Markets saw a healthy rebound today as earnings season helped to lift equities from their dismal spin that has been in effect for the last few trading sessions. After gold made yet another historic run yesterday, it fell back below the $1,600 per ounce mark as investors gained some optimism on the U.S. plan to handle the enormous debt and the ceiling which we have just hit. Oil, on the other hand, made strong gains on the day, as it turned a gain of over 1.6% moving nicely along with equities. As for major commodity indexes, the UBS Bloomberg CMCI Index gained 14.5 points while the S&P GSCI saw a drop of about 6.3 points. While the strong economic indicators were good news for a handful of futures, it put downward pressure on others that are more closely aligned with safe haven appeal, as the risky commodities saw inflows at their expense during today’s session.
One of the biggest commodity winners of the day was copper, which saw strong gains from an increase in housing starts. For the month of June, work began on 629,000 new homes, topping even the high range of analyst estimates. Strong housing markets translate into gains for copper as the metal is essential in many key elements of a home, including plumbing and wiring. Adam Klopfenstein, a senior strategist at Lind-Waldock in Chicago said that “there is a continued feeling that growth will be here in the second half of the year” in reference to the increased housing starts and strong trading day for copper futures. During trading today, copper futures jumped approximately 1.4% amid the good news from the long-battered housing sector, helping to put spot prices of the red metal close to the $4.5/lb. level [see also Ultimate Guide To Copper Investing].
One of the biggest losers on the day was silver, which saw a strong sell-off after yesterday’s robust performance. While the precious metal was able to shine due to economic uncertainty yesterday, today’s stronger equity markets led to a lack of demand for silver, as traders bought up equities and moved out of positions in the metal. European concerns continue to weigh on the world, but stronger earnings and news that the U.S. is nearing a debt plan translated into investor confidence, allowing them to exit the safe haven that silver has become, and trade in the booming equity markets instead. Overall on the day, silver futures lost a staggering 3.4% pushing spot prices of the metal close to the $40/oz. level [see also Ultimate Guide To Silver Investing].
Disclosure: Charts courtesy of Barchart. No positions at time of writing.