Precious metals were down an average of 0.8 percent on Friday, they are up 0.5 percent this morning, with a 1.2 percent gain in palladium underpinning the complex, gold prices are up 0.1 percent at $1,123.70.
Base metals retreated on Friday as the market was nervous about the reopening of Chinese markets today, as it happens China has opened slightly firmer with the Shanghai metals up around 0.5 percent on average, compared with where they closed on Wednesday.
This morning the base metals on the LME are for the most part firmer, up by an average of 0.3 percent, with copper at $5,123.50 compared with $5,109 at Friday’s close, while tin is off 0.7 percent at $14,900. Volume is average with 3,629 lots traded – see table below for more details.
In Shanghai, the base metals are up an average of 0.5 percent with nickel up the most with a 1.3 percent gain, lead is up 0.7 percent and copper is up 0.5 percent at Rmb 39,270. Spot copper in Changjiang is up 0.6 percent at Rmb 39,350-39,480, the backwardation with the futures is at an equivalent of $32/tonne, while the LME/Shanghai arb window is open with the ratio at 7.67.
On the other metals in Shanghai, gold is down 1.4 percent, silver is down 0.2 percent and steel rebar is off 1.8 percent.
Equities were nervous on Friday with the Euro Stoxx 50 closing down 2.8 percent and the Dow closed off 1.7 percent, but Asia is mixed this morning with the Nikkei off 0.1 percent, the Hang Seng is off 0.5 percent, the ASX 200 is down 0.4 percent, the Kospi is off 0.2 percent and China has been up and down,last off 1.6 percent.
Currencies – the dollar remains firm with the dollar index at 96.37, as is the yen at 119.35, the euro is weak at 1.1129, sterling is falling, last at 1.5192, as are the aussie at 0.6922, the rouble at 68.54 and the yuan at 6.4634. The rupiah, real, rand and rupee are all falling further and extending their weakness, which suggests these emerging market countries have not yet got over the shock following China’s currency depreciation and that bodes ill for global growth and market stability.
Economic data out today shows Japan’s leading indicators ease to 104.9 percent, from 106.5 percent and German industrial production climbed 0.7 percent, lower than the 1.2 percent expected, but up from the 0.9 percent drop previously. Later we get a data reading on German Sentix investor confidence. The US markets are closed today for Labor Day.
The base metals are for the most part consolidating recent rebound gains and look well placed to push higher if Chinese markets see some stability. We are concerned that while all eyes are on China, the market is no paying enough attention to other emerging markets and the sell-off in their currencies looks alarming. As such, if the rallies in the metals do run further we would be wary of trusting them too much.
The precious metals are consolidating, they remain vulnerable as the downward trends dominate, but as they are also oversold the rebounds of late could still run further. We also feel that the contagion from China, especially in emerging markets, will underpin a pick-up in physical gold in the region, which may underpin support for gold prices at these low price levels.
| BST | 06:49 | +/- | +/- % | Lots |
| Cu | 5,128 | 18.5 | 0.4% | 1876 |
| Al | 1614.5 | 4.5 | 0.3% | 358 |
| Ni | 9900 | 10 | 0.1% | 495 |
| Zn | 1799.5 | 12.5 | 0.7% | 654 |
| Pb | 1673.5 | 9.5 | 0.6% | 242 |
| Sn | 14900 | -105 | -0.7% | 4 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.2% | 3,629 | ||
| Gold | 1123.2 | 1.3 | 0.1% | |
| Silver | 14.6 | 0.06 | 0.4% | |
| Platinum | 990 | 3 | 0.3% | |
| Palladium | 578.5 | 7.5 | 1.3% | |
| Average PM | 0.5% | |||
| SHFE Prices 6:49 BST | Change | % Change | |
| Cu | 39270 | 210 | 0.5% |
| AL | 11855 | 15 | 0.1% |
| Zn | 14795 | 55 | 0.4% |
| Pb | 13490 | 90 | 0.7% |
| Ni | 77110 | 960 | 1.3% |
| Sn | 101800 | -110 | -0.1% |
| Average change (base metals) | 236.5 | 0.5% | |
| Rebar | 1922 | -35 | -1.8% |
| Au | 232.8 | -3.4 | -1.4% |
| Ag | 3328 | -6 | -0.2% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 6:00am | JPY | Leading Indicators | 104.9% | 104.9% | 106.5% |
| 7:00am | EUR | German Industrial Production m/m | 0.7% | 1.2% | -0.9% |
| 9:30am | EUR | Sentix Investor Confidence | 16.2 | 18.4 | |
| All Day | USD | Bank Holiday | |||
The post Gold prices consolidate as strong dollar a headwind appeared first on The Bullion Desk.
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