Precious metals closed down an average of 0.7 percent yesterday, palladium was off 1.7 percent at $572, platinum and gold prices were off 0.7 percent at $1,005 and $1,124.90, while silver bucked the trend with a 0.3 percent gain to $14.70.
This morning, the precious metals remain mixed, gold prices are little changed, silver is up 0.3 percent, platinum is off 0.6 percent at $999 and palladium is off 0.1 percent at $571.20.
The base metals generally continued their rally yesterday with average gains of 0.5 percent, the exceptions were lead and zinc that declined 0.5 percent. Copper was the best performer with a 2.1 percent gain.
This morning, the base metals are weaker across the board with average losses of 0.6 percent, led by a 1.3 percent fall in tin to $15,005, aluminium is unchanged at $1,625, while the rest are off between 0.3 percent for lead and 0.7 percent for zinc, with copper down 0.6 percent at 5,190. Volume is light at 2,716 lots, but with China closed that is not too bad.
Equities – there was a rally yesterday after ECB President remained dovish saying asset purchases are intended to run until the end of September 2016, or beyond, if necessary – adding the ‘beyond, if necessary’ was seen as being prepared to keep monetary policy easier for longer if need be. The Euro Stoxx 50 climbed 2.2 percent and the Dow, closed up 0.1 percent, having earlier been up 1.2 percent, but the rally faded as traders focused on today’s US employment report. Markets in Asia are weaker with the Nikkei off 2.1 percent, weighed down by a stronger yen as it picks-up safe-haven buying, the Hang Seng is off 0.8 percent, the CSI 300 remains closed, the Kospi is off 1.5 percent, but the ASX 200 is up 0.3 percent, helped by stronger metals prices and a weaker currency.
Currencies – the dollar index continued to climb yesterday reaching a high of 96.61, last at 96.26 and up from a low of 92.56 on August 24 – given the rally in the dollar, metals are doing well to be rallying, which highlights the short-covering element, we think. The euro is weaker at 1.1129, as are sterling at 1.5247, the aussie at 0.6980, while the rouble is consolidating at 66.90 and the yen is at 119.42. The rand and rupiah continue to fall, while the real and rupee are consolidating, albeit in low ground.
The economic agenda will be focused on the US employment report where 215,000 non-farm jobs are expected to have been created, with the unemployment rate expected to ease to 5.2 percent. Data out already showed Japan’s average cash earnings climbed 0.6 percent, which was below what was expected and German factory orders dropped 1.4 percent, having been expected to decline 0.5 percent. Later we get EU retail sales PMI, there is a G20 meeting today and FOMC member Jeffrey Lacker is speaking.
The base metals’ rebounds generally seem to be continuing, but prices are pausing this morning and with the US employment report out later and with Chinese markets reopening on Monday, we feel the markets will remain nervous and further consolidation will be seen today. Today’s US employment report is likely to impact the dollar the most and equities, but with the metals largely ignoring the stronger dollar in recent weeks, we do not expect the employment report to have much of an impact on the metals – we think their focus will be on how China reopens on Monday.
Gold prices continue to consolidate, we expect it will react to the employment report as the data will tweak the market’s view about likely FOMC decisions. We also note that the rebound in the dollar has acted as a headwind for gold since gold prices peaked on August 24. The PGMs are consolidating and silver is trying to edge higher, but in volatile trading. The fall in the gold/silver ratio to 75.9 from 79.80, shows silver is playing catch-up with gold to some extent.
| BST | 06:55 | +/- | +/- % | Lots |
| Cu | 5,190 | -30 | -0.6% | 1383 |
| Al | 1625 | 0 | 0.0% | 377 |
| Ni | 9900 | -45 | -0.5% | 294 |
| Zn | 1797.5 | -13.5 | -0.7% | 406 |
| Pb | 1702.5 | -5.5 | -0.3% | 249 |
| Sn | 15005 | -195 | -1.3% | 7 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -0.6% | 2,716 | ||
| Gold | 1124.7 | -0.2 | 0.0% | |
| Silver | 14.75 | 0.05 | 0.3% | |
| Platinum | 999 | -6 | -0.6% | |
| Palladium | 571.2 | -0.8 | -0.1% | |
| Average PM | -0.1% | |||
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 2:30am | Japan | Average Cash Earnings y/y | 0.6% | 2.1% | -2.5% |
| 7:00am | Germany | German Factory Orders m/m | -1.4% | -0.5% | 1.8% |
| 9:10am | EU | Retail PMI | 54.2 | ||
| Day 1 | All | G20 Meetings | |||
| 1:10pm | US | FOMC Member Lacker Speaks | |||
| 1:30pm | US | Average Hourly Earnings m/m | 0.2% | 0.2% | |
| 1:30pm | US | Non-Farm Employment Change | 215K | 215K | |
| 1:30pm | US | Unemployment Rate | 5.2% | 5.3% | |
The post Gold prices face headwinds from stronger dollar – waiting for US employment report appeared first on The Bullion Desk.
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