Precious metals were mixed yesterday, prices tried to head higher, but better than expected services PMI data out of the US put a halt to that. The gold price ended the day at $1,085.20, off 0.2 percent.
Base metals closed down an average of one percent yesterday. Led by a 1.6 percent fall in tin as it looks as though export delays from Indonesia will not last too long. Copper closed off 0.6 percent at $5,191.
Precious metals are up 0.5 percent on average this morning, led by a 1.4 percent rebound in palladium to $599.40, while the gold price is unchanged at $1,085.20.
This morning the base metals are firmer by an average of 0.4 percent, led by a 0.9 percent rise in nickel to $10,920, while copper is up 0.4 percent at $5,210. Volume is weak at 2,740 lots.
In Shanghai, the base metals are mixed with nickel up 0.2 percent and copper up 0.1 percent at Rmb 38,150, while the others are down between 0.5 percent for aluminium and tin and 0.2 percent for lead. Spot copper in Changjiang is up 0.3 percent at Rmb 38,550-38,680, the backwardation with the futures is narrower at an equivalent of $85 per tonne, while the LME/Shanghai copper arb ratio is at 7.41, which means the arb window is around parity for nearby dates.
Steel rebar is down 0.5 percent – the market expects a pick-up in production this month before government ordered cutbacks in September in order to reduce air pollution in Beijing ahead of a Second World War parade – this may impact nickel and zinc too. Iron ore prices edged higher to $56.80. Gold and silver prices in Shanghai are easier with gold off 0.4 percent and silver off 0.1 percent.
Equities – yesterday the Euro Stoxx 50 closed up 1.6 percent helped by generally positive data, while the Dow was down 0.1 percent. This morning in Asia, the markets are mixed with the Nikkei up 0.7 percent, the CSI 300 is up 0.4 percent, while the Kospi is off 0.7 percent and the Hang Seng is off 0.4 percent.
Currencies – the dollar seem to be on hold ahead of tomorrow’s employment report with the dollar index holding in high ground at 97.77, the euro is at 1.0918, sterling is firm at 1.5615, while the yen is weaker at 124.76, as is the aussie at 0.7330 and the rouble last at 62.80.
The economic agenda is busy, Japan’s leading indicators were slightly stronger and German factory orders climbed 2 percent, which was up from expectations for a 0.4 percent rise. Data out later includes EU retail PMI, UK manufacturing and industrial production, there is a barrage of Bank of England data, rate decisions and statement, while US data includes the jobless claims and natural gas storage numbers – see table below for more details.
The base metals remain on a back footing with prices holding above recent lows, but only just. The markets have stopped falling for now, but rebounds are fragile and gains are hard to hold on to, which suggests buyers feel in little need to chase prices higher. We would say there is risk of short-covering rallies, but only if sustained rallies get going and there does not seem much appetite for that. The dollar may provide a catalyst for that, but we would only expect dollar weakness if tomorrows US employment report disappoints and creates doubt about a September rate increase.
A strong report could trigger further weakness for commodities – that is if they have not already fully discounted a September rate rise.
The gold price are hovering above lows as are the other precious metals and they look set to head lower. It looks as though only the slim possibility of a poor US employment report is holding prices back. Like the base metals, should the dollar weaken then that could prompt short-covering rallies as the fund shorts are holding extended positions.
| Overnight Performance | ||||
| BST | 06:11:35 | +/- | +/- % | Lots |
| Cu | 5210 | 19 | 0.4% | 1280 |
| Al | 1599 | 3 | 0.2% | 274 |
| Ni | 10920 | 100 | 0.9% | 505 |
| Zn | 1902.5 | 9 | 0.5% | 603 |
| Pb | 1719.5 | 4.5 | 0.3% | 72 |
| Sn | 15425 | -25 | -0.2% | 6 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.3% | 2740 | ||
| Gold | 1085.2 | 0 | 0.0% | |
| Silver | 14.59 | 0.01 | 0.1% | |
| Platinum | 951.1 | 3.1 | 0.3% | |
| Palladium | 599.4 | 8.4 | 1.4% | |
| Average PM | 0.5% | |||
| SHFE Prices 6:26 BST | Change | % Change | |
| Cu | 38150 | 20 | 0.1% |
| AL | 12070 | -55 | -0.5% |
| Zn | 14675 | -55 | -0.4% |
| Pb | 12910 | -20 | -0.2% |
| Ni | 81260 | 200 | 0.2% |
| Sn | 107410 | -490 | -0.5% |
| Average change (base metals) | 236.5 | -0.2% | |
| Rebar | 2082 | -11 | -0.5% |
| Au | 218.6 | -0.85 | -0.4% |
| Ag | 3205 | -1 | 0.0% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 6:00am | Japan | Leading Indicators | 107.2% | 106.9% | 106.2% |
| 7:00am | Germany | German Factory Orders m/m | 2.0% | 0.4% | -0.2% |
| 9:10am | EU | Retail PMI | 50.40 | ||
| 9:30am | UK | Manufacturing Production m/m | 0.2% | -0.6% | |
| 9:30am | UK | Industrial Production m/m | 0.1% | 0.4% | |
| 12:00pm | UK | BOE Inflation Report | |||
| 12:00pm | UK | MPC Official Bank Rate Votes | 2-0-7 | 0-0-9 | |
| 12:00pm | UK | Official Bank Rate | 0.5% | 0.5% | |
| 12:00pm | UK | Asset Purchase Facility | 375B | 375B | |
| 12:00pm | UK | MPC Asset Purchase Facility Votes | 0-0-9 | 0-0-9 | |
| Tentative | UK | MPC Rate Statement | |||
| 12:30pm | US | Challenger Job Cuts y/y | 42.7% | ||
| 12:45pm | UK | BOE Gov Carney Speaks | |||
| 1:30pm | US | Unemployment Claims | 273K | 267K | |
| 3:00pm | UK | NIESR GDP Estimate | 0.7% | ||
| 3:30pm | US | Natural Gas Storage | 46B | 52B | |
The post Gold price on a back footing with little buying interest around appeared first on The Bullion Desk.
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