Industrial metals looking firmer, gold prices consolidate

The base metals put in a very strong performance yesterday with average gains of 2.6 percent, with a 4.4 percent gain in nickel, four percent rise in zinc, while copper closed up 2.5 percent at $4,823.50. Precious metals were mixed, palladium was strong, it climbed 2.5 percent to $569, gold prices fell 0.9 percent to $1,312.70 while silver and platinum were little changed.

This morning, the base metals are mixed, nickel is off 0.8 percent, copper, zinc and tin are off around 0.4 percent, while lead and aluminium are unchanged, Volume has been strong though with 7,039 lots traded as of 06:09 BST, which suggests good two-way interest. Precious metal are firmer, led by a 1.4 percent climb in silver to $18.01, gold prices are up 0.5 percent at $1,319 and the PGMs are firmer too.

In Shanghai, most of the metals are firmer, led by a 2.3 percent rise in zinc and 1.7 percent gain in nickel, while copper is up 0.7 percent at Rmb 37,080. Tin is off 0.9 percent, while lead and aluminium are little changed. Spot copper in Changjiang, is up 0.6 percent at Rmb 37,070-37,370, which has pushed the spread back into a backwardation, equivalent of $28 per tonne, while the LME/Shanghai copper arb ratio has slipped to 7.67.

In other metals in China, iron ore prices on the Dalian Exchange are up 1.1 percent at Rmb 420, steel rebar is down one percent, gold is little changed, while silver is picking up some industrial buying with a 1.6 percent gain. Brent crude prices in international markets are last at $48.73.

Equities recovered yesterday with the Euro Stoxx 50 up 2.3 percent and the Dow closing up 1.6 percent – Asia this morning is upbeat too with the Nikkei up 1.9 percent, the Hang Seng is up 0.5 percent, the CSI 300 is up 0.3 percent, the ASX 200 is up 0.8 percent and the Kospi is up 1.2 percent. The initial Brexit shockwaves seem to be subsiding, but Brexit is likely to have far reaching implications, so we would expect secondary reactions later.

In FX, the dollar index is hanging-up around the 96 level and the currencies are consolidating with the euro trading around 1.1060, sterling is at 1.3320, the aussie is at 0.7388 and the yen remains strong at 102.20. Equities may be recovering but the currencies are in no hurry to correct Friday’s moves. The yuan remains weak at 6.6726, the rupiah and real are strengthening, while the rest of the EM currencies are consolidating.

The economic calendar is busy today, Japan’s retail sales declined 1.9 percent, later we get data on German GfK consumer climate, UK HPI, German and Spanish CPI, UK M4 money supply and data on lending, with US data including personal spending, income and PCE prices, pending home sales, crude oil inventories and the results of its latest bank stress tests – see table below for more details.

The base metals picked-up yesterday with copper and nickel leading the way and with zinc and aluminium rebounding. Lead edged higher, while tin seems to be struggling now. So for now momentum is to the upside and we would not be surprised to see more of that, we see the next main driver coming from Friday’s PMI data, especially from China.

Gold prices are firmer this morning after Monday’s and Tuesday’s consolidation. Given Friday’s spike higher it is not surprising some consolidation is happening as the run up would have given longs a profit-taking opportunity. With equities rebounding, more profit-taking may be seen, but overall we expect dips to remain well supported as there is still a lot of uncertainty around. Silver is rallying, as our the PGMs – the more industrial precious metals may well pick-up some tailwind from the stronger base metals.

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Source: Bullion Desk News