Copper Remains Near Recent Highs While Gold Continues To Bottom

                  Gold is trading at 1292.60 adding $1.80 but remaining weak as the US dollar maintains its strength. Silver added 83 points to reach 20.498 and platinum is flat at 1472.10. Gold futures fell to the lowest in five weeks in New York as the outlook for an improving global economy reduced demand for a haven. 

A preliminary China Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics rose to an 18-month high. U.S. jobless claims fell to the lowest since February 2006 last week, a government report today showed. The Standard & Poor’s 500 Index of stocks closed at a record yesterday. The decline extends losses this month for bullion after unrest in Ukraine and the Middle East helped prices rebound 10 percent in the first half of 2014. Goldman Sachs Group Inc. reiterated a call for gold to drop further by year-end with an accelerating U.S. recovery, even as the bank raised its long-term forecast on the metal.

Prices for the yellow metal fell 1 percent to below $1,300 an ounce as the dollar and stock markets rose on surprisingly low weekly jobless claims and robust corporate earnings out of the United States. 

Data from Europe showed the services sector in the 18-member euro zone performing better than any forecast from 39 economists in a Reuter’s poll. All that diverted investor attention from the clashes in Gaza between Hamas and Israel, as well as the tensions in the Crimean region after the sanctions on Russia and the downing of a Malaysian passenger jet, that sent bullion rallying last week.

Goldman repeated a forecast for gold to drop to $1,050 by the end of 2014, analysts wrote in a report dated yesterday. The bank said it raised its long-term forecast 13 percent to $1,200 in 2014-dollar terms “to make it more in line with our marginal-cost support level.”

Data from the China Gold Association yesterday showed consumption in the country, which surpassed India as the largest user last year, fell 19 percent in the first half of 2014.

Copper gave up a few points this morning as traders booked profits after Thursday’s rally on Chinese data. Copper is trading at 3.255. Copper dropped for the first time this week as investors viewed a rally to the highest price since July 14 as excessive amid rising global supplies.

Copper is down 2.8 percent this year, the most among the six main metals on the LME. Global supply will exceed demand by 353,000 tons in 2014 and by 492,000 tons in 2015, according to Goldman Sachs Group Inc. Goldman cut its 12-month estimate for copper to $6,200 a ton from $6,600 due to rising output and exposure to a weak property market in China, the biggest user. Copper futures rose the most in three weeks as a gauge of manufacturing climbed to an 18-month high in China, the world’s top consumer of industrial metals.

China’s factory measure from HSBC Holdings Plc and Markit Economics showed a preliminary July reading of 52, compared with the 51 median estimates of analysts surveyed. A level above 50 indicates expansion. Copper inventories monitored by the London Metal Exchange extended a slump to the lowest since August 2008. - Fxempire

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IMF Reduces Growth For US & China Lowering Implied Demand For Oil

                    On Thursday the International Monetary Fund has lowered its 2014 global economic growth forecast, warning of “negative surprises” from the United States and China and geopolitical risks in Ukraine and the Middle East. The IMF projected global growth of 3.4 per cent for this year, down from its April estimate of 3.7 per cent. In 2013, the world economy grew 3.2 percent. The downgraded 2014 growth outlook reflects “both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets,” the IMF said, in an update of its semiannual World Economic Outlook.

The downgrade weighed on implied demand for energy products. The brief update showed the IMF increasingly concerned by escalating geopolitical tensions. “Geopolitical risks have risen relative to April: risks of an oil price spike are higher due to recent developments in the Middle East while those related to Ukraine are still present,” the report said. Despite the worse-than-expected global growth outlook for 2014, the IMF left its 2015 forecast unchanged at an annual rate of 4.0 per cent, the fastest pace since 2011.

The lower growth rates weigh on commodity demands, but at the same time the increase in geopolitical concerns pushes the price of crude oil on worries over supply and production disruption. WTI slipped $1.05, or 1 percent, to end at $102.07. The volume of all futures traded was 23 percent below the 100-day average for the time of day. Brentdeclined 96 cents, or 0.9 percent, to close at $107.07 a barrel 

West Texas Intermediate crude declined with gasoline as U.S. inventories of the motor fuel expanded for a third week, threatening to depress refining margins. Gasoline stockpiles grew by 3.38 million barrels last week and supplies around New York Harbor, where futures contracts are delivered, were at the highest seasonal level since 2008, Energy Information Administration data showed. Gasoline futures ended at the lowest price in almost six months. Gasoline futures for August delivery dropped 2.33 cents to $2.8368 a gallon on the Nymex, the lowest settlement since Feb. 28. Ultra low sulfur diesel dropped 0.45 cent to $2.8709.

Natural gas gained after the release of the weekly EIA inventory report. Gas climbed to trade at 3.847 adding 8 points this morning. The report showed a net increase of 90 Bcf from the previous week. Stocks were 561 Bcf less than last year at this time and 683 Bcf below the 5-year average of 2,902 Bcf with the total working gas below the 5-year historical range. - fxempire

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