Metals drift ahead of FOMC statement and Monday’s Chinese PMI data

Metals continued to consolidate yesterday on a back-footing, the complex closed down an average of 0.6 percent, led by losses of just over one percent in nickel and zinc, while copper was unchanged at $4,917. Precious metals were mixed, silver was off 0.1 percent, gold prices were up 0.2 percent to $1,319.50 and the PGMs were up between 0.3 and 0.6 percent.

This morning, the base metals are generally lower, with average losses of 0.3 percent, aluminium is unchanged, tin is up slightly, while the rest are off between 0.3 percent for copper ($4,901) and 0.7 percent for nickel ($10,280). Volume has been average at 5,188 lots.

In Shanghai, the base metals are bucking the trend with most metals higher, led by a 2.6 percent rise in tin, lead is up one percent, nickel and copper are up 0.1 percent, with copper at Rmb 37,860, while zinc is off 1.2 percent and aluminium is off 0.4 percent. Spot copper in Changjiang is up 0.4 percent at Rmb 37,820-38,020, the backwardation is at an equivalent of $24 per tonne, while the LME/Shanghai copper arb ratio is at 7.73.

In other markets in China, iron ore prices are up 3.7 percent, steel rebar is up 2.3 percent, while gold and silver prices are off between 0.1 and 0.2 percent. Brent crude oil is last at $44.73.

Equities were mixed with the Euro Stoxx 50 up 0.2 percent yesterday and the Dow closing down 0.1 percent. Asia this morning is mixed with the Nikkei up 1.8 percent, the Hang Seng and ASX 200 are little changed, the CSI 300 is off 2.3 percent and the Kospi is down 0.1 percent.

In FX, the dollar index is firm at 97.28, the euro is weak at 1.0989, sterling continues to consolidate at 1.3131, the yen is weaker at 105.76 and the aussie is weaker at 0.7471. In emerging market currencies, the yuan is firmer at 6.6710 while other currencies are consolidating, although the rouble is weaker at 65.820, no doubt on the back of weaker oil.

The economic calendar will be focused on the FOMC meeting and what spin the Fed puts on the interest rate outlook. Before that, German import prices were weaker, while GfK business climate came between what was expected and the previous number. Later there is data on EU money supply, UK private loans, GDP, index of services and CBI realised sales. US data includes durable goods orders, pending home sales, crude oil inventories and the FOMC statement and interest rate decision – see table below for more details.

The base metals are drifting lower as prices have been turned back by overhead supply and buyers seem reluctant to chase prices higher. This may well be cautiousness ahead of the FOMC statement this evening. Generally, however, we think the metals will continue to consolidate until they see the Chinese manufacturing PMI data, which is due out of Monday. The next direction is likely to come from that.

Precious metals continue to consolidate, the PGMs in high ground as they wait for developments from wage negotiations in South Africa, while gold and silver prices consolidate further off recent highs as they absorb profit-taking/selling. Gold may well take further direction from the FOMC statement, especially if it is at all hawkish. 

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Source: Bullion Desk News