Copper Can’t Seem To Stop Falling

Gold continues to slowly give back gains as more and more Federal Reserve speakers say they support a rate increase soon most saying before the end of the year. St Louis Fed chief James Bullard on Friday raised the prospect of a lift in US borrowing costs when he said he would “like to get going”. His comments reinforced the view that monetary policy would be tightened before 2016.

Fed boss Janet Yellen said Thursday she expects a hike by year-end, pointing to recent strong data.

On Friday the Commerce Department said the US economy grew 3.9 per cent in April-June, up from the 3.7 per cent originally stated thanks to a boost in investment and consumer spending.

Gold eased on Monday to trade at 1132.00 down over $11 as traders booked profits from last week’s rally and remained flat in the Asian session on Tuesday. Silver tumbled 551 points to 14.56 while platinum took a beating to trade at 922.50 down almost $30.  Gold fell for a second session on Monday, as the dollar stood close to a five-week high ahead of a key US jobs report later in the week, which could boost bets the Federal Reserve will hike interest rates this year. Platinum fell nearly 3% to a fresh 6-1/2 year low and continued its decline on Tuesday morning. Palladium tumbled 3% also to trade at 650.30. It posted its biggest weekly drop since July last week on fears that the Volkswagen emissions scandal could dent demand for diesel cars, where it is used in catalysts.

Federal Reserve Bank of New York President William Dudley said he continues to believe officials will be able to end their current near-zero interest rate policy before the close of 2015.

“My expectation is that we will probably raise rates later this year,” and any meeting over the remainder of the year is eligible for action, Mr Dudley said. But whatever the Fed does will be driven by how the economy performs and is being affected by financial conditions and overseas events, he said.

Mr Dudley’s comments came as part of an interview held with The Wall Street Journal in New York. They were his first public remarks since the Fed met just over a week ago in a policy gathering that saw central bankers maintain their near-zero interest rate policy while they took stock of how worrisome overseas economic events and unsettled markets might affect the course of the US economy.

Like Mr Dudley, most Fed officials continue to believe that they’ll be able to raise short-term rates this year. The US dollar rallied to trade as high as 96.67 but declined after a miss in pending home sales.

The strength of the US dollar continued to weigh on the dollar denominated commodities especially the base metals market. Copper fell 40 points to its lowest level of 2.24 over the past two days. The price of the industrial metal fell steadily throughout the week, shedding 5% of its value, after data released by the International Copper Study Group on Monday showed Chinese demand fell 1% in the first half of the year and refined copper imports fell 10%. China consumes roughly 45% of global copper supply. Many investors are concerned that China’s slowing economy will undergo a ‘hard landing’ after years of double-digit growth, triggering a supply glut as manufacturing and construction slow. Profits at China’s major industrial companies saw their biggest declines in four years last month, official data shows, the latest sign of weakness in the world’s second-largest economy. The figures came after a string of poor data showing the slowing pace of the traditional drivers of China’s growth sent shock waves through markets worldwide.