Precious Metals Falling While Base Metals Climb

Gold touched its lowest point in weeks on Thursday to close as $1231 adding $1.20 in the Asian session as traders bought up the cheap commodity. Wall Street jumped this week as better-than-expected third quarter profit reports have combined with reassuring data on the US economy. Companies in the S&P 500 are on track to post a 5.3 per cent rise in profit from a year ago, according to FactSet, compared with expectations for a 4.5 per cent increase before earnings season started.  The Dow Jones climbed 216.58 points, or 1.3 per cent, to 16,677.90. Thursday was the 10th session this month the Dow has finished up or down more than 1 per cent, the most since November 2011. The S&P 500 index gained 23.71 points, or 1.2 per cent, to 1,950.82 and the NASDAQ advanced 69.95 points, or 1.6 per cent, to 4,452.79. 

ETF’s backed by gold extended a slump to a five-year low. A manufacturing index in the euro area unexpectedly rose in October, while Spain’s economy showed signs of a further recovery. In the U.S., the four-week average of jobless claims dropped to a 14-year low, government data showed. The dollar rose to a two-week high against a basket of 10 currencies. Assets in gold ETPs have dropped 5.9 percent this year after plunging 33 percent in 2013, according to data compiled by Bloomberg. Money managers cut their bullish futures and options Comex bets in eight of the past nine weeks.

Precious metals fell to weekly lows as equities rebounded and inflation remained muted. On Oct. 6, the shiny metal slumped to the cheapest this year. The price then climbed as much as 6.1 from the low after the Federal Reserve cited slowing foreign economies as a risk to the U.S. That prompted some analysts to push back estimates for an increase in interest rates. Silver gained 60 points this morning to trade at 17.218 remaining below its recent trading range, while platinum continued to slide falling $4.65 this morning to trade at 1252.65.

Copper remained the best performer in the base metal family gaining steadily on Thursday to trade at 3.034 and is flat this morning. Yesterday, Chinese HSBC manufacturing PMI printed better than expected, which was followed by a better than expected eurozone manufacturing and services release. Stockpiles monitored by the LME fell for a fourth straight day, to 157,500 tons. Orders to remove the metal from warehouses rose 7.7 percent to a one-month high of 28,025 tons. China’s factory sector grew a shade faster in October as firms saw more foreign and domestic orders, a private survey showed on Thursday, though the modest expansion likely will not dispel concerns about the cooling Chinese economy. It certainly seems like that the Chinese data has provided hope for copper and traders have pushed the metal higher. A stronger number in China is mostly good news. China accounts for roughly 40 percent of global refined demand. The outlook for the copper market has been tarnished by expectations of a steep surplus set to emerge next year.