The base metals ended yesterday up an average of 0.8 percent, but copper was weaker, it closed down 0.3 percent at $5,005, having earlier set a fresh low at $4,976. Precious metals were stronger and that improved further after the FOMC minutes suggested the Fed may resist raising rates in Septembe. The complex closed up an average of two percent, led by a 2.8 percent rally in silver, while gold closed up 1.4 percent to $1,133.
This morning, the base metals are mixed with aluminium up 0.5 percent at $1,560, copper is up 0.3 percent at $5,021, lead is up 0.3 percent, zinc is up 0.2 percent, while nickel and tin are off 0.5 and 0.3 percent, respectively. Volume remains light with 3,129 lots.
The precious metals are up an average of 1.2 percent this morning, led by the PGMs that are up an average of 1.6 percent, while silver is up one percent and gold is up 0.5 percent to $1,138.90.
In Shanghai, the base metals are for the most part higher, up between 0.2 percent for tin and 1.4 percent for lead, while copper is up 0.4 percent at Rmb 38,600. The one bucking the trend is nickel that is off 0.8 percent. Spot copper in Changjiang is up 0.1 percent at Rmb 38,650-38,850, the backwardation between spot copper and the October contracts is at an equivalent of $38 per tonne and the LME/Shanghai copper arb is at 7.88, meaning the arb window is open.
Gold and silver are up by 2.2 and 2.8 percent respectively, steel rebar is off 0.2 percent and iron ore dipped to $56.41.
Equities were weaker yesterday with the Euro Stoxx 50 down 1.9 percent and the Dow was off 0.9 percent – concerns over weaker growth, especially in emerging markets, have been weighing on the markets. This has flowed through to Asia this morning where the Nikkei is off 0.6 percent, the Hang Seng is off 1.4 percent, the CSI is off 0.9 percent and the Kospi is down 1.3 percent.
Currencies – the move dovish FOMC minutes has weakened the dollar with the dollar index at 96.42, the euro is firmer at 1.1127, as are sterling at 1.5679 and the yen at 123.96, while the aussie and rouble are weak at 0.7346 and 66.54. The yuan is stable at 6.4405, but other emerging market currencies remain weak, despite the weaker dollar index.
The economic agenda includes German PPI, UK retail sales, CBI industrial orders expectations, US initial jobless claims, existing home sales, the Philly Fed manufacturing index, leading indicators and natural gas storage.
The base metals are likely to see a bit of a relief rally today on the back of the more dovish FOMC minutes and the weaker dollar, but with downward pressure on emerging markets and with sentiment bearish over demand, the rallies are unlikely to last, unless they trigger short-covering rallies.
Gold leads the precious metals higher with prices breaking up through resistance to start a second up leg, platinum is in the same boat and that in turn is tugging silver and palladium behind. We feel gold is finally attracting safe-haven demand as concerns over the fallout from China’s devaluation spreads and the market is waking up to the likelihood that emerging market economies are entering another tough time and that could spread to mature economies.
| Overnight Performance | ||||
| BST | 06:24:43 | +/- | +/- % | Lots |
| Cu | 5021 | 16 | 0.3% | 1188 |
| Al | 1560 | 7 | 0.5% | 268 |
| Ni | 10380 | -55 | -0.5% | 1332 |
| Zn | 1796 | 4 | 0.2% | 296 |
| Pb | 1705 | 5 | 0.3% | 30 |
| Sn | 15380 | -45 | -0.3% | 15 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.1% | 3129 | ||
| Gold | 1138.9 | 5.9 | 0.5% | |
| Silver | 15.42 | 0.15 | 1.0% | |
| Platinum | 1024.1 | 15.1 | 1.5% | |
| Palladium | 618.3 | 10.3 | 1.7% | |
| Average PM | 1.2% | |||
| SHFE Prices 6:24 BST | Change | % Change | |
| Cu | 38600 | 140 | 0.4% |
| AL | 11990 | 50 | 0.4% |
| Zn | 14710 | 90 | 0.6% |
| Pb | 13330 | 185 | 1.4% |
| Ni | 80630 | -640 | -0.8% |
| Sn | 107160 | 180 | 0.2% |
| Average change (base metals) | 236.5 | 0.4% | |
| Rebar | 2033 | -4 | -0.2% |
| Au | 237.1 | 5.15 | 2.2% |
| Ag | 3486 | 94 | 2.8% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 7:00am | Germany | German PPI m/m | -0.1% | -0.1% | |
| 7:45am | US | FOMC Member Williams Speaks | |||
| 9:30am | UK | Retail Sales m/m | 0.4% | -0.2% | |
| Tentative | Spain | Spanish 10-y Bond Auction | 1.98|1.7 | ||
| 11:00am | UK | CBI Industrial Order Expectations | -10 | -10 | |
| 1:30pm | US | Unemployment Claims | 272K | 274K | |
| 3:00pm | US | Existing Home Sales | 5.45M | 5.49M | |
| 3:00pm | US | Philly Fed Manufacturing Index | 6.9 | 5.7 | |
| 3:00pm | US | CB Leading Index m/m | 0.2% | 0.6% | |
| 3:30pm | US | Natural Gas Storage | 60B | 65B | |
The post FOMC minutes lift gold and base metal prices, the latter may not last appeared first on The Bullion Desk.
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