With little data and news flow focus on the US political debates there was little activity in the commodities market. Volume was light and there was little volatility as Gold climbed yesterday only to give back some of those gains this morning. Gold is currently trading at 1272.900 down close to $4 as political leaders indicated that a final agreement was close and a vote could be expected later today. Gold prices rose on Monday as US lawmakers failed to reach a deal over the weekend, supporting gold’s safe haven appeal but volumes were low due to a holiday in US. The congress reached closer to a deal late yesterday which would end the 14 day long government shutdown and raise the debt ceiling to cover government funding till Feb 2014. Continuous outflows from SPDR, the world’s largest gold-backed exchange-traded fund weighed heavily on the commodity. Data showed that SPDR gold holdings declined by 0.2 percent to 889.13 tons. Other than the fiscal situation in US signal weak investment demand for gold and are likely to weigh on prices. Gold prices are expected to trade in the red today as a possible deal on debt ceiling and fading investment demand can hurt prices.
Silver prices declined by 179 points to trade at 21.175 as silver was hit by a double whammy yesterday with a drop in demand for precious metals and lower demand for industrial metals as Chinese trade data weighed heavily on metals. A slight uptick in industrial production in the eurozone is helping to support metals and is giving metal traders a glimmer of hope that things might be mending in the eurozone. Copper is trading at 3.295 well off the lows seen last week when Copper touched below 3.25. Rising demand for metals comes as surveys have recorded a steady improvement in consumer confidence in Europe in recent months as reported by Bloomberg. Rising demand comes as surveys have recorded a steady improvement in consumer confidence in Europe in recent months. Data provider Markit said its composite purchasing managers’ index for the euro zone rose to 52.2 in September from 51.5 in August, signaling the fastest growth rate in 27 months. A reading above 50 means month-to-month expansion in the manufacturing and services industries. Combined with PMI figures from July and August, the result suggests the third quarter was the strongest for business activity in more than two years. Conditions also appear to be improving in the copper market. European demand has plummeted in recent years as the financial crisis suppressed economic activity in the region, the world’s second largest consumer of base metals after China, but there have been signs of recovery in recent months. For copper, demand rose 1% in the third quarter to 922,000 tons; CRU forecasts it will rise nearly 2% in the fourth quarter to 935,000 tons.
Base metals are expected to trade in a fairly tight range today as investors would await the decision on US debt ceiling as well as economic sentiment from Euro zone and Germany with the ZEW releases later this morning.
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