Commodities: Base metal futures in tepid recovery; oil and gold falter

Base metals registered lacklustre recovery levels on Wednesday, as oil and gold futures slipped into negative territory yet again in European trading.

Copper recovered from an overnight hammering on fears of lower Chinese imports, after news emerged that Collahuasi mine in Chile – jointly owned by a conglomerate including Anglo American, Glencore, Mitsui and Nippon – will cut production by 30,000 tonnes per annum with effect from 1 November.

Past the midway point of trading on the London Metal Exchange, the copper three-month futures contract had clawed back 1.5% or $76.75 to trade at $5071.00 per metric tonne, having fallen as low as $4,955 a tonne for the first time since 2009 over the previous session.

Meanwhile, tin traded 0.7% lower at $15,402.50 per metric tonne, but most other LME three-month futures contracts, including primary aluminium (up 0.7%), lead (up 0.7%), nickel (up 2.1%) and zinc (up 1.2%) saw a tepid recovery.

Oil benchmarks continued to fluctuate, with the Brent front-month futures contract trading 0.08% or four cents lower at $48.19 a barrel just after 1401 BST, reversing Tuesday’s gains. Concurrently, the WTI was down 0.33% or 15 cents at $45.08 a barrel, carrying along a predictable tangent of spikes and dives as the market struggles to find direction.

Analysts at Sudcen Financial said: “The emerging market rout, bearish Chinese outlook and significant downward pressures on commodity markets currently weigh heavy on investor sentiment and as a result we could see sideways to lower crude prices over the coming week and in fact throughout the remaining quarter of the year as investors struggle with the current uncertain outlook."

Overnight respite for precious metals proved to be short-lived. COMEX gold for December delivery was down 0.98% or $11.00 at $1,115.80 an ounce, while spot gold was 1.12% or $12.68 lower at $1,131.60 an ounce.

FXTM chief market analyst Jameel Ahmad said: “Momentum for gold is looking weak. Buying power for gold has taken a hit following the various positive comments from US Federal Reserve policymakers that the central bank still intends to begin raising interest rates this year despite disappointing some market participants by leaving rates completely unchanged during their September meeting.”

Spot platinum was $6.15 or 0.67% lower at $910.75 an ounce, while COMEX silver was 0.30% or four cents lower at $14.68 an ounce.

Finally, headline agricultural commodities futures were largely in positive territory. CBOT corn (up 0.19%), wheat (up 0.25%) and ICE cotton (up 0.46%) futures were trading higher, but ICE cocoa (down 0.88%) and CME live cattle (down 1.34%) futures extended the previous session’s declines.