Copper, gold slip amid uptick in dollar

Base and precious markets started the Tuesday session in negative territory with the latest dollar surge providing a cap on price recovery.

Copper for September delivery on the Comex division of the New York Mercantile Exchange fell 1.7 cents or 0.8 percent to $2.1480 per pound. Trade has ranged from $2.1440 to $1.1650.

Comex gold for December settlement was last down $3.30 or 0.3 percent to $1,338.0 per ounce – around the lowest price since July 26.

“So far, August is turning out to be a very quiet month, just as vacationers like it,” Edward Meir, an analyst at INTL FCStone, said. “We do not see any near-term catalyst that will alter the range-based trading ranges we seem to be trapped in for the time being, but if anything, the dollar seems to be getting more ‘well bid’ than it has been of late, and should this continue, we could start to see commodities come under more pressure heading into month-end.”

Trading action has slowed since Friday’s US employment data stoked chatter of further US monetary tightening over the second half of the year.

While GDP continues to run below two percent, an improving labour market and signs of fledgling wage growth has placed the September Federal Reserve meeting in a spotlight.

In the interim, the data has ignited a dollar rally and has been the primary driver of commodity markets – last trading at 96.43 on the dollar index.

“Precious metals should remain under selling pressure because of the recent raft of encouraging US macro data releases, which may prompt investors to revise progressively the expected stance of the Fed’s policy, resulting in a steeper expected path of Fed funds rate. Any hawkish Fed statement or positive US macro indicator would reinforce the downtrend, particularly in gold and silver,” Boris Mikanikrezai, FastMarkets analyst, said.

Earlier today, Chinese CPI and PPI were both above expectations at a 1.8 percent increase and 1.7 percent decrease respectively.

In US data, the NFIB small business index for July came in at 94.6, a touch above the 94.5 expectation. Later, preliminary non-farm productivity, labor costs, IBD/TIPP economic optimism and wholesale inventories are all slated for release.

Meanwhile in European markets, Germany’s DAX and France’s CAC-40 were up one percent and 0.7 percent respectively, while the dollar strengthened 0.1 percent to $1.1077 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex rose nine cents or 0.2 percent to $43.11 per barrel, while the most active Comex silver contract stood at $19.645, down 16 cents.

(Editing by Martin Hayes)