The metals continued to get some lift yesterday having recently tested lower to varying degrees, but all finding support. The complex closed on average up of 1.8 percent yesterday, with tin up 4.4 percent – it has once again found strong underlying support, as did zinc (+2.5 percent) and aluminium (+ 2.3 percent), all three had set fresh lows for the year earlier in the week, as had nickel. Copper closed 0.4 percent higher at $5,783, while lead was up 1.4 percent. US and EU manufacturing PMI data was supportive.
Palladium was the star performer yesterday, prices closed up 3.4 percent at $694, platinum was up 0.5 percent, while gold and silver struggled, they closed off 0.5 and 0.8 percent respectively, with a gold price of $1,168.20.
Base metals are up an average of 0.3 percent this morning as the stronger tone from yesterday has rolled over, nickel leads with a one percent gain to $12,105, lead is up 0.5 percent, copper is up 0.3 percent at $5,798, zinc is up 0.2 percent, aluminium is little changed and tin is down 0.4 percent. Volume on the LME remains light at 2,220 lots.
Palladium once again is leading the precious metals this morning, it is up 1.1 percent at $701.40, the rest are hardly changed with the gold price at $1,168.
In Shanghai, the base metals are up an average of 1.6 percent with strong gains across the board – lead is up 2.4 percent, zinc and tin two percent, nickel 1.5 percent, aluminium 1.1 percent and copper 0.8 percent at Rmb 42,280. Spot copper in Changjiang is up 0.5 percent at Rmb 42,750-42,850, the backwardation is strong at an equivalent of $92 per tonne and the LME/Shanghai copper arb ratio is at 1 to 7.35.
Iron ore prices have slipped back below $60, last around $59.45 and steel rebar in Shanghai earlier dropped a record low since trading began in 2009, before rebounding – prices are down 19 percent year-to-date.
Gold and silver prices in Shanghai are weaker by around 0.4 percent.
Equities got some relief yesterday as it looked as though Greece might become more flexible – the Euro Stoxx 50 rallied 2.1 percent and the Dow closed up 0.8 percent. The firmer tone has spread to most parts of Asia where the Nikkei is up 1.1 percent, the Hang Seng is up 0.3 percent and the Kospi is up 0.4 percent – China’s CSI 300 remains very volatile, but is last off 1.1 percent.
The economic agenda is busy, especially as the US employment report has been brought forward a day as tomorrow is a US holiday. Data out today includes UK house price index, Spanish unemployment change, EU PPI, there are bond auctions in France and Spain. US data includes initial jobless claims, the US monthly employment reports, factory orders, natural gas storage and at 16:10 BST ECB President Mario Draghi is talking – see table below for more details.
The base metals seem to be attracting some buying after the recent dips and downward spikes – copper has been affected the least, but it avoided most of the sell-off, while the likes of zinc are rebounding strongly. PMI data has generally been supportive, but dollar strength may become a headwind. The market seems to be expecting a strong employment report that would likely increase expectations for a September Fed rate increase, which might become a double edge sword for the markets. For now we would not be surprised to see the rebounds edge higher.
Gold is suffering, prices are testing support, the late-May low was $1,162.60, the low this morning has been $1,164.40 so far, and the support line joining November and March lows is at $1,152. Silver is pressing lower too, while the PGMs are holding up better and palladium is bucking the trend by rallying. The PGMs are oversold, so a rebound is not surprising, but for gold and silver the combination of investors not looking for gold as a safe-haven and a stronger dollar seems to be weighing on prices.
| Overnight Performance | ||||
| BST | 06:26 | +/- | +/- % | Lots |
| Cu | 5798 | 15 | 0.3% | 835 |
| Al | 1729 | 0.5 | 0.0% | 420 |
| Ni | 12105 | 115 | 1.0% | 530 |
| Zn | 2053 | 4.5 | 0.2% | 300 |
| Pb | 1794 | 8.5 | 0.5% | 127 |
| Sn | 14425 | -60 | -0.4% | 8 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.3% | 2,220 | ||
| Gold | 1168 | -0.2 | 0.0% | |
| Silver | 15.57 | 0.02 | 0.1% | |
| Platinum | 1080.9 | -0.1 | 0.0% | |
| Palladium | 701.4 | 7.4 | 1.1% | |
| Average PM | 0.3% | |||
| SHFE Prices 06:27 BST | Change | % Change | |
| Cu | 42280 | 330 | 0.8% |
| AL | 12675 | 140 | 1.1% |
| Zn | 15535 | 305 | 2.0% |
| Pb | 12965 | 305 | 2.4% |
| Ni | 89790 | 1340 | 1.5% |
| Sn | 109900 | 2170 | 2.0% |
| Average change (base metals) | 1.6% | ||
| Rebar | 2138 | 8 | 0.4% |
| Au | 236.45 | -0.9 | -0.4% |
| Ag | 3432 | -12 | -0.3% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:50am | Japan | Monetary Base y/y | 34.2% | 36.2% | 35.6% |
| 4:45am | Japan | 10-y Bond Auction | 0.51|2.6 | 0.45|2.7 | |
| 7:00am | UK | Nationwide HPI m/m | 0.6% | 0.3% | |
| 8:00am | Spain | Spanish Unemployment Change | -124.3K | -118.0K | |
| 9:30am | UK | Construction PMI | 56.6 | 55.9 | |
| 10:00am | EU | PPI m/m | 0.1% | -0.1% | |
| Tentative | France | French 10-y Bond Auction | 1.28|1.8 | ||
| Tentative | Spain | Spanish 10-y Bond Auction | 2.35|1.9 | ||
| 12:30pm | EU | ECB Monetary Policy Meeting Accounts | |||
| 1:30pm | US | Non-Farm Employment Change | 231K | 280K | |
| 1:30pm | US | Unemployment Rate | 5.4% | 5.5% | |
| 1:30pm | US | Average Hourly Earnings m/m | 0.2% | 0.3% | |
| 1:30pm | US | Unemployment Claims | 270K | 271K | |
| 3:00pm | US | Factory Orders m/m | -0.5% | -0.4% | |
| 3:30pm | US | Natural Gas Storage | 74B | 75B | |
| 4:10pm | EU | ECB President Draghi Speaks | |||
The post Base metals consolidate, but dollar strength a headwind, gold price falls appeared first on The Bullion Desk.
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