Silver and gold futures were performing a bit higher during the midday trade in Europe last week considering that the armed conflict between the Middle East and the Ukraine pitted pressure from the U.S. economy. With copper futures performing lower below par housing figures from the U.S. and mixed durable goods orders were similarly assessed as well.

Gold futures for December on the Comex in New York was traded at $1,285.1 per troy ounce which was up 0.48 % last week. Prices ranged from $1,275.7 to $1,291.9 per troy ounce with the precious metals sector dropping 0.1 % last week as well.

Silver for the month of September delivery stood firmly for a 0.71 % daily gain at $19.495 per troy ounce with the same also losing 0.1 % last week.

Several primary U.S. economic features were reported last week as investors look up to economic data to help augment speculations that the Fed will increase interest rates earlier than previously anticipated.

The conference Board’s consumer confidence index was later logged at 92.4 which was its peak reading since the early start of the infamous 2008 downturn.

Earlier, durable goods were also logged for a mixed overall read. Generally, orders were able to add 22.6 %, the largest monthly increase on record as orders were augmented by an increase in orders for commercial airplanes for Boeing last month which primarily included volatile commodities such as airplane parts that paired much of the positive vibes from overall figures.
Prices are expected to better stabilise as expectations for higher interest rates have already been placed strategically. Against the backdrop of U.S. economic data, gold has been severely been affected especially with regards to its current strength.

The U.S. Fed chairperson’s upbeat remarks gave further boost to dollar bulls which lifted the U.S. currency to a new 13-month peak while the ECB chairman signaled QE might possibly be coming to the Eurozone if ever the U.S. economy reveal continuing signs for stronger recovery.

The value of the dollar has an indispensible role in gold pricing as a robust U.S. currency lifts the relative price of any dollar-denominated traded goods such as the precious yellow element to other currencies which reduced their appeal.

Positive economic data in the U.S. and a rather pessimistic and downbeat EU figures provide more support to the dollar bulls as positive outlooks for a rate hike to gain better momentum.

Furthermore, as gold continues to trade within a narrow range of assessment, the possibility of increasing interest rates while at the same time considering geopolitical tensions is probably a risky combination.

Tensions in the Middle East and the Ukraine

A column of about thirty Russian armoured vehicles were seen entering the territory of Ukraine last week which prompted an increase in military alertness near the town of Mariupol, ahead of talks that would generally involve the Russian and Ukrainian heads of state. Authorities pointed out that the said military forces of the latter successfully repelled the attack with unconfirmed reports that ten Russian military service men were captured.

The Russian Foreign Minister in his statement said that there is plenty of misinformation coming from the Ukrainian official spokesperson who denied all allegations that Moscow is assisting rebels within the Ukraine.

Elsewhere, the present military strife in the Middle East reinstated the region as a hot spot for armed conflicts with more fighting and deaths in a combined report across the region. This is the ripe period wherein investors purchase gold as they believe that it would hold its value despite risks constituting the so-called ‘safe-haven’ asset.

The struggle of copper

Contracts for copper for the month of September firmly stood at $3.2045 per pound which was down 0.42 %. The durable order figures were not able to affect copper to as much as there was a hefty increase overall that was pared by the decrease for core orders.

Meanwhile, the Standard&Poor’s house price index was logged at 8.1 % on a yearly basis which was slightly below expectations following new home sales that were reported to have diminished 2.4 % on a monthly basis last week. The average home has more or less 300-500 pounds of copper of plumbing and wiring combined.

The continued strength of the dollar also weighs down on the dollar-denominated copper although an overall and upbeat economic picture eases the industrial metal as demand for base metals generally picks up with the momentum of the economy.

Finally growth through the end of the fiscal year is likewise expected to grow into an extensive market surplus that will project a bearish outlook for the said metal.

Last Updated: October 24th, 2020