The base metals were for the most part bullish yesterday – at the day’s highs prices were up an average of 1.4 percent and at the lows they were down an average of 0.3 percent – they closed up 0.8 percent on average, with nickel and tin in negative territory by around 0.5 percent, while lead, zinc and aluminium were up around two percent and copper closed up 0.2 percent at $6,108.
Precious metals had an interesting day – in mid-afternoon prices spiked lower with average losses of 0.6 percent that took the price of gold down to a low of $1,180.50, but it promptly rebounded to $1,188.20 – the $1,180 area therefore still seems to offer good dip-buying support.
This morning nickel remains under pressure, it is off a further 0.3 percent, while the rest of the base metals complex is up between 0.1 and 0.5 percent with aluminium and lead up the most at $1,780 and $2,001, while copper is up 0.2 percent at $6,123. Volume is low at 3,498 lots, with nickel showing the second largest turnover at 923 lots, after 1,269 lots on copper.
Bullion prices are little changed with gold at $1,189.50, silver at $16.74, palladium at $781 and platinum at $1,116.90 – so whereas gold rebounded platinum did not to the same extent and that has pushed platinum’s discount to gold to $72.
In Shanghai , the August base metals are split with nickel and tin lower by 2.3 and 0.4 percent respectively, while the other metals are up between 0.2 and 0.4 percent with copper up 0.2 percent at Rmb 44,220. Spot copper in Changjiang is also up 0.2 at Rmb 44,400-44,500, the spread between the spot and August contract is at an equivalent of around $45 per tonne and the LME/Shanghai copper arb ratio is 1 to 7.24 for the August date, although the arb for nearer dates may well be closer to being open with the ratio for the June date around 1 to 7.50.
Precious metals in Shanghai are little changed with the price of gold up 0.2 percent and silver up 0.1 percent.
Equities – the Euro Stoxx 50 closed off 0.9 percent and the Dow was off 0.2 percent, but the CSI 300 is consolidating Thursday’s 6.5 percent loss with a 1.5 percent rebound today. The Nikkei is up 0.3 percent, the Hang Seng is up 0.5 percent and the Kospi is up 0.1 percent. So no follow through weakness in China, at least for now.
Currencies – the yen at 123.83 remains in the limelight, while the dollar index consolidates at 96.97 after a high of 97.78 and the euro is edging higher at 1.0952. Sterling is trending lower again, last at 1.5330, as are the aussie at 0.7662, the rouble at 52.62 and the yuan is flat at 6.2000.
The economic agenda is busy, earlier there was a host of data out of Japan including CPI, jobs, housing starts and industrial production, which was quite mixed-to-negative. Unemployment fell, but householding spending contracted 1.3 percent, worse than expected, but a big improvement on the previous month’s reading – see table below. Later we get German retail sales, French consumer spending, Spanish and Italian CPI, EU money supply, US GDP (preliminary/i.e. second reading), Chicago PMI and University of Michigan consumer sentiment and inflation expectations – see table below for more details.
The base metals for the most part seem to have encountered scale down buying, especially in aluminium, lead and zinc, but less so in nickel, tin and copper. With most of the cash to three month spreads not that tight, apart from zinc, it does not look as this latest strength is driven by short-covering, which suggests the pullbacks have prompted bargain hunting. For aluminium the combination of a steep drop to fresh 2015 lows and significantly lower physical premiums, that are less likely to fall too much further given the spread is back in contango, may well mean the low ‘all-in’ price is being seen as a bargain, especially for consumers. On balance, we are not that bullish, nor are we that bearish, so expect some rangebound trading as the market adjusts to recent gyrations.
The spike down in gold yesterday and subsequent recovery suggests good scale down buying, but we wait to see if there is follow through buying – this is likely to depend on the dollar, Greece and whether equities continue to push ahead. Today’s second reading of US GDP data may well set the scene as it is expected to show a 0.8% fall, after the advance reading came in at 0.2 percent which at the time was well below expectations. Although a lower reading is forecast, if it is actually seen then that might well prompt a correction in the dollar as the market expects the Fed to delay a rate rise.
| Overnight Performance | ||||
| BST | 06:30 | +/- | +/- % | Lots |
| Cu | 6123 | 15 | 0.2% | 1269 |
| Al | 1780 | 9 | 0.5% | 446 |
| Ni | 12760 | -35 | -0.3% | 923 |
| Zn | 2238 | 5 | 0.2% | 668 |
| Pb | 2001 | 9 | 0.5% | 179 |
| Sn | 15460 | 20 | 0.1% | 13 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.2% | 3,498 | ||
| Gold | 1189.5 | 1.3 | 0.1% | |
| Silver | 16.74 | 0.04 | 0.2% | |
| Platinum | 1116.9 | 3.9 | 0.4% | |
| Palladium | 781 | -1 | -0.1% | |
| Average PM | 0.1% | |||
| SHFE Prices 06:45 BST | Change | % Change | |
| Cu | 44220 | 90 | 0.2% |
| AL | 13210 | 40 | 0.3% |
| Zn | 16795 | 65 | 0.4% |
| Pb | 13370 | 40 | 0.3% |
| Ni | 97340 | -2300 | -2.3% |
| Sn | 116630 | -420 | -0.4% |
| Average change (base metals) | -0.2% | ||
| Rebar | 2349 | -10 | -0.4% |
| Au | 241.4 | 0.45 | 0.2% |
| Ag | 3659 | 3 | 0.1% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:30am | Japan | Household Spending y/y | -1.3% | 3.1% | -10.6% |
| 12:30am | Japan | Tokyo Core CPI y/y | 0.2% | 0.2% | 0.4% |
| 12:30am | Japan | National Core CPI y/y | 0.3% | 0.2% | 2.2% |
| 12:30am | Japan | Unemployment Rate | 3.3% | 3.4% | 3.4% |
| 12:50am | Japan | Prelim Industrial Production m/m | 1.0% | 0.9% | -0.8% |
| 6:00am | Japan | Housing Starts y/y | 0.4% | 0.3% | 0.7% |
| 7:00am | Germany | German Retail Sales m/m | 1.1% | -2.3% | |
| 7:45am | France | French Consumer Spending m/m | 0.4% | -0.6% | |
| 8:00am | Spain | Spanish Flash CPI y/y | -0.5% | -0.6% | |
| 9:00am | EU | M3 Money Supply y/y | 4.9% | 4.6% | |
| 9:00am | EU | Private Loans y/y | 0.4% | 0.1% | |
| 10:00am | Italy | Italian Prelim CPI m/m | 0.1% | 0.3% | |
| Day 3 | ALL | G7 Meetings | |||
| 1:30pm | US | Prelim GDP q/q | -0.8% | 0.2% | |
| 1:30pm | US | Prelim GDP Price Index q/q | -0.1% | -0.1% | |
| 2:45pm | US | Chicago PMI | 53.1 | 52.3 | |
| 3:00pm | US | Revised UoM Consumer Sentiment | 90 | 88.6 | |
| 3:00pm | US | Revised UoM Inflation Expectations | 2.9% | ||
The post Metals more upbeat – find dip buying, all eyes on US GDP appeared first on The Bullion Desk.
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