Gold prices continue to consolidate

The precious metals were also mixed with silver prices closing down 1.2 percent at $15.99, while gold prices were up 0.2 percent at $1,215.20, platinum was up 0.5 percent and palladium was up 2.1 percent. The base metals remain in consolidation mode, the corrections seen in May have for the most part halted for now, but rebounds are struggling to hold on to gains. It appears that there is both bargain hunting and selling into strength going on. Yesterday copper and lead ended the day lower by 0.7 and 0.4 percent respectively, aluminium was unchanged, nickel and zinc were up one percent and tin was up 0.8 percent. Copper closed at $4,654.

This morning, the base metals are down across the board by an average of 0.7 percent, led by a 1.1 percent fall in copper prices to $4,602, zinc is off 0.9 percent at $1,905, tin is off 0.7 percent, lead and nickel are off 0.5 percent and aluminium is off 0.3 percent. Volume has been higher than average with 7,454 lots traded. Higher volume and concerted weakness do not bode well. Disappointing Chinese and Japanese PMI data are weighing on sentiment. Official manufacturing PMI was unchanged at 50.1, the Caixin manufacturing PMI drifted to 49.2 from 49.4. Japan’s manufacturing PMI edged up to 47.7 from 47.6, but is still well below the 50 divide. So whereas the data could have been worse, it is disappointing that it did not show a rebound.

Precious metals are little changed with gold prices at $1,215.50, silver at $15.99, platinum is up 0.1 percent and palladium is off 0.3 percent.

In Shanghai, the base metals are also off across the board, down by an average of one percent, led by a 1.4 percent decline in copper to Rmb 35,300, tin is off 1.3 percent and aluminium is off 1.1 percent. Spot copper in Changjiang is down one percent at Rmb 35,420-35,520. The spread between spot and July is at an equivalent of $33 backwardation, while the LME/Shanghai copper arb ratio is at 7.68.

In other metals in China, iron ore prices were last around $50.15, steel rebar is off 2.4 percent, gold prices are up 0.6 percent and silver is off 0.1 percent. In international markets, Brent crude oil is off 0.1 percent at $49.44.

Equities showed some weakness yesterday with the Euro Stoxx 50 down 0.9 percent and the Dow closed off 0.5 percent yesterday. In Asia this morning, the Nikkei is down 1.3 percent, the Hang Seng is off 0.2 percent, the ASX 200 is down 0.9 percent, the Kospi is up 0.1 percent and CSI 300 is up 0.2 percent.

In FX – the dollar index is pausing in high ground, last at 95.72, the euro is hovering above recent lows, last at 1.1127, sterling is weaker at 1.4487, the yen is firmer at 109.85 as is the aussie at 0.7275. In emerging market currencies (EM), the yuan continues to weaken, last at 6.5975, the weakest since February, the rupiah and ringgit are also weaker, while the other EM currencies we follow are holding flat.

The economic data is focused on PMI data, we have seen Asia’s, later we get Europe’s and US data, plus there is a host of UK lending data, US construction spending, total vehicle sales and the beige book – see table below for more details.

This morning the metals are starting on a back-footing, which all seems part of the consolidation after the recent price weakness and given June is going to be a nervous time for the financial markets with the FOMC meeting and Brexit vote, we should expect volatility. Some metals are looking stronger than others – copper, nickel and lead are looking the more vulnerable ones, aluminium and tin are in mid-ground, while zinc is looking the one most eager to head higher. With a lot of important data out today, tomorrow and on Friday with the US employment report, trading may well remain choppy.

The precious metals remain in correction mode, there is some dip buying around, but follow through buying is absent, palladium is the one attempting to rebound the most but it is a thin market. For now, all but all remain vulnerable, but we expect dips to attract pent-up demand.

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Source: Bullion Desk News