Copper, gold tumble to fresh low with dollar holding stabile

Base and precious metals slipped to fresh lows Thursday in US due to a combination of the ongoing dollar surge and a lack of Chinese traders.

Copper for December settlement on the Comex division of the New York Mercantile Exchange dipped 0.90 cents or 0.4 percent to $2.1555 per pound. Earlier, the price hit $2.1455, the lowest since September 20.

Comex gold for December delivery fell $15.60 or 1.2 percent to $1,253.00 per ounce – the softest point since June 22. The contract has now declined eight of the last nine sessions.

Since the dollar hit a multi-month high earlier this week, prices have stayed under consistent pressure. Earlier this morning, positive labour market data kept the dollar index above 96 and the absence of Chinese investors is also factoring into the downturn.

“It’s worrying how slow it has been with China absent from the market. We are waiting for next week and hopefully business will pick up when Chinese markets reopen,” an LME trader said.

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.

In terms of macroeconomic policy, the Federal Reserve isn’t expected to raise rates at the October meeting with 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 55-percent chance of this happening, according to the CME Group FedWatch tool.

“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 EU retail PMI was as expected at 49.6. US Challenger job cuts year-over-year in September came in at -24.7 percent, besting expectations of -21.8 percent.

US weekly unemployment claims between September 22-29 came in at 249,000, below the forecast of 255,000 and more importantly, under the psychological 300,000 mark.

Meanwhile in US markets, the Dow Jones industrial average was down 0.1 percent, while the S&P gained 0.1 percent. The dollar strengthened 0.5 percent to $1.1153 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex rose 73 cents or 1.5 percent to $50.56 per barrel, while the most active Comex silver contract stood at $17.265 per ounce, down 43 cents.

(Editing by Tom Jennemann)

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