The base metals put in a mixed performance with nickel and tin the main gainers yesterday after recent weakness, they closed up around one percent, lead was up 0.6 percent, while zinc, aluminium and copper were lower between 0.1 and 0.4 percent with copper off the least at $5,746.50. The main factor behind the weakness, where weakness is being seen, is focused on China.
The precious metals pulled back further ahead of the FOMC meeting as the market expected the Fed to focus on the September date, but after the meeting the Fed’s more open stance weakened the dollar and that propped up bullion prices with gold closing up 0.2 percent at $1,184.30, silver closed up 0.4 percent at $16.07, while platinum was unchanged and palladium was off 1.5 percent at $720 – it set a low at $718, a level not seen since February 2014.
This morning, the base metals are up 0.8 percent on average with copper up 1.1 percent at $5,808, tin is up one percent, aluminium is up 0.9 percent, nickel and lead are up 0.7 percent and is zinc up 0.5 percent. It would seem that the weaker dollar is the main driver, although a slower fall in China’s house prices is being seen as a sign for optimism.
Precious metals are firmer this morning with average gains of 0.5 percent with silver up 0.9 percent at $16.21, while the rest are up between 0.3 and 0.5 percent with gold at $1,188.40. Again, the weaker dollar seems to be the main driver, while the escalation in the Greek saga may have underpinned gold prices of late, but they are not driving prices higher, at least not yet.
In Shanghai, the base metals are mixed with average gains of 0.6 percent led by a 1.6 percent gain in lead, with nickel up 1.2 percent, copper is up 0.8 percent at Rmb 42,180, tin is up 0.7 percent, while aluminium and zinc are off 0.3 and 0.6 percent respectively. Spot copper in Changjiang is up 0.7 percent at Rmb 42,250-42,550 and the LME/Shanghai copper arb ratio is at 1 to 7.25.
Precious metals in Shanghai are stronger by around 0.6 percent and steel rebar is up 0.8 percent.
Equities – jitters over Greece weighed on European stocks with the Euro Stoxx 50 off 0.7 percent yesterday, but the Fed’s stance saw the Dow close up 0.2 percent. Asia is weaker with the Nikkei off 1.1 percent, the Hang Seng is little changed, the CSI 300 is down 1.5 percent – they market is worried about a correction and the Kospi is up 0.3 percent.
Currencies – Fed Chair Janet Yellen’s dovish comments pulled the dollar index lower, it has dropped to 94.01 and currencies are up on the back of that, even the euro, which is last at 1.1355. Sterling is soaring, last at 1.5820, the yen is firmer at 122.94, as is the rouble at 53.53, the aussie is at 0.7747, while the yuan is easier at 6.2085. Whether the euro can hold on to these gains given crunch time seems to be approaching over Greece remains to be seen.
The economic agenda is busy, data out already includes Chinese foreign direct investment that declined to 10.1 percent, from a previous reading of 10.4 percent and house prices that fell 5.7 percent in May, after a 6.1 percent decline in April. Data out later includes UK retail sales, the level of EU targeted LTRO, there is a Spanish 10-year bond auction, a Eurogroup meeting and US data includes CPI, initial jobless claims, the Philly Fed manufacturing index, leading indicators and natural gas storage – see table below for more details.
Gold has tended to hold up quite well despite the weakness in other metals, both precious and base, and that we put down to some safe-haven buying on the back of Greece, but only light interest. We would not be surprised to see this increase as time runs out for an agreement. Silver has held around its support line and is getting some lift off that today and the weaker dollar in no doubt helping. The PGMs look extremely oversold.
The base metals have been weak and under pressure but this morning the weaker dollar is prompting some scale down buying. Given the extent of the downward moves in recent weeks the markets are looking oversold in the short term, so some rebounds could be expected – even if they turn out to be short-lived. We expect the bearish mood to prevail, but there may well be some short term strength.
| Overnight Performance | ||||
| BST | 06:42 | +/- | +/- % | Lots |
| Cu | 5808 | 61.5 | 1.1% | 2122 |
| Al | 1715 | 14.5 | 0.9% | 1130 |
| Ni | 12890 | 90 | 0.7% | 517 |
| Zn | 2097 | 10 | 0.5% | 645 |
| Pb | 1822 | 13.5 | 0.7% | 386 |
| Sn | 14895 | 145 | 1.0% | 9 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.8% | 4,809 | ||
| Gold | 1188.4 | 4.1 | 0.3% | |
| Silver | 16.21 | 0.14 | 0.9% | |
| Platinum | 1082.2 | 4.2 | 0.4% | |
| Palladium | 723.9 | 3.9 | 0.5% | |
| Average PM | 0.5% | |||
| SHFE Prices 07:08 BST | Change | % Change | |
| Cu | 42180 | 320 | 0.8% |
| AL | 12715 | -35 | -0.3% |
| Zn | 15910 | -95 | -0.6% |
| Pb | 12950 | 210 | 1.6% |
| Ni | 96660 | 1120 | 1.2% |
| Sn | 112500 | 820 | 0.7% |
| Average change (base metals) | 0.6% | ||
| Rebar | 2248 | 17 | 0.8% |
| Au | 240.35 | 1.5 | 0.6% |
| Ag | 3575 | 26 | 0.7% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:05am | GBP | BOE Quarterly Bulletin | |||
| 3:02am | CNY | Foreign Direct Investment ytd/y | 10.1% | 10.4% | |
| 9:00am | EUR | ECB Economic Bulletin | |||
| 9:30am | GBP | Retail Sales m/m | 0.0% | 1.2% | |
| 10:15am | EUR | Targeted LTRO | 60.0B | 97.8B | |
| Tentative | EUR | Spanish 10-y Bond Auction | 1.88|3.0 | ||
| All Day | EUR | Eurogroup Meetings | |||
| 1:30pm | USD | CPI m/m | 0.5% | 0.1% | |
| 1:30pm | USD | Core CPI m/m | 0.2% | 0.3% | |
| 1:30pm | USD | Unemployment Claims | 278K | 279K | |
| 1:30pm | USD | Current Account | -116B | -113B | |
| 3:00pm | USD | Philly Fed Manufacturing Index | 8.1 | 6.7 | |
| 3:00pm | USD | CB Leading Index m/m | 0.4% | 0.7% | |
| 3:30pm | USD | Natural Gas Storage | 95B | 111B | |
The post Metals get some lift as dollar weakens post FOMC comments appeared first on The Bullion Desk.
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