Yesterday the base metals gave back most of Tuesday’s gains, closing down an average of 2.1 percent with zinc falling the most with a 3.2 percent to drop to $1,682, tin was down 2.8 percent to $13,700 and copper was off 2.7 percent at $4,920. Silver led most of the precious metals lower with a 3.9 percent drop to $14.11, gold closed down 1.7 percent at $1,123.50, palladium was down 0.7 percent and platinum bucked the trend with a 0.4 percent rise.
This morning the base metals are up an average of one percent with gains of between 0.7 percent for tin and aluminium; lead and zinc are both up 0.9 percent, nickel is up 1.2 percent and copper leads with a 1.5 percent rise to $4,994.50. Volume remains higher than average with 6,710 lots traded.
Precious metals are up an average of 0.7 percent with platinum up 0.9 percent, palladium is up 0.8 percent, silver is up 0.7 percent and gold is up 0.3 percent at $1,127. Platinum’s discount to gold is $137.10.
In Shanghai, the base metals are mixed with tin off 1.3 percent, copper is down 1.1 percent at Rmb 38,810, zinc is off 0.6 percent and aluminium is off 0.4 percent, lead is up 0.1 percent and nickel is up 0.5 percent. Since peaking in May, October nickel has dropped 36 percent from Rmb 111,810 to Rmb 71,180.
Spot copper in Changjiang, is off 0.9 percent at Rmb 38,900-39,050, the backwardation with the futures is at an equivalent of $37 per tonne, while the LME/Shanghai copper arb window remains open, with the ratio at 7.9 for the September contract.
Gold and silver in Shanghai are weaker with silver off three percent and gold off 1.1 percent – in other metals, steel rebar up 0.7 percent and iron ore prices are steady at $53.70.
Equities were mixed yesterday with the Euro Stoxx 50 off 1.5 percent, but the mood changed later in the day with the Dow ending the day with a 3.95 percent rise. This has flowed through to Asian markets where the Nikkei is up 0.9 percent, the Hang Seng is up 2.2 percent, the Kospi is up one percent, the ASX 200 is up 1.2 percent and the CSI 300 is up two percent. So for now it seems equities are getting a respite and that may reduce the fear factor in the metals.
Currencies are correcting too with the dollar index rallying, last at 95.08, Monday’s low was 92.56. The euro, sterling and yen are weaker, last at 1.1346, 1.5500, 119.90 respectively, the aussie is treading water at 0.7113, while the weaker currencies of late are firmer with the rouble at 68.65, after a low of 71.62, and the real, rupee, rupiah and rand are off recent lows, although not by much. The yuan, however, remains volatile, last at 6.4793. Given, how oversold the metals have become, we doubt the firmer dollar will get in the way of a rally, should one get going.
Data out today includes German import prices, UK house prices, EU money supply and private loans, while US data includes preliminary GDP, initial jobless claims, pending home sales, national gas storage and it is the start of the Jackson Hole Symposium, when central bankers and leading market players put their heads together – Fed Chair Janet Yellen is apparently not attending this year.
So with the metals starting higher as Europe opens, another attempt to rebound is underway, in the recent past these have faltered fairly quickly – the last time copper had two consecutive up candles was July 8-9. That said, with US equities up yesterday and that flowing through to Asia this morning and with European pre-market equities looking stronger too, it may be that a relief rally does get going in the industrial metals and then it will be a question of whether that prompts more short-covering. Of late, although there has been some short-covering, it has tended to be matched by long liquidation.
With other markets getting some lift and with the dollar rebounding, gold may struggle for a while, but as we expect only a short counter trend up move in other markets, so the dip in gold may well find support as there may be more market anguish ahead. The more industrial precious metals are likely to get some loft along with the base metals.
| Overnight Performance | ||||
| BST | 06:14:20 | +/- | +/- % | Lots |
| Cu | 4994.5 | 74.5 | 1.5% | 3859 |
| Al | 1542.5 | 10.5 | 0.7% | 527 |
| Ni | 9650 | 115 | 1.2% | 740 |
| Zn | 1697.5 | 15.5 | 0.9% | 1390 |
| Pb | 1659 | 14 | 0.9% | 178 |
| Sn | 13800 | 100 | 0.7% | 16 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 1.0% | 6710 | ||
| Gold | 1127 | 3.5 | 0.3% | |
| Silver | 14.21 | 0.1 | 0.7% | |
| Platinum | 989.9 | 8.9 | 0.9% | |
| Palladium | 536.4 | 4.4 | 0.8% | |
| Average PM | 0.7% | |||
| SHFE Prices 6:15 BST | Change | % Change | |
| Cu | 38810 | -430 | -1.1% |
| AL | 11855 | -45 | -0.4% |
| Zn | 14415 | -85 | -0.6% |
| Pb | 13310 | 10 | 0.1% |
| Ni | 75600 | 410 | 0.5% |
| Sn | 99900 | -1270 | -1.3% |
| Average change (base metals) | 236.5 | -0.4% | |
| Rebar | 1967 | 14 | 0.7% |
| Au | 234.6 | -2.6 | -1.1% |
| Ag | 3266 | -100 | -3.0% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 7:00am | Germany | German Import Prices m/m | -0.3% | -0.5% | |
| 7:00am | UK | Nationwide HPI m/m | 0.4% | 0.4% | |
| 9:00am | EU | M3 Money Supply y/y | 4.9% | 5.0% | |
| 9:00am | EU | Private Loans y/y | 0.7% | 0.6% | |
| 1:30pm | US | Prelim GDP q/q | 3.2% | 2.3% | |
| 1:30pm | US | Unemployment Claims | 275K | 277K | |
| 1:30pm | US | Prelim GDP Price Index q/q | 2.0% | 2.0% | |
| 3:00pm | US | Pending Home Sales m/m | 1.3% | -1.8% | |
| 3:30pm | US | Natural Gas Storage | 59B | 53B | |
| Day 1 | ALL | Jackson Hole Symposium | |||
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