Gold, silver futures steady as euro zone woes return to focus

Gold futures were little changed during European morning trade on Tuesday, as concerns over Europe’s political troubles pushed their way back onto the agenda.
Fresh political uncertainty in Spain and Italy revived fears over the debt crisis in the region, pushing peripheral borrowing costs higher and undermining investor confidence in the region.

Spanish Prime Minister Mariano Rajoy faced calls to step down following allegations of corruption against him and senior officials in the ruling Popular Party, while uncertainty over the outcome of upcoming Italian elections mounted as former Prime Minister Silvio Berlusconi gained ground in opinion polls.

The yield on Spanish 10-year bonds rose to 5.46% early Tuesday, while similar-maturity Italian yields inched up to 4.50%.

The news prompted investors to shun riskier assets, such as industrial commodities and stocks, and flock to traditional safe haven assets like U.S. Treasuries and the dollar.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.1% to trade at 79.68.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Investors were also cautious ahead of the outcome of the European Central Bank’s policy meeting on Thursday.

Losses were limited as investors remained focused on the outlook for Federal Reserve monetary policy following last Friday’s U.S. jobs data, which indicated the U.S. economy has maintained its momentum, but not so much as to alter the view that the Fed will remain accommodative.

Copper futures little changed with Europe political woes in focus
Copper futures swung between modest gains and losses in rangebound trade on Tuesday, as sentiment remained cautious amid fresh concerns over political instability in Spain and Italy.

Sentiment remained cautious as fresh political uncertainty in Spain and Italy revived fears over the debt crisis in the region, pushing peripheral borrowing costs higher.

The yield on Spanish 10-year bonds rose to 5.5% early Tuesday, while similar-maturity Italian yields inched up to 4.54%.

Spanish Prime Minister Mariano Rajoy faced calls to resign from the country’s opposition leader, following allegations that he and senior officials in the ruling Popular Party received secret payments.

Meanwhile, in Italy, uncertainty over the outcome of upcoming general elections mounted as former Prime Minister Silvio Berlusconi gained ground in opinion polls. In addition, there were also concerns over the health of the Italian banking system.

The news prompted investors to shun riskier assets, such as industrial commodities and stocks, and flock to traditional safe haven assets like U.S. Treasuries and the dollar.

Crude oil higher after Monday’s sell-off; Europe, supply data in focus

Crude oil futures edged higher during European morning hours on Tuesday, as investors returned to the market to seek cheap valuations following the previous day’s sell-off which took prices to a one-week low.
Oil futures fell 1.6% on Monday to hit a one-week low of USD95.91 a barrel as fresh political uncertainty in Spain and Italy revived fears over the debt crisis in the region, pushing peripheral borrowing costs higher.

The yield on Spanish 10-year bonds rose to 5.5% early Tuesday, while similar-maturity Italian yields inched up to 4.54%.

Spanish Prime Minister Mariano Rajoy faced calls to resign from the country’s opposition leader, following allegations that he and senior officials in the ruling Popular Party received secret payments.

Meanwhile, in Italy, uncertainty over the outcome of upcoming general elections mounted as former Prime Minister Silvio Berlusconi gained ground in opinion polls. In addition, there were also concerns over the health of the Italian banking system.

The news prompted investors to shun riskier assets, such as industrial commodities and stocks, and flock to traditional safe haven assets like U.S. Treasuries and the dollar.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.1% to trade at 79.68.

Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.

Prices came under additional pressure after Iran’s Foreign Minister Ali Akbar Salehi said Sunday that Tehran would be interested in participating in bilateral talks on its nuclear program, so long as there is “honest intention.”

The minister’s reply came in response to a renewed offer by the U.S. for talks, which have been led by the five permanent members of the United Nations Security Council.

The next round of discussions would take place in Kazakhstan on February 25, Salehi said.

Oil traders now looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 2.8 million barrels.