Metals Trading In Strange Territory

NEW YORK (Oct 4)  Gold is selling at 1316.20 down by 1.40 bouncing up and down on wild changes in the market. Silver plunged to trade at 21.65 down 0.62% while gold only tumbled 0.11%. Copper is also in the red this morning down by 4 points at 3.269 after a hard fall on Thursday. US gold futures recorded a slight decline on Friday morning amid weak

Chinese demand, partial shutdown of the US government. However, upcoming festive, wedding season demand from Indian jewelers may have supported the yellow metal prices in the global market to some extent. Chinese markets have been closed from 1 October for National holidays and will open on October 8. Gold prices increased marginally around 0.2 percent yesterday on the back of weakness in the DX. However, sharp upside was restricted as a result of decline in SPDR gold holdings by 0.2 percent to 899.99 tons which is at lowest level since February 2009. Further, weak market sentiments on account of expectations that shutdown in US government can lead to default in the government over its debt ceiling issue prevented positive movement in prices. The yellow metal closed at $1316.70 in yesterdays trading.

Base metals on the LME traded on a negative note yesterday as the US President Barack Obama and Congress leaders failed to reach a consensus on budget, thereby leading to concerns regarding the default in the US government. Decline in LME inventories coupled with weakness in the DX cushioned sharp downside in prices of base metals. Copper prices declined by 1.3 percent yesterday on the back of no respite from the US shutdown. Copper was up as Chinese official non-manufacturing number surprised the economists after a dull manufacturing growth in earlier set released by HSBC*China reported a six month high figures in the official PMI data. The total PMI stood at 55.4 in September from53.9 in the month of August*LME three month forward prices of Copper were at $ 7252 per ton, up $ 71 per ton

The US fiscal problems are the overriding factor in the markets. Although what little data was released in the US yesterday weighed on the metals markets. Institute for Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) declined by 4.2 points to 54.4 September from 58.6-level in August.

Industrial metals prices fell yesterday on persistent concerns about over-supply, but losses were capped by buying on the back of a weaker dollar as U.S. government turmoil was compounded by slow service sector growth for September. Copper smelters need to receive higher fees for refining metal to remain competitive in the face of rising capacity and higher operating costs, an official at Japanese smelter Pan Pacific Copper said. The London Metal Exchange has approved Panama City, Florida, as a good location for exchange-registered warehouses to take delivery of copper, the LME said on Thursday.