Copper, gold prices rise; optimism returns with Chinese investors

Base and precious metals prices were on a better footing on the morning of Monday, October 10 in the US following last week’s sell-off, with the reopening of Chinese markets providing a solid boost for bullish investors.

Copper for December settlement on the Comex division of the New York Mercantile Exchange gained 1.1 cents or 0.5% to $2.1745 per pound. Trade has ranged from $2.1645 to $2.1840 so far.

Comex gold for December delivery rose $8.70 or 0.7% to $1,260.60 per oz. The contract is still hovering around a four-month low.

In the absence of Chinese traders for Golden Week last week, the dollar was the main driver of price direction in the metals. Copper and gold hit multi-month lows after the dollar index broke above 97.00.

But on Friday, the index dipped after US non-farm payrolls for September fell short of expectations and showed the US labour market is not expanding as quickly as it was in 2014 or 2015.

“So the Chinese return, volumes are up and prices have generally made modest gains at best,” Kingdom Futures director Malcolm Freeman said. “For the greater part the markets feel like they are all stuck in the mid point of their short-term ranges and the bounce in prices is more corrective than anything else.”

Market action is likely to be muted due to Columbus Day here although banks and markets are open. Still, after last week’s heavy sell-off, market participants expect prices to be reconsidered and investors to stay on the sidelines.

“Enough people will be absent to make the markets quieter than usual,” David Govett of Marex Spectron said. “We have seen the downside on gold for the time being and I would continue to look to buy dips to $1,250 unless anything materially changes in the world.”

Holdings in gold-backed exchange-traded funds (ETFs) continued to rise in September, reaching 2,335.6 tonnes, a 38.1-tonne month-on-month increase. In value terms, total holdings were worth $99.3 billion, 3% higher than at the end of August, the World Gold Council said.

Meanwhile, in a slow data day, there are no major scheduled US releases but Chicago Federal Reserve president Charles Evans is expected to give a speech later today.

Turning to European markets, Germany’s DAX and France’s CAC-40 were up 0.9% and 0.6% respectively, while the dollar strengthened by 0.4% to 1.1159 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex increased 66 cents or 1.3% to $50.47 per barrel while the most active Comex silver contract recently traded at $17.675 per oz, up 29.5 cents.

(Editing by Mark Shaw)