The base metals started to correct yesterday with average losses of 1.6 percent, led by a 3.4 percent drop in lead to $2,084, aluminium was off 2.3 percent, while copper closed down just 0.2 percent at $6,415, down from Tuesday’s high of $6,481. Given the speed and extent of recent gains a pull-back to consolidate was expected.
Precious metals were slightly weaker yesterday with average losses of 0.2 percent, with the gold bullion ending down 0.2 percent at $1,192.20, but palladium held above its $788 break-out level to close at $790.
This morning the base metals are down a further 0.5 percent, with lead once again falling the most, it is down 1.2 percent at $2,060, aluminium is off 0.7 percent at $1,910.50, copper, lead and zinc are all off 0.4 percent with copper at $6,392, while tin continues to buck the trend with a 0.2 percent rise to $16,190. Volume has been slightly above average with 5,074 lots traded as of 06:36 BST.
Precious metals are weaker by an average of 0.3 percent with silver down 0.5 percent at $16.44, gold bullion is off 0.4 percent at $1,187.70 and palladium straddling it’s the $788 level, quoted $787-793.
In Shanghai, the July base metals contracts are down an average of 0.7 percent and like the LME this morning tin is the only one in positive territory and lead leads the decline with a 2.5 percent drop. Copper is off 0.7 percent at Rmb 45,770. Spot copper in Changjiang is down 0.4 percent at Rmb 45,800-45,950, the backwardation with the futures is at an equivalent of around $30 per tonnes and the LME/Shanghai copper arb ratio has come into 1 to 7.12, which is getting further away from opening the arb window.
Gold bullion prices in Shanghai are off 0.1 percent, while silver has slipped 0.7 percent.
Equities – the Euro Stoxx 50 consolidated yesterday with a 0.3 percent gain, after the previous day’s weakness, but the Dow dropped a further 0.5 percent after Fed Chair Janet Yellen warned that equity valuations were quite high. That has prompted profit-taking in Asia this morning where the Nikkei is down 1.3 percent, the Hang Seng is off 1.1 percent, the CSI 300 is off 1.4 percent and the Kospi is down 0.7 percent.
Currencies – the dollar weakened further with the dollar index extending its drop to 93.88 yesterday, last at 94.06, the euro is climbing, last at 1.1359, as is the aussie at 0.7985, sterling is firm at 1.5241, the yen is flat at 119.45, as are the rouble at 50.86 and the yuan at 6.2000.
The economic agenda is fairly busy with German factory orders, French industrial production and trade balance, EU retail PMI. It is also General Election day in the UK and US data includes Challenger job cuts, initial jobless claims, natural gas storage data and consumer credit – see table below.
Corrections are generally underway across the base metals, the exception being tin, given the gains of late we would not be surprised to see the price pullbacks extend as the signs of weakness prompt more profit-taking and producer pricing. We will get a good feel for how bullish underlying sentiment is by how far prices fall now. For now we would expect the dips to be short-lived, although the shake-out may be quite deep.
Precious metals are consolidating, they have not rallied like the base metals, so we would expect the dips to be limited, especially with the dollar weakening further. The one caveat though is that if equities have a more meaningful sell-off then a general risk-off move could initially drag gold bullion lower, although a secondary reaction could be bullish if investors then look for safe-havens.
| Overnight Performance | ||||
| BST | 06:36 | +/- | +/- % | Lots |
| Cu | 6392 | -23 | -0.4% | 1439 |
| Al | 1910.5 | -12.5 | -0.7% | 571 |
| Ni | 13920 | -50 | -0.4% | 1370 |
| Zn | 2348 | -10.5 | -0.4% | 1038 |
| Pb | 2060 | -24 | -1.2% | 654 |
| Sn | 16190 | 40 | 0.2% | 2 |
| Steel | 395 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -0.5% | 5,074 | ||
| Gold | 1187.7 | -4.5 | -0.4% | |
| Silver | 16.44 | -0.09 | -0.5% | |
| Platinum | 1139.4 | -3.6 | -0.3% | |
| Palladium | 788.8 | -1.2 | -0.2% | |
| Average PM | -0.3% | |||
| SHFE prices 06:54 BST | Change | % Change | |
| Cu | 45770 | -320 | -0.7% |
| AL | 13470 | -65 | -0.5% |
| Zn | 17190 | -180 | -1.0% |
| Pb | 13580 | -355 | -2.5% |
| Ni | 112010 | -90 | -0.1% |
| Sn | 122850 | 820 | 0.7% |
| Average change (base metals) | -0.7% | ||
| Rebar | 2330 | -22 | -0.9% |
| Au | 241.05 | -0.2 | -0.1% |
| Ag | 3581 | -27 | -0.7% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 7:00am | Germany | German Factory Orders m/m | 1.6% | -0.9% | |
| 7:45am | France | French Industrial Production m/m | 0.1% | 0.0% | |
| 7:45am | France | French Trade Balance | -3.5B | -3.4B | |
| 9:10am | EU | Retail PMI | 48.6 | ||
| All Day | UK | Parliamentary Elections | |||
| Tentative | Spain | Spanish 10-y Bond Auction | 1.28|2.3 | ||
| 12:30pm | US | Challenger Job Cuts y/y | 0.064 | ||
| 1:30pm | US | Unemployment Claims | 277K | 262K | |
| 3:30pm | US | Natural Gas Storage | 75B | 81B | |
| 8:00pm | US | Consumer Credit m/m | 15.8B | 15.5B |
The post Pull-back gets underway in the base metals, bullion prices consolidate appeared first on The Bullion Desk.
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