Gold prices struggle to hold on to oil based gains

Precious metals were weak initially but got some lift on the back of the oil agreement, they closed up an average of 0.4 percent, led by a 1.7 percent rise in palladium to $709, platinum and silver closed up 0.1 and 0.2 percent respectively and gold closed off 0.4 percent at $1,322.20, having been as low as $1,308.40. The industrial metals are looking bullish, a last minute agreement to cut oil prices by OPEC has given commodities a boost. Yesterday, the base metals climbed an average of one percent led by a 2.3 percent run up in lead to $2,004 – a new high for the year, zinc was up 1.3 percent, copper was up 0.7 percent, while nickel was little changed at $10,700.

This morning the base metals are up an average of 0.6 percent with most up between 0.5 percent for zinc and 0.8 percent for aluminium and nickel. Copper is up 0.6 percent at $4,858, while tin lags with a one percent gain to $19,950, which is, however, the highest prices have been all year. Volume has been stronger with 7,147 lots traded, with good volume seen in copper, aluminium nickel and zinc, see table below for more details.

Precious metals are up 0.5 percent on average this morning, led by palladium that is up one percent to $716.10, platinum is up 0.5 percent and silver and gold prices are up 0.2 percent with gold at $1,324.90.

In Shanghai, the base metals are all in positive territory, up an average of 1.6 percent, led by a 2.4 percent rise in lead, followed by a two percent rise in tin, while the rest are up between 1.1 for zinc and 1.5 percent for aluminium. Copper is up 1.2 percent at Rmb 37,880. Spot copper in Changjiang is up 1.1 percent at Rmb 37,900-38,100, the spread is at an equivalent of $33 per tonne and the LME/Shanghai copper arb ratio is at 7.80, which getting closer to reopening the arb window.

In other metals in China, iron ore prices are up 3.6 percent in Dalian, steel rebar is up 2.2 percent, silver is up 0.4 percent and gold prices are off 0.1 percent. In international markets, after oil’s five percent rally yesterday Brent crude is last at $48.67.

Equities recovered yesterday with the Euro Stoxx 50 up 0.7 percent and the Dow closed up 0.6 percent. Asia has followed suit with the Nikkei up 1.5 percent, the ASX 200 is up 1.1 percent, the Kospi is up 0.9 percent, the CSI 300 is up 0.6 percent and the Hang Seng is up 0.4 percent.

In FX, the dollar index is flat at 95.46 as are the euro at 1.1227, sterling at 1.3018, the yen is weaker at 101.55 and the aussie is firm at 0.7685. The yuan is flat at 6.6700, the rouble is firmer at 63.01, as is the ringgit, while the rest are relatively flat.

The economic agenda is busy, Japan’s retail sales disappointed by falling 2.1 percent, later data is out on German and Spanish CPI, German unemployment change, UK M4 money supply and lending and a barrage of US data including final GDP, GDP prices, initial jobless claims, goods trade balance, pending home sales and natural gas storage. There are also a host of central bankers speaking today including Bank of Japan’s Haruhiko Kuroda, FOMC members Esther George, Jerome Powell, Fed Chair Janet Yellen and UK’s MPC member Kristin Forbes – see table below for more details.

The base metals are running higher with copper prices gapping higher this morning, which is a particular sign of strength. With lead and tin setting fresh highs and the others running up to challenge resistance levels the market is looking bullish and we would not be surprised to see the run continue. The next focal point is likely to be on Saturday’s release of Chinese manufacturing PMI – any sign that demand may be improving could add fuel to the rally.

Palladium prices have broken above resistance in recent days and now seem to have set off on another up leg, platinum is struggling to follow as it seems more in tune with gold and silver that have got some lift of yesterday’s lows but look far from bullish. Indeed with other metals looking stronger it may be demand for safe havens eases off for a while that could lead to further long liquidation. That said, if funds start buying oil, then there may be a move back into commodity baskets, which could give gold a lift.

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Source: Bullion Desk News