Gold & Copper Trading In The Green

It was a surprise session for gold as traders in the Asian markets pushed up the investment commodity by $7.50 to trade at 1130.10 even as more and more whispers about a rate increase from the Fed surfaced after very strong GDP print on Thursday.  Gold eased yesterday, headed for its biggest weekly rout since March, as upbeat U.S. growth and jobs data drove up stocks and the dollar, though uncertainty over the timing of a U.S. rate rise held losses in check.

This week’s slide in gold prices has eroded nearly all of last week’s gains. U.S. stocks soared and the dollar rose after data showed the U.S. economy grew faster than initially thought in the second quarter and jobless claims fell more than expected last week. European stocks extended gains to 3.4 percent.

A U.S. Federal Reserve policymaker said the case for an interest rate increase next month seemed “less compelling” than it was a few weeks ago. Gold tends to benefit from ultra-low rates, which cut the opportunity cost of holding non-yielding bullion while boosting the dollar.

According to William Dudley, president of the New York Federal Reserve a September rate hike is looking less compelling.  “From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago,” he said. He also added that “normalization could become more compelling by the time of the meeting as we get additional information on how the U.S. economy is performing and more information on international and financial market developments, all of which are important in shaping the U.S. economic outlook”.

Holdings of SPDR Gold Trust rose 0.35% on Friday from Thursday, while that of iShares Silver Trust remained unchanged during the same period. Silver traded in the green but with little gains trading at 14.44 and platinum moved to 1006.35 holding above the $1000 price for two consecutive days.

Copper also was able to gain as the base metal family has improved as Chinese stress eased and the better than expected US GDP helped support implied demand. Copper is up 7 points at 2.332 after Thursday’s gains. London Copper slid on Wednesday, wiping out the previous session’s gains on concerns that fresh rate cuts in China might not be enough to stabilize its slowing economy and end a collapse in Chinese stocks. Copper and zinc scored the biggest one-day gains in over two years on Thursday after comments by U.S. Federal Reserve officials helped calm global markets, including hard-hit stocks in top metals consumer China.

Speculators on the London Metal Exchange scrambled to buy back short positions after the recent downswing, traders said. Equities rallied around the world on Thursday following comments by two Federal Reserve officials that prompted investors to push back forecasts for U.S. rate hike.