Precious Metals & Industrial Metals Turning Green

On Monday the metals market was green across the board and remain so on Tuesday morning. Gold climbed this morning adding $2.00 to reach 1237.10. Gold prices are trading higher by around 0.8 percent on bargain buying at lower levels after the recent fall in prices. However, weak physical demand and fears the Federal Reserve may signal an early interest rate increase at this week’s policy meeting. The Fed meeting may be pivotal as it debates a potential overhaul of its guidance on interest rates and seeks to nail down a plan for quitting its extraordinarily easy monetary policy. Silver added 103 points to trade at 18.723 taking cues from gold as there was a lack of supportive market data. Silver prices are trading higher taking cues from strong gold prices as bargain buying at lower levels is acting as a positive factor. However, weak performance in the base metals pack coupled with strength in the dollar index is exerting downside pressure. Gold prices traded lower last week on strength in the dollar index coupled with easing of geo-political tensions dragging the yellow metal lower. Gold prices fell even though U.S. President Barack Obama authorized air strikes against Islamic State and more sanctions on Russia on cards. Holdings in SPDR Gold Trust, the world’s top gold-backed exchange traded fund, have been falling recently while physical demand is also quiet. Encouraging economic data could prompt the U.S. Federal Reserve to raise interest rates sooner than expected.

Over the weekend Chinese data surprised traders but seemed to have very little overall effect on the metals markets. China’s Industrial Production fell to 6.9 percent in August as against a rise of 9 percent in July. Fixed Asset Investment was at 16.5 percent in last month from 17 percent in July. Retail Sales grew at slow pace of 11.9 percent in August with respect to 12.2 percent in July. US Core Retail Sales remained unchanged at 0.3 percent in the month of August. Retail Sales grew by 0.6 percent in August as against a rise of 0.3 percent in July. Prelim UoM Consumer Sentiment increased by 2.1 points to 84.6-mark in September with respect to 82.5-level in August. Favorable economic data from the US supported an upside in the US dollar. The currency touched a weekly high of 84.53.

Industrial metals remained in the green with copper climbing to 3.097 adding 10 points this morning. Copper prices rose by 0.1 percent on Monday as industrial-output growth in China was the weakest in August since the global financial crisis, while investment and retail sales moderated. Also, mixed global market sentiments along with strength in the DX acted as negative factors. Copper prices rose during Asian morning trading this morning thanks to upbeat US manufacturing data.