The base metals put in a mixed performance yesterday, early strength that saw the complex up an average of 0.8 percent at the day’s highs went on to become quite mixed with aluminium up 2.2 percent to 1,874.50, copper closed up 0.5 percent at $6,127, while the rest pulled back by an average of 0.8 percent – jittery equity markets did not help confidence, but somewhat surprisingly a weaker dollar failed to provide a lift – the dollar index breached support at 96.16, setting a low at 96.01.
The precious metals did latch on to the weaker dollar as we thought it would – at the day’s highs the precious metals were up an average of 1.2 percent, with silver rising 1.8 percent to $16.71 at one stage. They ended the day up an average of 0.8 percent with the price of gold closing at $1,211.50.
This morning the base metals are for the most part easier with average losses of 0.3 percent. Tin is off 0.9 percent at $15,750, copper is off 0.6 percent at $6,088, while the rest are ranged between 0.1 and -0.1 percent. Volume on the LME has been light at 2,576 lots. This level of volume is normally seen when China is on holiday – which may well indicate how quiet trading is in China these days.
Precious metals this morning are mixed, palladium is up 0.4 percent at $777, platinum is up 0.2 percent, silver is unchanged and the price of gold is off 0.1 percent at $1,210.10. Platinum’s discount to gold is now at $55 per ounce.
In Shanghai, the June contracts are for the most part down, the exception is aluminium that is up 0.2 percent. The rest are down an average of 0.5 percent led by a 0.8 percent decline in tin, while copper is off just 0.1 percent at Rmb 43,970 – see table below for more details.
Spot copper in Changjiang is unchanged at Rmb 44,050-44,200, the spread with the futures is at a narrower backwardation of an equivalent of $37 per tonne and the LME/Shanghai copper arb window remains closed with the ratio at 1 to 7.22.
Bullion prices in Shanghai are stronger with the price of gold up 0.9 percent and silver up 1.4 percent.
Equities suffered some weakness yesterday with the Euro Stoxx 50 dropping to close 1.5 percent lower and the Dow dropped 0.6 percent intraday, before rebounding to close up 0.4 percent. In Asia this morning, equities are mixed with the CSI 300 up, while the Hang Seng and Kospi are down. Chinese markets have been strong of late so today’s one percent rise in the CSI 300 in light of the new People’s Bank of China’s (PBOC) action seems somewhat tame. The latest measures come in the form of allowing commercial banks to use local government debt as collateral to get loans from the PBOC– the idea being that local government should be able to issue more bonds, which in turn should enable them to keep the infrastructure projects on schedule – this should be bullish for base metals demand. So whereas equities might have largely discounted new stimulus, perhaps the metals are only just starting to.
Currencies – the focus is on the dollar index that is looking weaker having breached support at 96.16, it is last at 96.12 – further weakness should underpin firmer metal prices. The euro is strong at 1.0968, as are sterling at 1.5345, the aussie at 0.7995 and the yen at 118.84, while the rouble, 51.38, and yuan 6.2044, are flat-lined.
The economic agenda will be focuses on US GDP data out at 1:30pm BST and the FOMC statement out at 7:00pm BST. Ahead of that there is data on UK house prices, German CPI, EU M3 money supply and private loans and UK CBI realised prices. Other US data includes pending home sales and crude oil inventories – see table below for more details.
The base metals seem to range between being strong and overbought for zinc and lead, aluminium is playing catch up (but its fundamentals remain weak), nickel, tin and copper’s rallies have run into some profit-taking so look set to consolidate a while. But, they look well placed to continue higher once they have absorbed selling orders, which for copper seems to be lying above $6,100. China’s latest lending initiatives and the weaker dollar, if continued, may well underpin firmer metal prices.
Gold’s rebound looks constructive, silver and the PGMs are following. The fact the gold/silver ratio is falling also suggests sentiment has picked up with some investors opting to buy the more volatile silver as a proxy for gold.
| Overnight Performance | ||||
| BST | 06:12 | +/- | +/- % | Lots |
| Cu | 6088 | -39 | -0.6% | 1115 |
| Al | 1874 | -0.5 | 0.0% | 574 |
| Ni | 13400 | -10 | -0.1% | 476 |
| Zn | 2292.5 | -1.5 | -0.1% | 236 |
| Pb | 2085 | 2 | 0.1% | 155 |
| Sn | 15750 | -150 | -0.9% | 20 |
| Steel | 395 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -0.3% | 2,576 | ||
| Gold | 1210.1 | -1.4 | -0.1% | |
| Silver | 16.58 | 0 | 0.0% | |
| Platinum | 1155 | 2 | 0.2% | |
| Palladium | 777 | 3 | 0.4% | |
| Average PM | 0.1% | |||
| SHFE prices 06:12 BST | Change | % Change | |
| Cu | 43970 | -40 | -0.1% |
| AL | 13340 | 20 | 0.2% |
| Zn | 16925 | -25 | -0.1% |
| Pb | 13720 | -70 | -0.5% |
| Ni | 102340 | -770 | -0.7% |
| Sn | 116740 | -1000 | -0.8% |
| Average change (base metals) | -0.4% | ||
| Rebar | 2283 | -23 | -1.0% |
| Au | 242.65 | 2.25 | 0.9% |
| Ag | 3615 | 49 | 1.4% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| All Day | Japan | Bank Holiday | |||
| 7:00am | UK | Nationwide HPI m/m | 0.2% | 0.1% | |
| All Day | Germany | German Prelim CPI m/m | -0.1% | 0.5% | |
| 9:00am | EU | M3 Money Supply y/y | 4.3% | 4.0% | |
| 9:00am | EU | Private Loans y/y | 0.1% | -0.1% | |
| 11:00am | UK | CBI Realized Sales | 26 | 18 | |
| 1:30pm | US | Advance GDP q/q | 1.0% | 2.2% | |
| 1:30pm | US | Advance GDP Price Index q/q | 0.4% | 0.1% | |
| 3:00pm | US | Pending Home Sales m/m | 1.1% | 3.1% | |
| 3:30pm | US | Crude Oil Inventories | 2.1M | 5.3M | |
| 7:00pm | US | FOMC Statement | |||
| 7:00pm | US | Federal Funds Rate | <0.25% | <0.25% |
The post Metals’ rallies pause ahead of US GDP and FOMC statement appeared first on The Bullion Desk.
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