Metal Markets Remain Quiet

Gold trading is just about as uneventful as forex markets. Gold is trading at 1280.20 moving between small gains and losses.  Gold prices traded lower by 0.4 percent yesterday hovering near its lowest in two months on speculation that the U.S. Federal Reserve will raise borrowing costs next year, strengthening the dollar and damping demand for an alternative investment. Also, China’s net gold imports in July from main conduit Hong Kong tumbled to their lowest since June 2011 because the country already has ample supply from shipments in earlier months, while jewelers are waiting for lower prices. According to data by the Hong Kong Census and Statistics Department, July net gold flows into China from Hong Kong dropped to 22.107 tonnes versus 40.543 tonnes in June.

Gold regained some strength on Tuesday on bargain hunting but still held near its weakest level in two months as a firmer US dollar and rallies in equities undermined the metal’s appeal as an alternative investment. Tensions between Russia and Ukraine as well as violence in the Middle East have failed to stir up demand from investors. The United States is preparing military options, including surveillance flights, to pressure Islamic State in Syria, U.S. officials said on Monday, but they cautioned no decision had been made to expand U.S. action beyond the limited airstrikes under way in Iraq.

Russia increased its gold holdings for a fourth straight month in July, adding 10.6 tonnes to its reserves, while Turkey lowered its holdings by 4.3 tonnes, data from the International Monetary Fund showed on Monday. The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.37 percent to 797.09 tonnes. 

The chief executive of platinum producer Lonmin denied assertions from mining industry sources on Monday that the company aimed to cut around 5,700 jobs as part of a drive to restore profits after a five-month strike. Platinum is taking its cue from the overall markets holding tight at 1418.70 while palladium fell 3.50 to trade at 887.80.

Copper is trading at 3.218 down by 22 points giving back some of Monday’s gains.  Copper rose to a two-week high in New York amid signs of a strengthening economic recovery in the U.S., the world’s second-biggest consumer of industrial metals. The Federal Reserve Bank of Chicago’s national index, a weighted average of 85 economic indicators, climbed to 0.39 in July, topping the 0.2 median forecasts of economists in a Bloomberg survey. Data last week showing gains in housing starts and existing-home sales helped mute the impact of a drop in July new-home purchases in government figures released yesterday.