The metals consolidated on Wednesday after the weakness seen on Tuesday, aluminium fell in morning trading to set a fresh low for the year at $1,731 and at the day’s lows the base metals complex was off an average of one percent – they went on to closed mixed with nickel up 1.2 percent, aluminium off 1.1 percent at $1,738, copper off 0.3 percent at $6,098, while the rest were up around 0.2 percent.
Precious metals were also mixed yesterday with palladium up 0.4 percent, the gold price unchanged at $1,187.70, while silver and platinum were off 0.2 and 0.5 percent respectively.
This morning the base metals are up an average of 0.3 percent, led by a 0.5 percent rise in zinc to $2,200, the rest are up between 0.1 and 0.4 percent with copper at $6,108 – volumes have been above average with 5,396 lots traded, which suggests good dip buying interest.
Precious metals are up an average of 0.3 percent this morning, with the PGMs up 0.4 percent, silver up 0.2 percent and the gold price up 0.1 percent at $1,189.20.
In Shanghai, base metals are mixed, with copper, aluminium and tin off by around 0.2 percent, with copper at Rmb 44,100, zinc is up 1.3 percent and lead and zinc are up around 0.7 percent.
Spot copper in Changjiang off 0.2 percent at Rmb 44,300-44,400, the spread with the futures is at an equivalent of $48/tonne, which is slightly higher than yesterday, while the LME/Shanghai copper arb ratio is at 1 to 7.22.
The gold price in Shanghai is little changed, while silver is off 0.2 percent.
Equities continued to push to the upside yesterday with the Euro Stoxx 50 climbing 1.8 percent and the Dow was up 0.7 percent, reversing a good deal of Tuesday’s weakness. The stronger tone has generally not seen follow through strength in Asia with the CSI off 2.1 percent and the Hang Seng off 1.8 percent as China tightened margin rules. The Nikkei is reacting positively to the weak yen, which against the dollar is at a 12 year low, it is up 0.2 percent and the Kospi is up 0.2 percent too.
Currencies – the yen is under pressure, last at 123.85, as Japan’s and the US’s monetary policy look set to diverge further in the months ahead; the dollar index is at 97.23, the euro is flat at 1.0905, sterling is weaker at 1.5360, as are the aussie at 0.7693, the rouble at 51.80, while the yuan is at 6.1985.
Data out already shows a strong pick-up in Japan’s retail sales that climbed five percent, but it is from a low base as a year ago sales had been hit hard by the sales tax increase. German import prices climbed 0.6 percent, later we a second estimate on UK GDP, UK business investment, mortgage approvals and index of services. US data includes initial jobless claims, pending home sales, natural gas and crude oil inventories. The G7 meeting also continues today – see table below.
Our view on the base metals is there is little to be bullish about given the gains seen of late and the corrections now underway. The likes of aluminium and nickel have been hit hard, which suggests their earlier rallies had jumped the gun and the likes of lead and zinc seemed to go too far too quickly, so a period of consolidation seems justified – the same goes for copper, especially as coppers fundamentals are likely to deteriorate as more supply comes on stream in the months ahead. The one with the best current fundamentals is probably tin as LME stocks continue to edge lower and have not been this low since December 2008.
The precious metals have pulled back in the face of the weak dollar and as record setting equities provide too big a pull for investor money, but the gold price is holding up relatively well as are silver and palladium. Given uncertainty over Greece and some nervousness in equities, we would expect good underlying support for gold.
| Overnight Performance | ||||
| BST | 06:45 | +/- | +/- % | Lots |
| Cu | 6108 | 10 | 0.2% | 1752 |
| Al | 1742.5 | 4.5 | 0.3% | 1342 |
| Ni | 12925 | 55 | 0.4% | 811 |
| Zn | 2200 | 11.5 | 0.5% | 1391 |
| Pb | 1955 | 2 | 0.1% | 97 |
| Sn | 15550 | 45 | 0.3% | 3 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.3% | 5,396 | ||
| Gold | 1189.2 | 1.5 | 0.1% | |
| Silver | 16.71 | 0.04 | 0.2% | |
| Platinum | 1120.4 | 4.4 | 0.4% | |
| Palladium | 785.8 | 2.8 | 0.4% | |
| Average PM | 0.3% | |||
| SHFE Prices 06:52 BST | Change | % Change | |
| Cu | 44100 | -90 | -0.2% |
| AL | 13180 | -40 | -0.3% |
| Zn | 16815 | 210 | 1.3% |
| Pb | 13360 | 85 | 0.6% |
| Ni | 101190 | 720 | 0.7% |
| Sn | 116510 | -360 | -0.3% |
| Average change (base metals) | 0.3% | ||
| Rebar | 2359 | 4 | 0.2% |
| Au | 240.9 | -0.1 | 0.0% |
| Ag | 3651 | -8 | -0.2% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:50am | Japan | Retail Sales y/y | 5.0% | 5.3% | -9.7% |
| 7:00am | Germany | German Import Prices m/m | 0.5% | 1.0% | |
| 7:20am | US | FOMC Member Williams Speaks | |||
| 9:30am | UK | Second Estimate GDP q/q | 0.4% | 0.3% | |
| 9:30am | UK | Prelim Business Investment q/q | 1.2% | -0.9% | |
| 9:30am | UK | BBA Mortgage Approvals | 39.2K | 38.8K | |
| 9:30am | UK | Index of Services 3m/3m | 0.5% | 0.7% | |
| Tentative | EUR | Italian 10-y Bond Auction | 1.40|1.6 | ||
| Day 2 | G7 Meetings | ||||
| 1:30pm | US | Unemployment Claims | 271K | 274K | |
| 3:00pm | US | Pending Home Sales m/m | 0.8% | 1.1% | |
| 3:30pm | US | Natural Gas Storage | 95B | 92B | |
| 4:00pm | US | Crude Oil Inventories | -1.5M | -2.7M | |
The post Weaker gold price attracts dip buying, strong dollar a headwind appeared first on The Bullion Desk.
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