Commodities sustain bounce-back; dollar swaying bulls

The copper and gold price posted a minor uptick Monday in the US, although upside remain capped by a multi-month high dollar.

Copper for December settlement on the Comex division of the New York Mercantile Exchange jumped 3.20 cents or 1.5% to $2.1955 per pound. Trade has ranged from $2.1645 to $2.2025.

Comex gold for December delivery rose $9.00 or 0.7% to $1,260.90 per oz. The contract is still hovering around a four-month low.

Throughout last week, a dearth of investment action and a surging dollar lead to broad-based capital exit out of commodities. But today saw Chinese investors return from a week-long holiday, which helped produce a general market lift.

Still, the greenback isn’t retreating and was actually up to 96.92 on the dollar index – near the highest point since late July – which contained any major recovery.

“Even with the return of the Chinese trading community, todays LME business remained subdued and in light turnover,” Sucden Financial said. “Prices were trading a little higher across the board on short covering but contained within recent ranges and somewhat “pegged” by a steady dollar.”

In physical holdings, gold ETFs continued to make gains in September. Total holdings in physically backed gold exchange-traded funds stood at 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.

Because of the US holiday, the data flow was limited today, with the August German trade balance showing a surplus of 22.2 billion euros, while the October EU Sentix investor confidence index was better than expected at 8.5. Earlier, data from China over the weekend showed the Caixin Services PMI at 52.0 against the previous 52.1.

Turning to US markets, the Dow Jones industrial average and S&P were each up 0.6 percent, while the dollar strengthened 0.7% to $1.1136 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex increased $1.58 or 3.2% to $51.39 per barrel, while the most active Comex silver contract was last trading at $17.675 per oz., up 29.5 cents.

(Editing by Tom Jennemann)

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