Copper, gold prices extend sell-off in thin session

Copper and gold futures were again under pressure at the start of the US trading session on Thursday, October 6 while the dollar continues to cap markets ahead of Friday’s blockbuster US jobs report.

Copper for December settlement on the Comex division of the New York Mercantile Exchange dipped 1.45 cents or 0.7 percent to $2.1500 per pound. Trade has ranged from $2.1490 to $2.1715.

Comex gold for December delivery fell $6.30 or 0.5 percent to $1,262.30 per ounce. The contract has now declined in eight of the last nine sessions.

Commodity markets sold off markedly after upbeat US data sent the dollar to a multi-month high. This morning, US weekly unemployment claims for September 22-29 at 249,000 were below the forecast of 255,000 and, more importantly, the psychological 300,000 mark.

This is more evidence that the US labour force is showing healthy growth in its eighth year of expansion, which has made investors more optimistic that the Federal Reserve will raise rates at least once before the year concludes.

With no October meeting and a presidential election approaching, December is widely seen as the last possible time for the Fed to restart the normalisation of interest rates this year – market participants reckon there is a 60-percent chance of this happening, according to the CME Group FedWatch tool.

Investors are now awaiting Friday’s blockbuster jobs report, which is expected to show 171,000 Americans joined the labour market last month. In a precursor to that figure, the ADP non-farm employment change at 154,000 jobs was below the forecast of 166,000.

“The lower prices may well prompt pent-up physical demand as well as encourage more investment bargain hunting,” William Adams, FastMarkets’ head of research, said. “But better economic data may dry up the safe-haven buying for a while. We would expect choppy trading for a few days while the market adjusts to these lower prices and to Friday’s US employment report.”

In today’s data, German factory orders outperformed at 1.0 percent and the EU retail PMI was as expected at 49.6. US Challenger job cuts year-over-year in September at -24.7 percent beat expectations of -21.8 percent.

In European markets, Germany’s DAX and France’s CAC-40 were both down 0.3 percent while the dollar strengthened by 0.2 percent to 1.1181 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex gained 34 cents or 0.7 percent to $50.17 per barrel while the most active Comex silver contract stood at $17.605 per ounce, down nine cents.

(Editing by Mark Shaw)

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