Gold prices resume up trend, silver and PGM prices follow

The base metals closed with average gains of 1.2 percent yesterday, led by a 2.9 percent rally in lead, while copper closed at $4,850.50, up 0.6 percent. The industrial precious metals took off with strong gains averaging 4.9 percent, while gold prices were up 0.8 percent.

This morning the base metals are for the most part firmer, the exception is copper that is off 0.5 percent at $4,827, while the rest are up an average of 0.9 percent, led by a two percent gain in tin to $17,340 – all eyes are on whether it is the next metal to break higher above its March high at $17,525, so far only zinc has recently set fresh highs for the year.

Precious metals are consolidating this morning with average losses of 0.2 percent, with gold at $1,321.80.

In Shanghai, copper is off 0.2 percent at Rmb 37,390, the rest are all higher by an average of 2.1 percent, led by a five percent rise in tin. The fact the metals are stronger when Chinese manufacturing PMI data has slipped further is odd. That said, the fact non-manufacturing PMI climbed to 53.7 from 53.1 is encouraging as it suggests the slow transformation of the economy continues.  Spot copper in Changjiang is off 0.3 percent at Rmb 37,330-37,530, the backwardation is running at an equivalent of around $20 per tonne and the LME/Shanghai copper arb ratio is at 7.75, which should be open for some trading.

In other metals in China, iron ore prices continue to rise, they was up at $55.66 yesterday, up some 10 percent on the week. Steel rebar is up 2.4 percent this morning, silver is up 5.5 percent and gold prices are up 1.4 percent.

Equities were firmer yesterday as the markets for now put Brexit fears behind them, although we would have thought there is little room for complacency on this issue. The Euro Stoxx 50 closed up 1.3 percent, the Dow closed up 1.2 percent and Asia this morning is bullish with the Nikkei up 0.7 percent, the Hang Seng is up 1.8 percent, the CSI 300 is up 0.1 percent, the ASX 200 is up 0.3 percent and the Kospi is up 0.9 percent. It seems central bank dovishness is underpinning market confidence.

The dollar index continues to consolidate, last at 95.95, sterling remains weak at 1.3300, the yen is giving back some of its gains, last at 102.76 and the euro is consolidating too, last at 1.1088. The aussie is last at 0.7458. Generally the currencies do not seem to be prepared to recover as much as equities have.

The economic agenda is busy, Japan has put out some mixed data on CPI, household spending, unemployment, consumer confidence, PMI and the Tankan surveys, see table below for details. China’s official manufacturing PMI came in at 50, after 50.1, the Caixin manufacturing PMI came in at 48.6 after 49.2. Later we get PMI data out across Europe, UK and the US, plus data on Italian and EU unemployment, US construction spending and total vehicle sales.

The metals are looking strong, copper led the latest rebound after the Brexit dip, but copper prices are consolidating this morning, the rest are looking bullish, with even lead starting to play catch-up. The fact iron ore prices and steel prices are stronger in China too, plus industrial precious metals, suggests some concerted move into commodities by investors. Generally, reports from the physical market suggest business is quiet, so we do see this strength in metals as more likely to be fund driven.

Gold prices put in a relatively limited and short-lived correction earlier in the week, but prices are on the rise again and this time the industrial precious metals are following. Given the potential fall-out from Brexit that is causing central banks to be more accommodating, we are not surprised that gold prices are rising, and as with the base metals, funds seem to be getting interested in the all the metals again.

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Source: Bullion Desk News