Precious metals were mixed yesterday – at the day’s lows they were down an average of 0.7 percent, they closed with silver up 0.8 percent at $16.05, gold up 0.4 percent at $1,185.50 and the PGMs off 0.4 percent on average. A weaker dollar helped provide some lift, but we feel concern over Greece was probably the main supporting factor for gold prices.
Base metals prices suffered further weakness on Monday, especially tin that dropped 4.2 percent to $14,280 at one stage, while the rest were down an average of 2.4 percent at the day’s lows – they ended the day down an average of 1.4 percent with tin recovering the most off the intraday lows, it ended down 0.5 percent at $14,830, while copper was off 1.5 percent at $5,827 and lead was off the most with a 2.5 percent decline to $1,815.50. All the metals except nickel set fresh lows yesterday for this pull-back.
This morning, the base metals are up an average of 0.2 percent as consolidation sets in, tin and nickel are off slightly, while the rest are up between 0.3 and 0.4 percent, with copper at $5,842. Volume has been even lighter than normal with 1,950 lots traded against an average last week of 2,278 lots at a similar time of day.
Gold prices are unchanged this morning and the rest of the precious metals are up between 0.1 and 0.3 percent as consolidation sets in. Silver has just managed to find enough support around its support line to avoid another tumble and likewise gold is holding up relatively well – while the PGMs are the weaker cousins.
In Shanghai, the base metals are down by an average of 0.5 percent with nickel leading the drop with a one percent fall to Rmb 97,210, aluminium is unchanged, while the rest are off between 0.2 and 0.9 percent with copper off 0.4 percent at Rmb 42,350. Spot copper in Changjiang is off 0.6 percent at Rmb 42,450-42,630, the backwardation with the futures is at an equivalent of $45 per tonne and the LME/Shanghai copper arb ratio is at 1 to 7.25.
Precious metals in Shanghai are firmer with gold and silver up 0.4 and 0.6 percent respectively.
Equities remain under pressure on the back of concerns over Greece – the Euro Stoxx 50 was down 1.9 percent and the Dow was off 0.6 percent yesterday and the weaker tone has spread to Asia where the Nikkei is off 0.5 percent, the Hang Seng and Kospi are down 0.6 percent and the CSI 300 is off 1.3 percent.
Currencies – the euro is surprisingly robust considering the situation over Greece, it is at 1.1272, so there is still a lot of complacency that an 11th-hour deal will be reached – given the turmoil that could follow any Grexit a deal is likely to be conjured up – but we are surprised the market is not taking out some insurance in case the worst case scenario unfolds. The German bund has lifted off recent lows, which suggests some safe-haven buying, but the dollar index at 94.88 remains fairly weak but that maybe ahead of tomorrow’s FOMC announcement. Sterling is stronger at 1.5604, the aussie is at 0.7750, the yen is weaker at 123.57, as is the yuan at 6.2080 and the rouble is last at 54.40.
The economic agenda is fairly busy with CPI data out of Germany and a barrage of price data out of the UK. In addition, ZEW data is out for Germany and the EU, plus there is EU employment change data and US housing data. The European Court of Justice (ECJ) is also set to rule on whether the ECB’s outright monetary transactions (OMT) are legal. The OMT has been the vehicle the ECB has used to lend money indirectly to individual governments, such has Portugal, Spain and Greece. It would be ironic if the ECJ’s decision ended up being a catalyst rather than Greece.
Sentiment in the base metals has been weaker of late. This has shown up in the weaker performance across the metals and judging by some large moves and spikes lower it seems as though liquidity is thin, but there does seem to be dip buying around. For now, we feel the path of least resistance remains to the downside, especially with so much uncertainty over Greece.
The precious metals are generally weak, gold prices are holding up better than the rest, although silver’s support line is holding for now. The PGMs, however, look washed out with gold prices now at a $91 premium to the platinum price. The lack of support for gold given the Greece situation remains a surprise, it shows how unloved gold is at present, but if push comes to shove, that may change.
| Overnight Performance | ||||
| BST | 06:05 | +/- | +/- % | Lots |
| Cu | 5842 | 15 | 0.3% | 1086 |
| Al | 1722 | 7 | 0.4% | 335 |
| Ni | 12935 | -5 | 0.0% | 237 |
| Zn | 2117.5 | 8 | 0.4% | 198 |
| Pb | 1822 | 6.5 | 0.4% | 70 |
| Sn | 14800 | -30 | -0.2% | 24 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.2% | 1,950 | ||
| Gold | 1185.5 | 0 | 0.0% | |
| Silver | 16.07 | 0.02 | 0.1% | |
| Platinum | 1089.5 | 3.5 | 0.3% | |
| Palladium | 734.9 | 1.9 | 0.3% | |
| Average PM | 0.2% | |||
| SHFE Prices 06:20 BST | Change | % Change | |
| Cu | 42350 | -170 | -0.4% |
| AL | 12725 | 0 | 0.0% |
| Zn | 16135 | -35 | -0.2% |
| Pb | 12780 | -75 | -0.6% |
| Ni | 97210 | -970 | -1.0% |
| Sn | 112400 | -970 | -0.9% |
| Average change (base metals) | -0.5% | ||
| Rebar | 2278 | -15 | -0.7% |
| Au | 240.25 | 1.05 | 0.4% |
| Ag | 3569 | 20 | 0.6% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 7:00am | Germany | German Final CPI m/m | 0.1% | 0.1% | |
| 9:30am | UK | CPI y/y | 0.1% | -0.1% | |
| 9:30am | UK | PPI Input m/m | 0.7% | 0.4% | |
| 9:30am | UK | RPI y/y | 1.1% | 0.9% | |
| 9:30am | UK | Core CPI y/y | 1.0% | 0.8% | |
| 9:30am | UK | HPI y/y | 10.2% | 9.6% | |
| 9:30am | UK | PPI Output m/m | 0.1% | 0.1% | |
| 9:30am | EU | European Court of Justice Ruling on OMT | |||
| 10:00am | Germany | German ZEW Economic Sentiment | 37.5 | 41.9 | |
| 10:00am | EU | ZEW Economic Sentiment | 60.3 | 61.2 | |
| 10:00am | EU | Employment Change q/q | 0.1% | 0.1% | |
| 1:30pm | US | Building Permits | 1.11M | 1.14M | |
| 1:30pm | US | Housing Starts | 1.10M | 1.14M | |
| 2:30pm | UK | CB Leading Index m/m | 0.2% | ||
The post Gold prices hold up, Greece saga could provide more support appeared first on The Bullion Desk.
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