Copper rally capped by stocks rise in New Orleans; gold steady

Copper futures in the US made a small gain on Thursday morning but an increase in warehouse inventories in New Orleans could indicate that physical demand might be lacklustre.

Copper for December delivery on the Comex division of the New York Mercantile Exchange was last up 0.45 cents at $2.1920 per pound. Trade has ranged from $2.1815 to $2.2055.

“We remain cautious [on copper] over the next three-six months because we feel the current buying pressure might not enough to tighten the global supply/demand balance sufficiently, especially because of stronger global supply,” FastMarkets analyst Boris Mikanikrezai noted.

But in some copper-supportive news, BHP was forced to suspend operations at its Olympic Dam copper-gold mine in Australia due to a power outage. It is not yet certain when production can restart.

But a climb in London Metal Exchange copper stocks took the steam out of any perspective rally. Inventories increased a net 10,100 tonnes to 379,175 tonnes – a move centred on New Orleans, where inventories climbed 7,075 tonnes to 46,675 tonnes. Still, Asia stocks also rose – up 2,775 tonnes and 2,025 tonnes respectively in listed warehouses in Busan and Port Klang.

“The third quarter was particularly weak [in the US] – there just aren’t many buyers on the consumer side at the moment. I wouldn’t be surprised to see move deliveries [into exchange warehouses],” a US trader recently told FastMarkets.

In wider markets, the dollar was 0.11 percent stronger at 1.1206 against the euro while Germany’s DAX and France’s CAC-40 were up 0.4 percent and 0.7 percent respectively.

On the data calendar, US initial jobless claims inched up 3,000 to 254,000 but this was better than the 260,000 expected and the 82nd consecutive week below 300,000.

As for the precious metals this morning, Comex gold for December delivery was last down $1.30 or 0.1 percent at $1,321.90 per ounce while the most active Comex silver contract was at $19.095, down 4.1 cents or 0.21 percent.

“To turn gold higher and to change the psychology of the market we shall soon need to see spot gold trading upward through $1,350 and presently there is very little to suggest a fundamental turn of events that shall precipitate that strength,” Dennis Gartman, editor of the Gartman Letter, said.

“We shall remain long of gold but shall be wholly unwilling to be longer of it than we are presently. After several years of holding the same position we need real strength to lift us from our stupor,” he added.

(Editing by Mark Shaw)

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