Gold prices off to a slow start with the US closed for Labor Day

Poor US data on Friday saw the dollar sell-off initially, which gave support to the precious metals, which closed up an average of 1.8 percent on Friday, led by a 3.4 percent gain in silver. The base metals remained on diverging paths on Friday with aluminium leading on the downside with a 1.4 percent drop, copper remained flat while the rest pushed ahead, either into fresh ground, or in the case of nickel with its rebound.

This morning the base metals are little changed, copper is up 0.4 percent at $4,634, lead is up 0.2 percent and tin is off 0.1 percent while the rest are unchanged. Volume has been average with 5,446 lots traded. Precious metals are mixed, the PGMS are up an average of 0.6 percent, while silver has given back some of Friday’s gains, it is off 0.9 percent at $19.25 and gold is off 0.1 percent at $1,325.50.

In Shanghai, the metals are also mixed, aluminium is off 1.3 percent, led is off 0.7 percent, copper and zinc are up 0.1 percent with copper at Rmb 36,580, while nickel and tin are both up 1.2 percent. Spot copper in Changjiang is up 0.1 percent at Rmb 36,600-36,700, the LME / Shanghai copper arb ratio at 7.89 should mean the arb window is open for some traders, while the spread between the spot and November contracts is at an equivalent of some $18 back.

In other metals in China, iron ore futures are up 0.4 percent, steel rebar is up 1.3 percent, gold is up 0.3 percent and silver is  up 2.6 percent. In international markets Brent crude is last at $46.85.

Equities – were firmer on Friday despite the poor US data, which suggest the markets were relieved that a September rate rise by the Fed is less likely. The Euro Stoxx 50 closed up 2.1 percent and the Dow closed up 0.4 percent.  Asia, is stronger too this morning, with the Nikkei up 0.6 percent, the Hang Seng is up 1.7 percent, the CSI 300 is up 0.2 percent and the ASX 200 is up one percent – so again the broader markets like the thought of easier money for longer, even if the underlying signs are of economic headwinds.

In FX, the dollar index initially sold off after the US data on Friday, but it recovered into the close, probably ahead of the long US weekend and was last at 95.63. The yen has been weakening in recent days, last at 103.44, the euro is last at 1.1179, sterling is firmer at 1.3320 as is the aussie at 0.7600. The yuan is weak at 6.6880, but most of the other emerging market currencies we follow have gained ground on the back of the disappointing US data.

The economic agenda is busy mainly with services PMI data – China’s Caixin services PMI continues to trend higher, which is a healthy sign, it is last ta 52.1. In addition to the PMI data, there is EU Sentix investor confidence and EU retail sales – see table below for more details.

Despite mixed data that was out last week, it does look as though the metals have cherry-picked what data they like, which has included the jump in China’s official PMI manufacturing data to 50.4 from 49.9, even though the Caixin manufacturing PMI dropped to 50 from 50.6. The slide in copper and nickel seem to have been arrested, but that is not the case in aluminium, but the other metals have all been showing considerable strength and are underpinned by strong up trends. We now wait to see if the leading metals, zinc, lead and tin can drag the others higher.

Gold prices have been consolidating in a sideways-to-lower pattern, as has palladium, while platinum and silver have seen sharper sell-offs. Since Friday, all have seen some lift. We wait to see if there is follow through buying.

The post Gold prices off to a slow start with the US closed for Labor Day appeared first on The Bullion Desk.

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Source: Bullion Desk News