New York Times Story Effect on Metal Trading

New York Times Story Effect on Metal Trading


A preliminary probe was launched by the U.S. Department of Justice into the metals industry warehousing operation after a scandalous story broke out from the New York Times. The complaints: storage firms owned by Wall Street banks and major traders allegedly have inflated prices. It has definitely shaken up the commodities market and added to the volatility in prices of the traded metals.

Meanwhile on Thursday, as US housing data has beaten expectations, gold prices were seen tumbling down and closed the trading day at $1,320 per ounce. Between minuscule gains and losses, its value was seen to remain flat at week’s end.

Signs of a sustained economic recovery were observed in the U.S. and European regions, causing gold prices to fall further by more than 1%. The bullion’s appeal as a hedge was shattered from the combination of a strengthening U.S. dollar, short-term interest rates in US Treasury yields and falling prices in crude oil futures. Data from new home sales in the US peaking to a five-year high in June and the expanding private industry in the euro zone also added to the tumbling value of gold. As of July 23, Gold holdings of SPDR gold trust, the largest ETF backed by gold, declined to 929.76 tons.

Friday’s Asian trading session was an entirely different scene. Thanks to a recently-released weak US jobs data, gold futures traded higher than Thursday’s accrued gains.  Asian trading saw gold futures for August delivery increased 0.35% to USD1,333.45 per troy ounce in the COMEX division of the NYMEX. Gold is expected to find support at USD 1,269.45 a troy ounce, and resistance at USD1,347.85.

Worse-than-expected U.S. data proved to be helpful in gold prices as this lessens concerns that the Federal Reserve will begin to taper its USD85 billion-per-month quantitative easing program at the first signs of a strong economic performance.

Copper and Silver

Copper prices, on the other hand, ended higher on Wednesday in light of economic recovery in the U.S. and Europe. On the COMEX division of the NYMEX, copper futures for the September delivery was capped down by China’s stalling economy and ended down by 0.6% at $3.179.

Silver gained by as much as 48 points, and was trading at 20.068. As of July 24, Silver holdings of ishares silver trust, the largest ETF backed by the metal, increased to 10,428.02 tons. On the COMEX division, September delivery for silver increased by 0.38% to USD20.230 per ounce.

The European Central Bank (ECB) and global central banks have grown to be relatively quiet and there is little action seen in gold this week.  Gold futures enjoyed a jump in prices by 1% to its highest level as gains in Japanese bullions added extra support and inflation rates throughout the world are kept at a level that does not cause too much concern. Money managers are raising their bullish bets in gold and silver, while they curb net shorts in copper trading.