September 19, 2014 11:22 am

Gold and silver futures were still on the downside during midday trade in Europe today, as the precious metals feel the pressure of the stronger dollar. Meanwhile, copper futures reversed earlier gains over the past two days, as the stronger dollar and weak US housing data pared optimism after China stimulus.

Gold futures for December delivery on the Comex in New York traded at $1 222.9 per troy ounce by 11:20 GMT, down 0.33%. Prices ranged from $1 218.9 to $1 229.2 per troy ounce. The contract is headed for a

0.7% weekly loss, after reaching a nine-month bottom at $1 216.3 yesterday.

Silver for December delivery stood for a 0.38% daily drop at $18.447 per troy ounce, on track for a

0.8% weekly loss.

The highly anticipated Federal Open Market Committee (FOMC) September meeting took place this week, with rate and quantitative easing Monetary policy used by central banks to stimulate an economy when conventional policies have become ineffective. The central bank is increasing the monetary base by purchasing long-term financial assets from commercial banks and other private institutions. decisions announced yesterday.

The monetary-policy body of the Fed decided to, as expected, cut monthly assets purchases by another $10bn, steering the QE program to an October close, and keep the benchmark interest rate at 0.25%. The Fed’s projection for next year was changed, however, with still a “considerable time” between the QE program closing and rates rising. The end-year rate target, however, was raised to 1.375% from the previous of 1.125%, offering dollar bulls significant support.

The US Dollar Index, which measures the strength of the greenback, reached a 4-year peak this week, weighing on all dollar-denominated commodities, such as gold.

Logging the drop in confidence for gold, the SPDR Gold Trust, the largest exchange-traded gold-backed fund, trimmed assets by 4 tons to 784.22 tons, the lowest in three months.

Data

The US dollar also priced in a fair amount of economic data this week. US benchmark CPI Consumer Price Index. Examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the basket and averaging them, weighting them according to its importance. CPI is sometimes referred to as headline inflation. Calculated on both annual and monthly basis. at the disappointing 1.7% on an annual basis and -0.2% month-on-month in August, while core CPI Consumer Price Index. Examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the basket and averaging them, weighting them according to its importance. CPI is sometimes referred to as headline inflation. Calculated on both annual and monthly basis. which excludes the more volatile food and energy, was reported at 1.7% from a year ago.

Yesterday, however, initial jobless claims The number of people who have or are filing to receive unemployment insurance benefits for the first time. which is reported weekly by the U.S. Department of Labor. It is a closely watched indicator because a continuing increase in its value indicates rising unemployment rate Percentage of the total workforce who are unemployed and are actively looking for employment. All employed and unemployed people are included in the workforce category. One who is not classified as employed or unemployed is excluded from the statistics, which this indicator tracks. One counts as unemployed if he falls in all of the following categories: unemployed for the last week; able bodied; has been seeking employment for a period of at least four weeks, which end in the week when the research is being conducted. People who have been laid off and are awaiting to be rehired are also counted as unemployed. and a difficult economic environment. The indicator is volatile on a week-to-week basis so the four-week moving average is also closely observed. It differs from the Continuing Jobless Claims indicator, which consists of unemployed people who already have been receiving unemployment benefits for a while. were logged at 280 000, the lowest weekly level in six years, while housing starts Tracks statistics about the construction of single-family houses, which has just begun, marked by excavation works or laying the foundations of the building. Data from every single part of the country is compiled and it also includes overhauls of buildings, which lie on existing foundations. plummeted and building permits Tracks the statistics for housing construction, based on given building permits, issued by the local authorities. Does not track building permits numbers in areas of the U.S. where they are not obligatory. The statistics doesn’t show how many constructions have really been started since most of the data is not available by the time of publishing the report. were also below-par.

Investors also priced in a reported “No” result of the Scottish independence referendum, calming fears of break up of the UK, the world’s sixth largest economy. The preliminary results show a 54% of Scots voted against independence.

The news was perceived as bearish for gold, as it dimmed demand for a safe haven with the unity of the UK secured.

Copper

Copper contracts for December, the most-traded contract in New York, stood at $3.098 per pound, up 0.11% for the day. The red metal is headed for a minor weekly loss.

Copper futures slumped on Thursday after the US posted disappointing housing starts Tracks statistics about the construction of single-family houses, which has just begun, marked by excavation works or laying the foundations of the building. Data from every single part of the country is compiled and it also includes overhauls of buildings, which lie on existing foundations. which fell 14.4% on a monthly basis, and building permits Tracks the statistics for housing construction, based on given building permits, issued by the local authorities. Does not track building permits numbers in areas of the U.S. where they are not obligatory. The statistics doesn’t show how many constructions have really been started since most of the data is not available by the time of publishing the report. which were down 5.6%. An average home has some 300-500 pounds of copper, making the real estate sector one of the top copper markets, and housing data a leading gauge for copper demand.

Meanwhile, the stronger dollar also weighed on dollar-denominated copper, further dimming the appeal of the metal.

It is strength in the dollar which is beating down commodities like copper, Naeem Aslam, chief market analyst at Ava Trade, said for Reuters. I am bullish on all industrial metals as we may see more demand with an improvement in growth, especially in the US.

The red metal had previously rallied by quite more, however, with support from reports that the People’s Bank of China is injecting 500bn yuan ($81bn) into the country’s five biggest banks.

The move follows a string of downbeat data from the world’s top consumer of industrial metals, where 40% of all copper goes.

The Chinese liquidity boost was short-lived and a stronger dollar made for lower prices, broker Triland said in a note cited by Reuters.

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