Gold prices consolidate, palladium prices look weak

The precious metals were mixed yesterday, spot gold, silver and platinum prices were little changed, while palladium prices dropped 1.5 percent to $609 per oz. The base metals pressed ahead with their stronger tone on Thursday, October 27, with three-month prices closing up an average of 0.4 percent, led by a 1.1 percent rise in nickel prices to $10,340 per tonne, copper prices closed up 0.7 percent at $4,788 per tonne, while lead was the only metal to see prices slip, they closed down 0.8 percent at $2,050 per tonne.

This morning, base metals three-month prices are up an average of 0.5 percent with gains across the board, with zinc, lead and nickel prices up 0.6-0.7 percent, aluminium prices are up 0.4 percent, tin prices 0.3 percent and copper prices once again lag with a 0.1 percent again to $4,795 per tonne. Volume has been higher than average with 7,449 lots traded as of 06:39 BST.

Spot precious metals prices are also upbeat with a 0.5 percent average gain, PGM prices are up 0.6 percent, silver prices are up 0.4 percent and gold prices are up 0.2 percent at $1,270.70 per oz.

In Shanghai, the December base metals prices are up an average of 1.4 percent, led by a 2.7 percent gain in aluminium prices, lead prices are unchanged, while the rest are up between 1.2 percent for copper (Rmb 38,280 per tonne) and tin prices and 1.6 percent for nickel prices. Spot copper prices in Changjiang are up 0.9 percent at Rmb 38,250-38,450 per tonne, the backwardation between spot and the December copper contracts has narrowed to an equivalent of $25 per tonne, while the LME/Shanghai copper arbitrage ratio is steady at 1:7.99, which should be open for some trading.

In other metals in China, iron ore January futures are up four percent on the Dalian Commodity Exchange, January steel rebar prices on SHFE are up 0.8 percent, while gold and silver prices are up around 0.3 percent. The surge in iron ore and steel is now looking more speculative again, but until recently it had looked to be driven by restocking. In international markets, spot Brent crude oil prices are up 0.4 percent at $50.48 per barrel.

Equities were mixed yesterday, the Euro Stoxx 50 closed up 0.1 percent, the Dow closed down 0.2 percent and bonds were lower as it looked as if more central banks might move away from further monetary policy easing. In Asia this morning, equities are mixed, the Nikkei is up 0.6 percent, the Hang Seng is down 0.7 percent, the CSI 300 is up 0.1 percent, the ASX 200 is off 0.2 percent and the Kospi is down 0.3 percent.

In FX, the dollar index remains strong at 98.91, but prices are consolidating below Tuesday’s high at 99.12, the euro is getting some lift at 1.0905, sterling is weak at 1.2160 as are the yen at 105.40 and the aussie at 0.7577. The yuan continues to weaken, it was recently at 6.7793 and most of the other emerging market currencies we follow are consolidating, but perhaps with a slightly weaker bias.

The economic agenda is busy, there was a host of Japanese data out, most of it showed some improvement even if it was not strong, see table below. French preliminary GDP climbed to 0.2 percent, later there is data on German, French and Spanish CPI, French consumer spending and Spanish GDP. US data includes advanced GDP, GDP prices and revised University of Michigan consumer sentiment and inflation expectations – see table below for more details.

Base metals prices are rallying again, aluminium prices have cleared a resistance area, tin prices have set a fresh high this morning and the complex is looking more bullish as it approaches London Metals Week. We wait to see what sentiment is like when the metals’ world meets next week. For now we remain quietly bullish.

The precious metals are for the most part consolidating, gold and silver prices are doing well to hold up in the face of the stronger dollar, platinum prices are rebounding having become quite oversold in recent months, while palladium prices are struggling and are looking weaker. With considerable uncertainty ahead with the US election, the FOMC meetings in November and December and with an OPEC meeting in November too, we would not be surprised if demand for safe-havens remained solid. On top of that, the lower gold prices of late are likely to attract a pick-up in physical interest.

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Source: Bullion Desk News