Commodities: Gold futures retreat after hitting 15-month high

Commodities were knocked lower almost across the board in the wake of weaker than expected manufacturing data out of China which itself came close on the heels of another negative surprise out of the States in the previous session.

The China Caixin manufacturing PMI fell to 49.4 in April from 49.7 in March, missing economists’ expectations for a reading of 49.9. A reading below 50 indicates contraction.

On the previous day, the ISM´s own US manufacturing sector gauge slipped from a reading of 51.8 to 50.8 (consensus: 51.4).

Weak manufacturing data?

Economists took the latest data in their stride, but markets did not.

Analysts at Capital Economics attributed the weakness in the Chinese figures to the difficulties in adjusting the data for the seasonal quirks linked to the Easter holidays.

Similarly, economists at Barclays had a more upbeat view on the most recent slate of manufacturing data.

The broker´s global manufacturing sector gauge moderated to a reading of -0.46 for April, after a "significant improvement" to -0.24% in the month before.

However, Barclays´s Apolline Menut pointed out how a three-month moving average of new orders had continued to improve, with a subindex of export orders little changed at -0.27.

"In addition, our forward-looking measure of new orders less finished goods inventories remained firm on a three-month moving average basis, boding well for future manufacturing production," Menut said.

Soft commodities patch fares worst

It is against that backdrop that gold futures hit a 15-month high at $1,304 per troy ounce early in the session, just as the US dollar did exactly the opposite.

Nevertheless, by the end of the session both gold and the greenback had reversed direction, with June 2016 gold futures on COMEX finishing down by 0.59% to $1,288.10 per ounce while the US dollar spot index was up by 0.10% at 92.72.

Front month West Texas Intermediate crude oil futures fell 2.28% to $43.78 per barrel and Brent by another 1.4% to $45.20 per barrel on the ICE.

Natural gas futures were again to be seen swimming against the current, rising by 1.96% to $2.08/MMBtu.

Agricultural commodities registered steep losses, with July 2016 corn futures off by 3.51% to $3.78 per bushel on the Chicago Board of Trade, while wheat futures retreated by 3.54% to $4.7050 per bushel.

Live cattle futures were the main exception Stateside, clocking in with a rise of 0.65% to $1.1655 per pound on the CME.