Markets are tumbling this morning on the back of further concerns over China that has seen China’s CSI 300 equity index drop 8.6 percent. The base metals down an average of 2.2 percent led by a 4.1 percent decline in nickel to $9,770, copper, lead and zinc are down around 2.5 percent with copper at $4,932, aluminium is off one percent and tin is holding up relatively well, it is off 0.1 percent. Volume has been high with 12,875 lots traded as of 06:07 BST.
The precious metals are mixed, gold is little changed at $1,159.40, while palladium is off two percent at $589.20, silver is down 0.7 percent at $15.18 and platinum off 0.1 percent. Gold and other safe-havens like the yen and US treasuries are once again acting as safe havens.
In Shanghai, the base metals are down off an average of 2.9 percent, led by a five percent drop, limit down, in nickel, while tin is off 3.7 percent, zinc is down 2.8 percent, while lead and copper are off around 2.2 percent with copper at Rmb 38,170 and aluminium is down 1.5 percent at Rmb 11,860.
Spot copper in Changjiang is down 1.7 percent at Rmb 38,350-38,550, the backwardation with the October futures is at an equivalent of around $60 per tonne and the LME/Shanghai copper arb ratio is at 7.89, which means the arb window remains open.
Gold and silver are mixed with silver off 1.9 percent at Rmb 3,446, while gold is up 0.2 percent at Rmb 241, steel rebar is down five percent (limit down).
Equities – Friday saw weakness with the Dow closing down 3.1 percent and the Euro Stoxx 50 closed off 3.2 percent and the weakness has flowed through and accelerated in Asia where the Nikkei is off 4.2 percent, the Hang Seng is down 4.8 percent, the Kospi is off 2.9 percent and pre-market indications are for the Dax to be down around four percent – so it looks as though the equity rout is set to circumnavigate the globe again.
Currencies – the turmoil in markets is making it less likely the Fed will initiate a rate increase in September and that is weighing on the dollar with the dollar index at 94.45. Consequently the euro and yen are climbing with the euro at 1.1450 and yen at 121.00, sterling is flat at 1.5677, the aussie is weak at 0.7235, as is the rouble at 69.78. The yuan is weaker again at 6.4690, as are other emerging market currencies with the rupee at 66.50, the rupiah at 14,040 and the rand gapped down to 13.67, last at 13.50, but the real although weak has not extended recent losses, last at 3.5017.
There is little data out today, but FOMC Dennis Lockhart is speaking this evening.
The base metals are for the most part still falling; the exception is tin, while all the rest apart from nickel, are extending their lows, with nickel prices falling but still above the spike low from two weeks ago. Copper has extended its low to $4,903, aluminium has been as low as $1,524.50, while lead and zinc have reached $1,663 and $1,711. The metals look increasingly oversold, but it remains a buyers’ market. While prices are falling buyers are probably holding to the sidelines but when something emerges to turn the tide then we expect a snap-back rally on the back of bargain hunting and short-covering.
Gold has rallied well, it is up 8.4 percent from the July lows, the general sell-off this morning seems to be capping gold prices for now, so some consolidation seems likely, but we would expect dips to be well supported and there may well be more short-covering. Last week’s CFTC data showed short-covering, but the gross short position remains elevated. Silver is struggling to keep up with gold as its industrial attributes weigh on it, platinum is behaving like silver, while palladium remains in low ground.
| Overnight Performance | ||||
| BST | 06:07:41 | +/- | +/- % | Lots |
| Cu | 4932 | -131 | -2.6% | 6495 |
| Al | 1530 | -15 | -1.0% | 2164 |
| Ni | 9770 | -415 | -4.1% | 1687 |
| Zn | 1722 | -43 | -2.4% | 1744 |
| Pb | 1670 | -41 | -2.4% | 760 |
| Sn | 14860 | -10 | -0.1% | 25 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -2.1% | 12875 | ||
| Gold | 1159.4 | -1.1 | -0.1% | |
| Silver | 15.18 | -0.11 | -0.7% | |
| Platinum | 1017.4 | -0.6 | -0.1% | |
| Palladium | 589.2 | -11.8 | -2.0% | |
| Average PM | -0.7% | |||
| SHFE Prices 6:09 BST | Change | % Change | |
| Cu | 38170 | -850 | -2.2% |
| AL | 11860 | -180 | -1.5% |
| Zn | 14415 | -410 | -2.8% |
| Pb | 13085 | -285 | -2.1% |
| Ni | 76800 | -4050 | -5.0% |
| Sn | 102320 | -3910 | -3.7% |
| Average change (base metals) | 236.5 | -2.9% | |
| Rebar | 1930 | -102 | -5.0% |
| Au | 241 | 0.6 | 0.2% |
| Ag | 3446 | -67 | -1.9% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 8:55pm | USD | FOMC Member Lockhart Speaks | |||
The post Gold attracts safe-haven buying as Asian rout extends appeared first on The Bullion Desk.
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