ago.

GDP figures last week were projected to validate a bullish story for the dollar and U.S. stocks, with the groundwork reading on quarterly growth for Q2014 was set to be plotted at 4.6 %, beating the earlier flash figure of 4.2 %.

Betting heavily on an improving recovery in the U.S., the Fed announced an abrupt rate increase in 2015 last week, in support of the U.S. dollar and weighing on the dollar-denominated commodities, specifically gold.

The Federal Open Market Committee’s (FOMC) September meeting was able to produce another $10 billion savings in monthly government spending on quantitative easing. Meanwhile, the central lending rate was likewise kept at 0.25 %, however, the targeted rate by the end of 2015 was increased from 1.125 % to 1.375 %, bolstering the greenback to a new four-year peak.

It was said that the strength of the dollar continues to put additional weight on all precious metals, with gold looking likely to make a play for $1,200 in the coming sessions. With the reflective diminishing appeal of gold, assets at the SPDR Gold Trust, the biggest exchange-traded-gold-backed fund, plummeted 774.65 last week, the lowest level in the course of six years.

Copper in General

Copper contracts for the month of December, the most-traded contract in New York, was positioned at $3,0405 per pound, up 0.07 % for the day.

The red metal plummeted 1.7 % last week. Moreover, the red metal was boosted by a better-than-expected reading on Chinese factories by Markit and HSBC. Also, the companies which are putting their manufacturing PMI at 50.5, signaling an expansion in the sector, which accounts for a substantial piece of Chinese copper consumption.

China on its account was able to produce 40 % of global copper demand. The property and construction sectors in China are still not presenting any signs of recuperation. That, along with signs that copper mine supplies are ramping up, have resulted in speculations that prices will soon fall by the end of this year.

A Reuters poll indicates that a 226, 000 ton surplus copper by the end of this year 2014 and another 285,000 next year.

With the downbeat U.S. housing data stressed regarding the red metal to a multi-month low last month, the typical home has more or less 300-500 pounds of copper, making the real estate sector among the top performing markets and housing which gauges copper demand.

Finally, now that investors are eyeing on new home sales figures from the U.S., experts are predicting that there will be a bumper reading for 4.2 % growth of the yearly rate of new home sales.

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