Copper Stages A Recovery

Gold continued to trade in the red as October unfolded. The shiny metal is trading at 1114.70 in the Asian session as traders turned their focus to Chinese PMI data forgetting the US Federal Reserve for only a few short hours. A good print from ADP on Wednesday afternoon was the final straw that traders needed to send the greenback on a rally allowing gold to continue to ease. Silver reversed the trend to 14.535. Platinum was the big gainer adding $5.65 bouncing off of recent lows as speculators grabbed up the cheap commodity. The ADP report is based on data from businesses with almost 24 million workers on their combined payrolls.

The September jobs report issued by the Labor Department may show private businesses added about 200,000 employees after a 140,000 increase in August, according to the median forecast of economists surveyed by Bloomberg. The unemployment rate probably held at 5.1 percent, the lowest since April 2008. The improving outlook for the labor market is among the reasons Federal Reserve policy makers have said they may raise their benchmark interest rate from near zero before year-end.

Copper rallied adding 34 points to trade at 2.375 surprising investors. The slightly better Chinese PMI print helped the depressed metal climb. Analysts said that while the survey indicated stabilization, manufacturing remained weak since September’s report marked a second consecutive month of contraction. Any number below 50 indicates activity is shrinking on a monthly basis, while one above indicates expansion.

Chinese financial markets were closed Thursday for the start of a week-long public holiday, but the rest of Asian indices traded higher following the news. Australian shares led gains by 0.7 percent, while the Australian dollar added 0.1 percent against the greenback. “With the world so sensitive to China’s growth prospects, today’s manufacturing and services reports could drive sentiment.

Last month’s range of dismal economic indicators, such as August’s 5.5 percent fall in exports and recent stock market volatility, have heightened concerns about the world’s second-largest economy and fueled expectations for more monetary and fiscal support, such as additional interest rate cuts and lower bank reserve requirements sent copper to multi year lows.

Wednesday copper futures staged a comeback from six year lows hit earlier in the week as supply disruptions from top producing countries Chile and Peru lift sentiment in beaten down sector.

On the Comex market in New York copper for delivery in December surged as much as 4.7% to a session high of $2.3575. Today’s advance lifted the red metal out of bear territory for 2015, but at a more than 17% drop since December 31 following a 16% retreat in 2014, no-one’s celebrating a bottom yet.

Today’s big jump in heavy volume came after news from top producing country Chile.  Output at one of the world’s largest copper mines, Collahuasi, will be cut by 30,000 tonnes due to current market conditions. The mine, owned by Anglo American and Glencore produced 470,000 tonnes of copper in 2014, roughly 2% of global output. Earlier this month Glencore announced its idling mines in Zambia and the DRC that would remove more than 400,000 from the market. Also on Tuesday Peru declared a state of emergency in the area around the Las Bemba’s mine after clashes between police and protesters left four people dead and 16 seriously injured.