Copper up on China data, gold gains on Deutsche concerns

Copper futures pushed modestly higher on Friday amid data indicating that China’s manufacturing sector has steadied in recent months.

Copper for December delivery on the Comex division of the New York Mercantile Exchange was last up 0.7 cents at $2.197 per ounce. Trade has ranged from $2.1805 to $2.20.

“Copper’s correction appears to have run its course and buying has returned in recent weeks. Given the short-selling of late, there may be room for short-covering as well as bargain hunting now that the summer lull has passed,” William Adams, FastMarkets head of research, noted.

In data, China’s Caixin manufacturing PMI for September at 50.1 was as expected and close to August’s reading of 50. A reading above 50 reading signifies expansion.

“The readings for the manufacturing PMI over the past three months seem to indicate that the economy has begun to stabilize,” Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said. “But given that the growth rate of fiscal income has slowed recently, while expenditures have swung, there is insufficient momentum to drive future economic growth, and there is a risk that industrial output may decline.”

Earlier, the EU CPI flash estimate was as expected at 0.4 percent but the core CPI flash estimate undershot at 0.8 percent and the EU unemployment rate at 10.1 percent also disappointed.

The core PCE price index, personal spending, personal income, the Chicago PMI, revised UoM consumer sentiment and revised UoM inflation expectations.

In warehousing data, Shanghai bonded copper stocks hit a seven-month low at 528,000-558,000 tonnes from 560,000-590,000 tonnes a month previously, according to FastMarkets’ survey of multiple warehouse companies.

The brief opening of the arbitrage window between the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE) was the main driver of the month-on-month decrease, several sources said.

Spot premiums in Shanghai have also increased to $55-65 per tonne this week from $40-50 at the end of August, according to FastMarkets historical data.

“With the LME/Shanghai copper arb close to being open and with copper prices and metals prices generally looking more upbeat, along with economic data in China, perhaps the flow of copper will reverse and metal will head back to China,” FastMarkets’ Adams said.

In the wider-markets, the dollar was 0.49 percent stronger at 1.1167 against the euro, while Germany’s DAX and France’s CAC-40 were down 0.70 percent and 1.17 percent respectively, as many big Deutsche Bank clients shifted their assets amid concerns over the banks stability.

As for the precious metals, the December Comex gold was up $1.10 at $1,327.10 per ounce, while the most-active Comex silver was up 18.7 cents at $19.375 per ounce.

“The problems attendant to the Deutsche Bank have to be supportive of gold,” Dennis Gartman, editor of the Gartman Letter, said. “We draw attention firstly to the fact that the barometer of fear in the capital markets – the euro/Swiss franc cross – has moved very sharply in the franc’s favour.”

“Capital is leaving ‘Europe’ and is looking for a home and that first home is either Zurich, or Lugano, or Geneva or Basel et al. The second home almost certainly shall be gold,” he added.

(Additional reporting by Vicky Chen, editing by xx) 

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