Fool's Gold Report: Gold Stands Firm Against China Data As Other Metals Drop

Gold investors have looked closely at goings-on abroad recently, with the Crimea attracting the attention of markets generally. But today, the focus shifted to China and its extremely weak export data, as oil, copper, and other commodities fell sharply in response to the threat of a further slowdown in the emerging-market powerhouse. Yet April gold futures settled up $3.30 per ounce to $1,341.50, defying the other metals and helping the SPDR Gold Shares (GLD 0.34%) inch upward today. But May silver fell $0.02 per ounce to $20.91, sparking a 0.3% drop in the iShares Silver Trust (SLV 0.19%), and platinum-group metals were both down as well.

Source: Kitco. As of 5:30 p.m. EDT.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

The mood of the market
Without huge events driving prices in the market, traders resorted to more technical measures to help guide their moves Monday. One such measure came from data on the commitments of traders, which precious-metals investors use to guide their positions. The latest report, which came out Friday afternoon reflecting activity from the week that ended last Tuesday, showed that large speculative investing firms continued to cover short positions in gold, increasing their net-long positions. They were more bullish on platinum and palladium, taking new long positions in addition to closing out shorts, but were less bullish in silver, reducing their net-long exposure there.

For the most part, large speculative companies tend to take positions against those of producers, and that continued to be the case in this report, with producers using futures to lock in market prices. Although major producers have ended long-term hedging strategies, these positions can also reflect shorter-term futures designed to protect against near-term price fluctuations.

All that glitters isn't gold
Meanwhile, on the mining front, the real action was in the copper arena, with copper prices falling to their worst levels in eight months. That was bad news for major copper producers, but it also helped send Thompson Creek Metals (TCPTF) down 6% on the day. Thompson Creek's explosive moves upward earlier this year have hinged on the gold and copper production from its Mt. Milligan mine, and the rise in gold prices created a lot of optimism about the company's future prospects. But copper will play a key part in Thompson Creek's long-term profitability, and so any macroeconomic trend that affects copper will have an outsized impact on Thompson Creek compared to larger companies. Yet even industry giants BHP Billiton (BHP -0.53%) and Rio Tinto (RIO 0.82%) suffered losses of 3% and 2%, as they rely especially on China's demand to drive their long-term results.

Many gold investors don't really pay much attention to base metals, but ignoring their impact can create problems when you assess mining companies that produce them as byproducts. Even though gold can go its own way over fairly long periods of time, it often fares much better in environments in which demand for all commodities is on the rise.