The base metals started yesterday on a fairly positive note, looking well placed to extend gains, but early trading was only in light volume – as it turned out prices slipped to close down an average of 0.7 percent, with aluminium leading the decline with a two percent drop to $1,819.50. Nickel was off 1.1 percent at $13,710, while copper closed down 0.6 percent at $6,376.
Precious metals edged higher on Monday with silver leading the advance with a 1.4 percent rise to $17.70, the gold/silver ratio dropped through the 70 level indicating growing interest in silver as a proxy for gold. The gold price was little changed, it closed up 0.1 percent at $1,224.90.
This morning the base metals are mixed – tin is off 0.6 percent, nickel is down 0.1 percent, while the rest are firmer with lead up 0.4 percent at $,1972.50, copper is up 0.3 percent at $6,392 and aluminium and zinc are up 0.2 percent. Volume remains light with 2,150 lots traded as of 05:33 BST.
The silver price is giving back some of yesterday’s gains, it is off one percent at $17.53, the rest of the precious metals have pulled back around 0.3 percent with the gold price at $1,222.30. The firmer dollar that has the dollar index at 94.20 after Friday’s low of 93.13 has taken the wind out of the gold price.
In Shanghai, the July base metals are down an average of 0.4 percent, but individual performance is quite mixed – nickel is down 2.1 percent, tin is off 0.5 percent, aluminium is down 0.4 percent and copper is off 0.2 percent at Rmb 45,900, while lead and zinc are up around 0.4 percent.
Spot copper in Changjiang is off 0.2 percent at Rmb 46,010-46,070, the backwardation is at an equivalent of $27 per tonne and the LME/Shanghai copper arb ratio is at 1 to 7.18 – so the arbitrage window remains shut.
Precious metals in Shanghai are lower with silver off 0.9 percent and the July gold price off 0.2 percent.
The equity boom continues with US equities setting fresh all-time highs – considering this gold is holding up well. The Euro Stoxx 50 closed up 0.5 percent, the Dow closed up 0.1 percent, the S&P 500 up 0.3 percent and Asia has followed on with the Nikkei up 0.8 percent, the Hang Seng is up 0.4 percent, the Kospi is up 0.5 percent and the CSI 300 is up 3.1 percent as money pours into IPOs and spills over into the broader market. Despite the strong gains, trading volume in Shanghai this morning was reportedly some 38 percent below the 30-day average.
Currencies – the dollar is attempting a rebound, the trend remains to the downside, but yesterday it found some strength and is trying higher again this morning. Conversely the euro is easing, last at 1.1302, as are sterling at 1.5650, the aussie at 0.7990 and the yen at 119.98, while the rouble is firm at 49.08 and the yuan is flat at 6.2040.
There is a host of UK price data out today, German and EU ZEW economic sentiment, EU final CPI, trade balance and US building permits and housing starts – see table below for more details.
Most of the base metals are in pull back mode with prices falling in search of support – given the strong gains of late it is not surprising profit-taking and forward selling have emerged. The two that are holding up better are copper and tin that are managing to consolidate up in high ground. We should now get an insight into how strong underlying support is as to whether the dips attract sufficient buying to chase prices higher again. Today’s LME commitment of traders report should also throw fresh light on what has been driving prices.
The run up in the gold price has been strong, but resistance has now been encountered so some consolidation seems likely. With equities booming and the dollar trying to rebound, the gold price may well pull back for a while. The PGMs are in the same boat, they have both been turned lower by resistance. We would not be surprised to see some rotation out of equities some of which may finds its way into gold as it still looks a relatively cheap safe-haven, especially with the dollar and treasuries seeing weakness recently.
| Overnight Performance | ||||
| BST | 05:33 | +/- | +/- % | Lots |
| Cu | 6392 | 16 | 0.3% | 505 |
| Al | 1824 | 4.5 | 0.2% | 411 |
| Ni | 13700 | -10 | -0.1% | 803 |
| Zn | 2287.5 | 4 | 0.2% | 390 |
| Pb | 1972.5 | 8.5 | 0.4% | 37 |
| Sn | 15850 | -100 | -0.6% | 4 |
| Steel | 395 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.1% | 2,150 | ||
| Gold | 1222.3 | -2.6 | -0.2% | |
| Silver | 17.53 | -0.17 | -1.0% | |
| Platinum | 1166.9 | -6.1 | -0.5% | |
| Palladium | 782.4 | -2.6 | -0.3% | |
| Average PM | -0.5% | |||
| SHFE Prices 05:33 BST | Change | % Change | |
| Cu | 45900 | -70 | -0.2% |
| AL | 13245 | -50 | -0.4% |
| Zn | 16890 | 70 | 0.4% |
| Pb | 13440 | 65 | 0.5% |
| Ni | 106870 | -2290 | -2.1% |
| Sn | 118810 | -570 | -0.5% |
| Average change (base metals) | -0.4% | ||
| Rebar | 2218 | -4 | -0.2% |
| Au | 247.35 | 1.25 | 0.5% |
| Ag | 3728 | -33 | -0.9% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 9:30am | UK | CPI y/y | 0.0% | 0.0% | |
| 9:30am | UK | PPI Input m/m | 0.8% | 0.3% | |
| 9:30am | UK | RPI y/y | 0.9% | 0.9% | |
| 9:30am | UK | Core CPI y/y | 1.0% | 1.0% | |
| 9:30am | UK | HPI y/y | 7.7% | 7.2% | |
| 9:30am | UK | PPI Output m/m | 0% | 0% | |
| 10:00am | Germany | German ZEW Economic Sentiment | 48.8 | 53.30 | |
| 10:00am | EU | Final CPI y/y | 0.0% | 0.0% | |
| 10:00am | EU | ZEW Economic Sentiment | 62.4 | 64.8 | |
| 10:00am | EU | Final Core CPI y/y | 0.6% | 0.6% | |
| 10:00am | EU | Trade Balance | 22.9B | 22.0B | |
| 1:30pm | US | Building Permits | 1.06M | 1.04M | |
| 1:30pm | US | Housing Starts | 1.02M | 0.93M | |
The post Copper and tin hold up well, other metals looking weaker appeared first on The Bullion Desk.
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