The base metals struggled on Thursday with the metals falling an average of 1.2 percent, led by a three percent decline in lead – we see the pullbacks as a reaction to the strong rallies seen across the board in recent weeks. What is surprising is that weakness came despite fresh weakness in the dollar.
The precious metals continued their rally, climbing an average of 0.8 percent yesterday with silver once again in the lead with a rise of 2.1 percent to $17.47, while gold reached a high of $1,227.40, overcoming resistance around $1,225 in the process.
This morning the base metals are firmer by an average of 0.5 percent, led by a 1.2 percent rise in nickel to $14,000, lead and tin are up 0.6 percent, copper is up 0.3 percent at $6,416, while aluminium and zinc are up 0.2 percent. Volume remains light at 3,109 lots.
Precious metals are mixed with silver giving back some of its gains from yesterday, it is off 0.9 percent at $17.32, gold is down 0.3 percent at $1,218 while the PGMs are up 0.2 percent.
In Shanghai, the July base metals contracts are down 0.6 percent on average, with tin off 1.2 percent, lead is off one percent and zinc is down 0.8 percent, while the rest are off around 0.3 percent with copper at Rmb 45,860.
Spot copper in Changjiang is down 0.1 percent at Rmb 45,900-46,080, the backwardation is at an equivalent of some $35 per tonne and the LME/Shanghai copper arb ratio is at 1 to 7.14.
Precious metals are firmer with gold up 0.8 percent at Rmb 245 and silver is up 0.8 percent at Rmb 3,699.
Equities – were strong yesterday with the Euro Stoxx 50 rising 1.4 percent as ECB President Mario Draghi reassured markets that quantitative easing would remain in place as scheduled and that brought some stability to bonds. The Dow closed up 1.1 percent, but Asia has been mixed with the Nikkei up 0.8 percent, the Hang Seng is up 0.5 percent, the CSI 300 is off 1.7 percent and the Kospi is down 0.7 percent.
Currencies – the dollar remains weak with the dollar index falling to a fresh low of 93.13 yesterday, it is last at 93.53, the euro remains upbeat, last at 1.1383, as does sterling at 1.5762, the aussie has pulled back from high ground, last at 0.8052 after yesterday’s high of 0.8163, the yen is flat at 119.52, as is the rouble at 50.05 and the yuan is at 6.2042.
The economic agenda saw a drop in Japan’s PPI to minus 2.1 percent and consumer confidenec eased to 41.5 from 41.7. China’s foreign direct investment has climbed 10.4 percent year-to-date, down slightly from 10.6 percent previously. Later we get data on UK construction and leading indicators, while US data includes Empire State manufacturing, industrial production and capacity utilisation, University of Michigan consumer sentiment and inflation expectations and TIC long term purchases data – see table below for more details.
The base metals are for the most part consolidating recent gains with copper holding up in high ground, while most of the others are consolidating off recent highs, but the dips for now do seem to be attracting scale down buying, especially in nickel that is back above $14,000. Given the extent of the recent gains, we would not be surprised to see prices consolidate for longer and that could mean further weakness, but the weaker dollar is providing some support.
Bullion prices have put in three strong days now that took gold up above $1,225 and silver above $17.40, but prices are now consolidating. We should get a feel for how much sentiment has changed by seeing how well prices now hold up. The PGMs have been less active, with platinum now trading some $59 below the gold price. If equities continue to push ahead and bonds avoid selling-off further, then bullion prices may struggle on the upside.
| Overnight Performance | ||||
| BST | 07:01 | +/- | +/- % | Lots |
| Cu | 6416 | 17.5 | 0.3% | 804 |
| Al | 1871 | 3 | 0.2% | 312 |
| Ni | 14000 | 170 | 1.2% | 712 |
| Zn | 2307.5 | 3.5 | 0.2% | 862 |
| Pb | 1979 | 12 | 0.6% | 406 |
| Sn | 15850 | 95 | 0.6% | 13 |
| Steel | 395 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.5% | 3,109 | ||
| Gold | 1218 | -3.2 | -0.3% | |
| Silver | 17.32 | -0.15 | -0.9% | |
| Platinum | 1158 | 2 | 0.2% | |
| Palladium | 781.2 | 1.2 | 0.2% | |
| Average PM | -0.2% | |||
| SHFE Prices 07:07 BST | Change | % Change | |
| Cu | 45860 | -140 | -0.3% |
| AL | 13310 | -25 | -0.2% |
| Zn | 16875 | -135 | -0.8% |
| Pb | 13350 | -135 | -1.0% |
| Ni | 109450 | -330 | -0.3% |
| Sn | 119050 | -1410 | -1.2% |
| Average change (base metals) | -0.6% | ||
| Rebar | 2245 | -5 | -0.2% |
| Au | 245 | 1.9 | 0.8% |
| Ag | 3699 | 20 | 0.5% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:50am | Japan | PPI y/y | -2.1% | -2.1% | 0.7% |
| 3:00am | China | Foreign Direct Investment ytd/y | 10.4% | 10.6% | |
| 4:40am | Japan | BOJ Gov Kuroda Speaks | |||
| 6:00am | Japan | Consumer Confidence | 41.5 | 41.9 | 41.7 |
| 9:30am | UK | Construction Output m/m | 4.1% | -0.9% | |
| 1:30pm | US | Empire State Manufacturing Index | 5.1 | -1.2 | |
| 2:15pm | US | Capacity Utilization Rate | 78.4% | 78.4% | |
| 2:15pm | US | Industrial Production m/m | 0.1% | -0.6% | |
| 2:30pm | UK | CB Leading Index m/m | 0.6% | ||
| 3:00pm | US | Prelim UoM Consumer Sentiment | 95.8 | 95.9 | |
| 3:00pm | US | Prelim UoM Inflation Expectations | 2.6% | ||
| 9:00pm | US | TIC Long-Term Purchases | 21.3B | 9.8B | |
The post Bullion prices consolidate strong gains, base metals consolidate at lower levels appeared first on The Bullion Desk.
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