Metals Bleed Red

Gold seemed immune to the commodities rout as industrial metals and other precious metals tumbled hard. Gold remained locked in its recent trading range. In the Asian session gold gave up $5.70 to trade at 1083.70 staying dead center of its trading zone. Silver fell 100 points this morning to 14.416 heading to its lowest level, while platinum nose-dived $16.80 to 946.25.

Investors are deserting precious metals as the outlook for higher U.S. borrowing costs boosts the dollar, which curbs the appeal of bullion as it doesn’t pay interest. Holdings in gold-backed exchange-traded products fell for a third month in July to the lowest since 2009, and Goldman Sachs Group Inc. sees gold slumping below $1,000 an ounce. A U.S. government report Monday showed American households kept spending in June, capping a stronger quarter for the biggest part of the economy.

“It’s part of a broader commodity-complex washout,” quipped a broker on Tuesday.  “The challenge is that the U.S. economy is performing better on a relative basis than most other economies, so that’s the headwind that we face for gold.”

The well-known Commodity Index slid 1.5 percent on Monday to the lowest level since February 2002 as oil and nickel slumped. A gauge tracking the U.S. dollar against 10 major peers rose in July by the most since March. In the past year, commodities have lost 29 percent as the U.S. currency yardstick added 19 percent.

Federal Reserve officials said last week the economy is making progress, keeping market expectations focused on a move as soon as September. Investors are looking ahead to employment data this week for further clues on the probable timing.

Money managers stayed net-short on bullion for a second week as of July 28, according to Commodity Futures Trading Commission data. There’s a 68 percent chance the Fed will raise its benchmark at or before its December meeting, according to data compiled by Bloomberg.

“With earnings season concluding this week all eyes are likely to look back at the clouded macro picture where China and Greece remain problematic and the US Fed is likely to remain at the forefront of investors’ concerns.” Palladium fell as much as 1.2 per cent to 592.65, the lowest level since October 2012. Copper fell 0.3 per cent to 2.338, after touching a fresh six-year low in the previous session.

Copper prices are stabilizing today after reaching six-year lows yesterday. The metal is nearing a bear market, falling just shy of 20% from their peak in May. Other industrial metals fell in copper’s wake. On the London Metal Exchange, aluminum for delivery in three months was down 0.4 per cent to 1,612 a metric tonne, the lowest since July 2009. Nickel was down 2.7 per cent to 10,745 a metric tonne.