LME metals down, gold prices up as UK vote shocks markets

The early results from the UK referendum are a shock to global markets, yesterday’s trading performance suggested the ‘remain’ vote would likely win, but that has changed this morning, with gold prices up and industrial metals down.

There is a risk on contagion as the impact is widespread. As of 04:28 BST, the yen is at 101.50, but has been as low as 99, a 6.6 percent drop, therefore developments in the UK could cause contagion in that it could prompt intervention from central banks. Relatively speaking, the base metals are not as affected as othr markets, base metals are down 2.1 percent, with copper off 2.2 percent at $4,668, while cable was off nine percent, pre-market FTSE was indicated down 7.5 percent, but gold prices are up 4 percent. It should be noted volume on the LME is extremely high at 19,102 lots as of 04:28 BST.

In Shanghai the base metals are down an average of 0.9 percent, with copper off 0.6 percent at Rmb 36,030, while gold prices are up 3.3 percent.

Equities have been taken by surprise, yesterday they were upbeat with the Euro Stoxx 50 up two percent and the Dow was up 1.3 percent, but that has all changed with the Nikkei off 6.6 percent, the Hang Seng is off 4.7 percent, the ASX 200 is down 3.3 percent, the CSI 300 is down one percent and the Kospi is down 4.2 percent.

In FX-the dollar index has shot higher on safe-haven buying, last at 96.10, sterling has dropped to a low of 1.3300, the lowest since 1985, the euro has dropped to 1.0912, the aussie has fallen to 0.7335, but the yen has had a massive rally to 99. In emerging market currencies, the yuan has fallen to 6.6295 and most others have had a knee-jerk reaction to the downside as the dollar has strengthened and as risk-off has hit the markets.

Today’s markets will be fully focused on the aftermath of the UK vote, but other data out includes: Japan’s SPPI, German Ifo business climate, Italian retail sales, UK mortgage approvals, EU long term refinancing option, US durable goods orders and revised University of Michigan consumer sentiment and inflation expectations.

The base metals have in recent days run higher, which has provided a cushion that is helping to absorb this morning’s sell-offs. As such, although prices are down on the day the moves have not been excessive, although they have weakened further as the morning has progressed. As of 05:25 BST prices are down an average of three percent, this after a 2.1 percent drop an hour earlier. Nickel is off the most, it is down 4.4 percent at $8,805, while copper is off 3.2 percent at $4,633.

The precious metals are mixed gold, silver and platinum were up an average 2.8 percent as of 04:28 BST, they are now up 3.3 percent as of 05:27 BST. Palladium, however, is following the industrial metals more, it is off two percent at $553.

This mornings moves may well have been extremely volatile as markets tend to be thin in the early hours, we would expect more volatility as Europe opens but as it does, there is also likely to be more direction and damage limitation from politicians. 

The post LME metals down, gold prices up as UK vote shocks markets appeared first on The Bullion Desk.

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Source: Bullion Desk News