Copper managed to put in an up day yesterday, with prices rising 0.8 percent to $5,959.50, while the rest of the complex was off an average of 0.7 percent, led by 1.4 percent declines in aluminium and tin. Aluminium was weaker on the back of reports that China was cutting export tariffs on some aluminium products, albeit not primary aluminium. Weak PMI data out across the globe also weighed on sentiment.
Precious metals were led higher by a 1.9 percent gain in palladium, the others were up around 0.5 percent with the gold price closing at $1,193.40. The weaker dollar was the main feature in the market, but on a fundamental note, strong imports of gold into India and China from Switzerland were an encouraging development.
This morning the base metals are slightly softer as prices consolidate – zinc is off the most, but only off 0.3 percent, copper and tin are down 0.2 percent with copper at $5,948 and aluminium is last at $1,783.50. Volume is below average with 3,043 lots traded.
Precious metals are consolidating this morning, down an average of just 0.1 percent with the gold price at $1,192. The dollar index is also back below 98, last at 97.41.
In Shanghai, the June base metals contracts are mixed, copper aluminium and nickel are up an average of 0.4 percent, with copper at Rmb 43,230. Tin is unchanged while zinc and lead are weaker by 0.4 and 0.7 percent respectively.
Spot copper in Changjiang is up 0.3 percent at Rmb 43,550-43,700, the backwardation with the futures is at an equivalent of $75 per tonne and the LME Shanghai copper arb ratio for June is 1 to 7.26, so the arb window remains closed.
Precious metals in Shanghai are little changed with the June gold price at Rmb 238.30.
Equities were mixed yesterday, the Euro Stoxx 50 dropped 0.7 percent and the Dow was up 0.1 percent but Asia is weaker this morning with the Nikkei off 0.8 percent, the Hang Seng is down 0.6 percent, the CSI 300 is down 2.1 percent and the Kospi is off 0.8 percent.
Currencies – the dollar index is weaker at 97.41 it would take moves below 97 and then 96.16 to signal the dollar is rolling over to the downside. The euro is firmer at 1.0812, as are sterling at 1.5054, the yen at 119.51, the aussie at 0.7777, the yuan at 6.1970 and the rouble at 50.50. So judging by the fact all the currencies are firmer it does look as though the dollar may test support and if it does that could underpin the base metals.
The economic agenda includes German Ifo business climate and US durable goods orders – data out earlier showed Japan’s service PPI drifting to 3.2 percent and all industry activity up just 0.1 percent. There is also a Eurogroup meeting in Riga with Greece firmly in focus – see table below for more details.
The base metals are looking quite mixed, lead and zinc are pausing after their super-charged rallies, for now prices are holding up well but there is room for some pullback. Tin is also consolidating after its rebound, nickel is stuck sideways in low ground, while aluminium is looking vulnerable now that prices are back below $1,800 and availability looks set to increase even more as China will repeal the 5-15 percent tax on aluminium strips and rods from May 1. Conversely, copper is looking a bit brighter having put in a rebound yesterday and with the dollar looking weaker. We do feel that dollar weakness could underpin firmer metal prices, especially in the likes of copper and nickel.
The precious metals have been weak of late, platinum and silver continue to look weak, while palladium and gold found some buying yesterday once the dollar turned lower again. Also, as mentioned above, a stronger physical market may well be enough to prompt some buying too, especially if the dollar weakens further.
| Overnight Performance | ||||
| BST | 06:24 | +/- | +/- % | Lots |
| Cu | 5948 | -11.5 | -0.2% | 2065 |
| Al | 1783.5 | 1.5 | 0.1% | 525 |
| Ni | 12720 | 5 | 0.0% | 216 |
| Zn | 2217 | -6.5 | -0.3% | 112 |
| Pb | 2032 | -1 | 0.0% | 115 |
| Sn | 15420 | -30 | -0.2% | 10 |
| Steel | 395 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -0.1% | 3,043 | ||
| Gold | 1192 | -1.4 | -0.1% | |
| Silver | 15.82 | -0.04 | -0.3% | |
| Platinum | 1132 | -1 | -0.1% | |
| Palladium | 768.5 | 0.5 | 0.1% | |
| Average PM | -0.1% | |||
| SHFE prices 06:36 BST | Change | % Change | |
| Cu | 43230 | 150 | 0.3% |
| AL | 13220 | 50 | 0.4% |
| Zn | 16495 | -65 | -0.4% |
| Pb | 13505 | -90 | -0.7% |
| Ni | 96660 | 520 | 0.5% |
| Sn | 113450 | 20 | 0.0% |
| Average change (base metals) | 0.0% | ||
| Rebar | 2298 | 34 | 1.5% |
| Au | 238.3 | 0 | 0.0% |
| Ag | 3468 | 5 | 0.1% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:50am | Japan | SPPI y/y | 3.2% | 3.3% | 3.3% |
| 5:34am | Japan | All Industries Activity m/m | 0.1% | -0.9% | 0.5% |
| 9:00am | Germany | German Ifo Business Climate | 108.5 | 107.9 | |
| All Day | EU | Eurogroup Meetings | |||
| 1:30pm | US | Core Durable Goods Orders m/m | 0.2% | -0.6% | |
| 1:30pm | US | Durable Goods Orders m/m | 0.7% | -1.1% |
The post Quiet start in the metals, weaker dollar may lend support appeared first on The Bullion Desk.
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