Precious metals were mixed yesterday, gold prices were under pressure as other markets looked brighter, but the more industrial precious metals climbed with silver prices up 0.5 percent, platinum up one percent and palladium up 1.7 percent. This morning, the precious metals are down across the board, gold and silver prices are off 0.1 percent, platinum is down 0.3 percent and palladium, after yesterday’s strong performance, is off 0.8 percent.
The base metals closed up an average of one percent yesterday led by tin and nickel that were up 3.4 and 1.1 percent respectively, while copper closed up 0.9 percent at $5,114.50 and lead bucked the trend with a 0.5 percent decline to $1,717.
This morning, the base metals are up an average of 0.3 percent, with copper up 0.7 percent at $5,148.50, nickel and lead are up 0.6 percent, while tin has eased 0.3 percent. Needless to say with China on holiday today and tomorrow for WWII Victory Parade, trading has been quiet with just 877 lots traded as of 06:13 BST.
Equities staged a recovery yesterday, helped by knowing China is closed for the rest of the week, the Euro Stoxx 50 closed up 0.3 percent and the Dow closed up 1.8 percent as it managed to shake off disappointing data including ADP employment numbers and factory orders – poor data may well steady the hand of the FOMC. In Asia, China and Hong Kong are closed, the Nikkei is up 1.4 percent, the ASX 200 is down 1.1 percent and the Kospi is up 0.1 percent. The markets may have two days of respite, while Chinese markets are closed, as long as the government does not take advantage of the closed markets to announce further monetary policy changes – if they do it may well prove to be bullish.
Currencies – the dollar index is fairly firm at 95.91 – the key will be what the market expects of the Fed – given the unrest in the markets we would be surprised if they moved in September, unless it is just a token to show the markets they, the FOMC, are off the ‘mark’, even if they do not then follow on for a long time. The euro is weaker at 1.1224 – poor PPI means the ECB may have to do more to stoke inflation given weak commodity prices, the pound is weakening, last at 1.5292, as is the aussie at 0.7011 – as a barometer to confidence over China the aussie continues to bode ill as does the continuing weakness in the real, rand and rupiah, while the rupee is managing o consolidate. The yen is in mid-ground at 120.43.
The economic agenda is busy – across Europe we get services PMI and given these are generally services economies this data will be important to see how the recoveries are holding up; ditto with EU retail sales. There is also the ECB’s interest rate decision and press conference. US data includes Challenger job cuts, the trade balance, initial jobless claims, two sets of services PMI and natural gas storage data – see table below. Without China to set the tone, metals markets are likely to focus on EU and US data for change.
As we have said in recent days, the base metals look well placed to extend the rallies that got going a week ago and then paused earlier in this week. All the metals’ prices, except nickel and tin, are perched just below recent rebound highs in what could be mini-bull-flags. Nickel is playing catch up, while tin is already pushing ahead. Any rallies are likely to remain fragile as who knows what Monday will bring from the Chinese markets when the reopen.
Precious metals, gold prices are struggling to make headway and given the respite in other markets that is not surprising, but although gold prices may not be rising, they seem well supported. Indeed, judging by the continuing weakness in the emerging market currencies we follow, we feel gold prices may still have further to move on the upside in time. Silver prices continues to watch from below, but is fairly steady and the PGMs are looking more like the base metals in that they are paused, albeit nervously, below recent resistance. On balance, we feel the industrial precious metals are likely to take a cue from the base metals should base metals rally.
| Overnight Performance | ||||
| BST | 06:10:05 | +/- | +/- % | Lots |
| Cu | 5148.5 | 34 | 0.7% | 439 |
| Al | 1600 | 0 | 0.0% | 171 |
| Ni | 9900 | 55 | 0.6% | 122 |
| Zn | 1828 | 8 | 0.4% | 108 |
| Pb | 1726.5 | 9.5 | 0.6% | 36 |
| Sn | 15150 | -50 | -0.3% | 1 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.3% | 877 | ||
| Gold | 1132.3 | -0.6 | -0.1% | |
| Silver | 14.65 | -0.01 | -0.1% | |
| Platinum | 1008.6 | -3.4 | -0.3% | |
| Palladium | 577.5 | -4.5 | -0.8% | |
| Average PM | -0.3% | |||
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| All Day | CNY | Bank Holiday | |||
| 8:15am | EUR | Spanish Services PMI | 59.3 | 59.7 | |
| 8:45am | EUR | Italian Services PMI | 53.1 | 52 | |
| 8:50am | EUR | French Final Services PMI | 51.8 | 51.8 | |
| 8:55am | EUR | German Final Services PMI | 53.6 | 53.6 | |
| 9:00am | EUR | Final Services PMI | 54.3 | 54.3 | |
| 9:30am | GBP | Services PMI | 57.6 | 57.4 | |
| 10:00am | EUR | Retail Sales m/m | 0.6% | -0.6% | |
| 12:30pm | USD | Challenger Job Cuts y/y | 1.254 | ||
| 12:45pm | EUR | Minimum Bid Rate | 0.05% | 0.05% | |
| 1:30pm | EUR | ECB Press Conference | |||
| 1:30pm | USD | Trade Balance | -43.2B | -43.8B | |
| 1:30pm | USD | Unemployment Claims | 273K | 271K | |
| 2:45pm | USD | Final Services PMI | 55.2 | 55.2 | |
| 3:00pm | USD | ISM Non-Manufacturing PMI | 58.3 | 60.3 | |
| 3:30pm | USD | Natural Gas Storage | 88B | 69B | |
The post Gold prices paused, but underlying concerns over contagion from China prevail appeared first on The Bullion Desk.
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