Metals mixed, but zinc is leading the advance party

• US total vehicle sales – Actual 17.4 m,  Forecast 17.2 M,  Previous  17.4 M

The base metals continued to consolidate yesterday with average gains of 0.4 percent, but within the complex the performance was mixed with copper off 0.9 percent at $4,606, tin was down 0.6 percent and nickel was off 0.2 percent.  Zinc led the advance, pushing up to a new 2016 high at $1,977, it closed up 2.3 percent at $1,968, lead and aluminium were up 0.9 percent. Precious metals pushed lower yesterday, but gold and silver closed little changed with gold prices at $1,215.20 and the PGMs were off around 0.5 percent.

This morning the base metals remain mixed, zinc is up one percent at $1,987, lead is up 0.6 percent, and aluminium is up 0.2 percent, while copper, nickel and tin are all off slightly with copper at $4,600. Volume has been above average with 6,054 lots traded as of 05:47 BST.

The precious metals are consolidating in low ground this morning with gold and silver prices little changed with gold prices at $1,215.10, platinum is off 0.4 percent and palladium is up 0.2 percent. With some of the industrial metal looking stronger we wait to see if the PGMs follow.

In Shanghai, the base metals are for the most part stronger, led by a 3.3 percent gain in zinc, aluminium is up 0.9 percent, lead is up 0.7 percent and tin is up 0.1 percent, while copper bucks the trend with a 0.6 percent decline to Rmb 35,250. Spot copper in Changjiang is up 0.1 percent at Rmb 35,350-35,550. The spread with the futures is at an equivalent of $45 per tonnes back and the LME /Shanghai copper arb ratio is at 7.66.

In other metals in China, iron ore prices fell to $48.40 as the correction continues, steel rebar is up 0.2 percent this morning, gold prices are off 0.1 percent and silver is up 0.2 percent.

Equities saw the Euro Stoxx 50 fall 0.8 percent while the Dow was little changed yesterday and Asia this morning is generally negative with the Nikkei down 2.1 percent, the CSI 300 is off 0.3 percent, the ASX 200 is down 0.8 percent, while the Hang Seng and Kospi are up 0.2 percent.

In FX, the yen is stronger, last at 109.20, the euro is strengthening, last at 1.1205, sterling is consolidating at 1.4440, as is the aussie at 0.7245, while the dollar index at 95.25 is weaker. Yesterday, the Fed Beige Book reported just modest economic growth across most of its districts, which suggests the Fed need not be in any great hurry, although it noted a tighter job market that could lead to higher wages.

Emerging market (EM) currencies are consolidating after recent weaker trends, the exception is the ringgit that is continuing to weaken.

Late yesterday saw better than expected US vehicle sales, which have held up well in April and May after March’s weaker number – this should be good for metal demand. Today’s data has seen mixed numbers out of Japan, European data includes: Spanish unemployment change, UK construction PMI, EU PPI, the ECB rate decision/press conference and US data has Challenger job cuts, ADP non-farm employment change, initial jobless claims, crude oil and natural gas inventories. In addition, FOMC member Jerome Powell and Bank of England Governor Mark Carney are speaking – see table below for more details.

The base metals are quite diverse with the market bullish for zinc – aluminium and lead are now following, while  tin has rebounded off its spike low, nickel is consolidating and copper is struggling to hold on to the rebound gains seen last week.  Our overall view is that the weakness in May was generally a correction to the bull markets seen in January-to May and that after consolidation prices would resume their upward trend, or at least hold up in relatively high ground.  Some of the metals are following that path, other have yet too.

The precious metals are weak, corrections in gold and silver prices were expected given how extended the gross long fund positions had become, we see this unfolding now but we do expect dips to attract buying, but it may still be too early to get bullish again. 

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Source: Bullion Desk News