Precious and Industrial Metals Weak On Chinese Worries

 Gold ended with a minor gain after a remaining range-bound, finding some support at lower levels to break out of their recent trading range but scored the highest settlement so far this month. Gold closed at 1578.00 and added $4.20 this morning following its usual pattern of adding in the Asian session and giving back some of the gains throughout the day and remaining flat for the balance of the day. There is very little guidance for precious metals.

Gold swung between gains and losses in New York as investors weighed data showing an improving US economy against signs Europe’s debt crisis is continuing. Global equities reached the highest since June 2008 and the dollar traded near a seven-month high against six counterparts on signs the US economy is strengthening. Physical buying interest in Southeast Asia was slow, as customers waited for a clear price direction. Gold holdings of SPDR gold trust, declined to 1,236.73 tons yesterday, while silver holdings of ishares silver trust increased to 10,646.48 tons. Silver is trading at 28.99 adding close to 14 cents this morning.

Copper inched higher Monday as continued strength in U.S. equity markets and a weaker dollar eclipsed concerns about slower industrial production and metal demand from China. A mid-morning reversal in U.S. equities, which shook off early morning losses to move higher, gave copper prices a boost. Copper and equities tend to move in the same direction as both assets are highly sensitive to shifts in economic outlook. A weaker dollar, which slipped against a basket of international currencies, also gave copper futures some support. Copper is traded in dollars and, as the dollar falls, it becomes less expensive for investors who use other currencies to buy the metal, drawing them to the market as buyers. Earlier in the day, copper prices had retreated on concerns that China’s appetite for the metal would slow. China is the world’s largest consumer of copper, accounting for about 40% of global demand. Data showed Chinese industrial output in the January-February period rose 9.9% from a year earlier, missing forecasts of 10.5% growth. Industrial activity during the first two months of the year also slowed from December’s 10.3% on-year increase.

Zinc prices fell to a 15-week low, after industrial output in China posted the weakest start to a year since 2009. Zinc stockpiles monitored by the London Metal Exchange rose 1% to 1.21mn tons, the highest since Jan. 31, data from the bourse showed.

Base metals are likely to continue down as demand from China still remains weak and investors would await the public policy on March 14th to get direction on future policy actions.

 Courtesy : fxempire