Commodities: Gold limps back up, oil maintains level but base metals fall on Chinese data

Gold continued its limp recovery in early European trading on Tuesday after plummeting to an 11-week low last week, while oil benchmarks held firm above the previous session’s levels.

Starting with the latter, with OPEC maintaining production at previous levels last week and oversupply concerns firmly entrenched, the Brent month futures contract for July delivery was marginally up by 22 cents or 0.35% at $62.91 a barrel, while the WTI contract was trading at $58.38 up 24 cents or 0.41% at 0907 BST.

Empirical and anecdotal evidence suggests both India and China are taking advantage of low prices to stock-up crude oil for strategic purposes. However, in the case of China, demand growth is lower than last year. Overall, global supplies are still seen exceeding demand by 1.1m to 1.3m barrels per day.

Precious metals, especially gold, saw a second trading session this week in the green, albeit one peppered with only marginal gains. COMEX gold for August delivery was up $1.40 or 0.12% at $1,175 an ounce, while the spot gold price in Dubai was $1,176.27 an ounce up $2.20 or 0.19%.

David Madden, market analyst at IG, said: “Gold is struggling to move higher despite the uncertain outlook in the equity market. The strong non-farm payrolls number from the US is a sign of what is to come for the metal.

“Gold has held up relatively well in the second-quarter while Greece rumbled, but the coming months will be the real test as the Fed edges closer to hiking rates. The sharp decline in Chinese imports has kept the price of copper low, and the red metal will not see any major increase in demand unless the PBoC launch another round of easing.”

COMEX silver was broadly flat at $15.96 an ounce while the platinum spot price came in at $1,108.97 an ounce up $6.51 or 0.59%.

On the base metals front, Chinese consumption continued to impact sentiment. With a mixed picture, traders pine for stimulus measures from Beijing with no clear indications so far from the Chinese government whether or not it would go down that route.

Instead, traders were greeted overnight with news that China's copper imports fell 16.3% in May from the previous month, hitting a three-month low. Additionally, data indicated that Chinese exports of unwrought aluminium and products jumped 21% on an annualised basis to 410,000 tonnes.

It meant the three month London Metal Exchange contract for copper was broadly flat at $5947.50 per tonne, while aluminium was down 0.4% at $1750.50, having slipped to a 14-month low of $1,726 at one point overnight. Lead (down 0.2%), tin (down 0.2%) and zinc (down 0.4%) were all trading lower, with only nickel bucking the trend up $350 or 2.7% at $13,375 per tonne.

Finally, agricultural commodities were largely in the green. CBOT corn (up 0.07%) and wheat (0.28%), ICE cocoa (up 0.10 and cotton (up 0.14%), CME live cattle (up 0.68%) were all trading higher.