Gold prices gapped higher yesterday on the Greek news, but then gave back most of the gains and the other precious metals followed suit. At the day’s highs prices were up an average of 1.2 percent, they closed off 0.3 percent with gold up 0.2 percent at $1,178.70.
The Greek referendum call weighed on base metals prices yesterday that is with the exception of copper that put in a relatively strong performance. At the day’s lows prices were off an average of 2.4 percent, which was skewed by a 5.7 percent drop in nickel and 3.8 percent drop in tin – two of the less liquid markets, but excluding those two, prices were off an average of 1.2 percent at the lows. Nickel fell as Norilsk nickel was accepted as good delivery against Shanghai Futures Exchange nickel contracts, which reduces the risk of a short-squeeze in SHFE nickel prices. The base metals, with the exception of nickel and tin, closed mixed with lead up 0.3 percent, copper up 0.1 percent, while zinc was off 0.2 percent and aluminium off 0.4 percent.
This morning the metals again under pressure, the exception again being copper that is up 0.1 percent at $5,805, while the rest are weaker with aluminium off 0.7 percent, lead off 0.6 percent, zinc down 0.4 percent, tin off 0.1 percent and nickel spiralling lower with a 4.1 percent drop to $11,320. Nickel at one stage was off 8.5 percent at $10,795. Volume is above average with 6,742 lots traded, of which 3,254 lots have been nickel and 2,091 lots have been copper – see table below for more details.
Gold prices are off 0.3 percent this morning at $1,176.70, silver is off 0.5 percent, platinum is off 0.4 percent and palladium is down 0.1 percent. The fact gold is struggling given the deterioration in the Greece situations beggars belief, but the fact it is may be telling us that other markets are over reacting.
The base metals in Shanghai, are down an average of 2.1 percent led by a five percent fall in nickel and four percent fall in tin, aluminium, lead and zinc are off an average of 1.2 percent and copper is bucking the trend with a 0.2 percent gain to Rmb 42,260. Spot copper in Changjiang is up 0.1 percent at Rmb 42,650-42,800, the backwardation is wider at an equivalent of $86 per tonne and the LME/Shanghai copper arb ratio is at 1 to 7.33, basis July.
Precious metals in Shanghai are weaker, gold by just 0.1 percent, while silver is off 1.5 percent.
Equities were under pressure yesterday following the Greek development with the Euro Stox50 closing down 4.2 percent and the Dow closed down two percent. In Asia, China has had a wild day so far with CSI 300 dropping a further 4.2 percent, before rebounding to being up 5 percent and is last up 4.4 percent. The Nikkei is up 0.6 percent, the Hang Seng is up 1.5 percent and the Kospi is up 0.5 percent. So for now Asia seems to be containing the fallout from Greece, we wait to see if Europe can follow suit.
Currencies – the dollar index has given back Monday’s gains, it is last at 95.14 and the euro is back at 1.1192 after spiking down to 1.0967 yesterday. Sterling is treading water at 1.5724, the yen is holding on to its safe-haven premium, it is last at 122.30, the aussie is at 0.7675, the rouble is weaker at 55.57 and the yuan is at 6.2085.
So currencies and equities are seeing plenty of gyrations, but are not overly directional, other than for China’s CSI which was correcting before Greece called the referendum. This suggests that Greece’s grabbing the initiative by calling the referendum spooked the markets as it was unexpected, but the feeling is the fallout in the end will be limited – this would explain gold’s performance even though it suggests massive complacency that the ‘can will be kicked down the road’.
The economic agenda is busy with the deadline for Greece to repay the IMF and with a host of European data including: German retail sales, German, Italian and EU unemployment data, French consumer spending, UK final GDP, index of services, business investment and EU and Italian CPI. US data includes Chicago PMI, Composite HPI and consumer confidence – see table below.
The base metals are polarised with nickel dropping like a stone, but this morning’s 8.5 percent drop is now being reversed and given the volume traded it looks as though the extent of the dip was exaggerated by the thinness of the market at that time of day. Copper on the other hand is looking stronger with prices above $5,800. There is some talk of fund shorts in China taking profits to help pay margin calls against equities – but we would also note that copper inventories on SHFE have also been falling which has given copper something of a positive spin. The rest of the metals seemed to have spiked lower yesterday and are now attempting to recover. Basis the theme mentioned above it does look as though the markets suffered a knee-jerk reaction yesterday and are now unwinding that.
Gold prices gapped higher yesterday, prices are now higher than they were on Friday but well below yesterday’s highs, platinum and silver are consolidating in low ground while palladium remains in freefall with a fresh low of $664 seen this morning. We remain surprised that gold is not being taken up as a safe-haven, but it does seem to still be supported in the $1,160-1,170 area.
| Overnight Performance | ||||
| BST | 06:11 | +/- | +/- % | Lots |
| Cu | 5805 | 7.5 | 0.1% | 2091 |
| Al | 1688.5 | -12.5 | -0.7% | 540 |
| Ni | 11320 | -480 | -4.1% | 3254 |
| Zn | 2012 | -10 | -0.5% | 714 |
| Pb | 1775 | -11 | -0.6% | 122 |
| Sn | 14350 | -10 | -0.1% | 21 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -1.0% | 6,742 | ||
| Gold | 1176.7 | -3.3 | -0.3% | |
| Silver | 15.67 | -0.08 | -0.5% | |
| Platinum | 1077 | -4 | -0.4% | |
| Palladium | 664.5 | -0.5 | -0.1% | |
| Average PM | -0.3% | |||
| SHFE Prices 06:21 BST | Change | % Change | |
| Cu | 42260 | 80 | 0.2% |
| AL | 12570 | -160 | -1.3% |
| Zn | 15335 | -170 | -1.1% |
| Pb | 12825 | -175 | -1.3% |
| Ni | 87330 | -4600 | -5.0% |
| Sn | 107450 | -4420 | -4.0% |
| Average change (base metals) | -2.1% | ||
| Rebar | 2111 | -95 | -4.3% |
| Au | 238.15 | -0.2 | -0.1% |
| Ag | 3421 | -51 | -1.5% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 2:30am | Japan | Average Cash Earnings y/y | 0.6% | 0.7% | 0.7% |
| 6:00am | Japan | Housing Starts y/y | 5.8% | 6.2% | 0.4% |
| 7:00am | Germany | German Retail Sales m/m | 0.0% | 1.7% | |
| 7:45am | France | French Consumer Spending m/m | 0.3% | 0.1% | |
| 8:55am | Germany | German Unemployment Change | -5K | -6K | |
| 9:00am | italy | Italian Monthly Unemployment Rate | 12.5% | 12.4% | |
| 9:30am | UK | Current Account | -23.7B | -25.3B | |
| 9:30am | UK | Final GDP q/q | 0.4% | 0.3% | |
| 9:30am | UK | Index of Services 3m/3m | 0.5% | 0.4% | |
| 9:30am | UK | Revised Business Investment q/q | 1.8% | 1.7% | |
| 10:00am | EU | CPI Flash Estimate y/y | 0.2% | 0.3% | |
| 10:00am | EU | Core CPI Flash Estimate y/y | 0.8% | 0.9% | |
| 10:00am | EU | Unemployment Rate | 11.1% | 11.1% | |
| 10:00am | Italy | Italian Prelim CPI m/m | 0.3% | 0.2% | |
| Tentative | Italy | Italian 10-y Bond Auction | 1.83|1.4 | ||
| 12:00pm | UK | MPC Member Haldane Speaks | |||
| 2:00pm | US | S&P/CS Composite-20 HPI y/y | 5.3% | 5.0% | |
| 2:45pm | US | Chicago PMI | 50.2 | 46.2 | |
| 3:00pm | US | CB Consumer Confidence | 97.1 | 95.4 | |
The post Gold prices consolidate after Monday’s knee-jerk reaction appeared first on The Bullion Desk.
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