Base and precious metals finished the Wednesday session in positive territory amid easing market tension surrounding the Brexit result, which incentivised a return of capital.
Copper for September delivery on the Comex division of the New York Mercantile Exchange edged up 1.05 cents to close at $2.1860 per pound. Trade has ranged from $2.1580 to $2.1805.
Comex Gold for August settlement gained $9.0 to finish at $1,326.90 per ounce. Trade ranged from $1,313.30 to $1,331.0.
Building on yesterday’s bounce-back, financial markets continued to stabilise today following the initial shock from the UK referendum.
Investors are reassessing the potential European and global impact from Brexit vote, but after panic selling, markets are starting to recalibrate due to likelihood that the process will occur over several years.
Since British citizens voted to leave the European Union after 43 years, the island nation is struggling with economic turmoil. The major rating agencies cut their credit ratings and changed the country’s outlook to negative while the pound suffered its single biggest intraday loss on its way to the lowest point since 1985.
Yesterday, outgoing Prime Minister David Cameron addressed the other 27 heads of states and told EU officials it must reform its current freedom of movement rules if it is to maintain close economic ties with Britain.
The restructuring of current trade and immigration policies is not expected to start in earnest until the UK parliament formally announces the two-year exit from the single market.
“Copper looks stronger than perhaps it should – there is not much tightness, stocks are still rising, the physical market is quiet and there is fear that the aftermath of Brexit could lead to weaker global growth,” William Adams, Head of Research at FastMarkets, said.
“For now we feel there is upward momentum but Friday’s Chinese PMI data will probably set the tone thereafter,” he added.
For gold, the impact of slower global growth could lead to additional capital stimlus and even a return of near-zero rates from the US Federal Reserve.
In paper holdings, inflows into exchange-traded-funds tracked by FastMarkets continued overnight with a 5.23 tonne increase to bring the total amount to 2,002 tonnes – the highest since July 17, 2013.
With prices consolidating around $1,325 per ounce due to to stabilisation in the financial markets, the persistent inflows show investors are attracted to gold’s safe-haven characteristics
“Analysts expect fresh Central bank ‘easing’ post Brexit which would be positive for gold,” Sucden Financial said.
In data, US personal spending in May was in line with expectations at 0.4 percent but personal income at 0.2 percent was below the forecast of 0.3 percent. The core PCE price index in May came was 0.2 percent as expected.
Pending home sales month-over-month in May dropped -3.7 percent, a major miss from the -0.9 percent estimate. Crude oil inventories between June 17-24 dipped 4.1 billion barrels, more than the 2.3 billion economists estimated.
Turning to US markets, the Dow Jones industrial average and S&P were up 1.5 percent and 1.6 percent respectively, while the dollar softened 0.5 percent to $1.1112 against the euro.
As for other commodities, light sweet crude (WTI) oil futures increased 35 cents or 0.7 percent to $48.20 per barrel while the most actively traded silver gold contract rose $52.20 to $18.365 per ounce – the highest mark since January 2015.
(Editing by Tom Jennemann)
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Source: Bullion Desk News
