Metals Markets Quiet

Gold added $6.20 in the morning session to trade at 1314.30 after trading below $1310 on Tuesday. There has been indication for price shifts except for positioning ahead of the European Central Bank meeting. There has been very little news flow from the eurozone outside of a strike in Greece and negative warning from the OECD yesterday. Inflation remains lows and traders continue to look for additional risk and profits which is weighing on the precious metals markets. Gold prices came under pressure on Tuesday as cues on the fundamental front across the globe were weak. From positive US economic data, to slowing Indian festive demand and strength in the Dollar Index, gold received negative cues. Data from the US showed a jump in services activity and this led to expectations that an improving US economy would support Fed’s decision to begin the QE taper. However, data during the rest of the week is expected to show a slowdown in US GDP along with an increase in the unemployment rate to 7.3 percent.  Gold and silver both traded lower as the nation’s service sector performed better than expected last month, providing hope that the Federal Reserve will dial down bond purchases in December. The Institute for Supply Management reported that its services index rose 1 point to 55.4 in October, higher than estimates calling for a decline to 54. A reading above 50 indicates expansion.

 ETF related activity is also becoming subdued and this too is capping positivity in the precious metals space. Physical demand from India failed to pick up despite the festive season of Diwali and has pushed the premiums to half around $60-70 an ounce from the peak of $130 an ounce last week. The ECB can possibly cut rates tomorrow at the monetary policy meet, which could strengthen the dollar index further.

Silver gained 87 points but remains below the $22 price level after falling hard on Monday and Tuesday. Silver is trading at 21.723 as precious metals remain weak but industrial and production metals have been trading in the red on worries about the housing markets in China and the repositioning of the economy by Chinese leaders. Copper is trading at 3.262 flat this morning but well below its recent price range at 3.30. Copper was the long gainer among the metals pack yesterday. Copper was higher by 0.1% backed by the strong ISDN PMI release in the US. Inventory stocks have declined steadily over the last two months which also provided support for the commodity yesterday. Otherwise the rest of the metals pack traded in the red.