Some buying evident after recent corrections

The metals put in a stronger performance on Friday with average gains of 1.1 percent led by a 2.5 percent gain in tin, lead and zinc were up around 1.4 percent, while copper closed up 0.5 percent at $4,687. Conversely the precious metals fell, dropping an average of one percent, with gold off 0.6 percent at $1,212.80.

This morning, the base metals are mixed, nickel is up 1.4 percent at $8,505, tin is unchanged, while the rest are down between 0.1 percent for zinc and 0.6 percent for lead and aluminium. Volume has been above average with 6,082 lots traded.

The precious metals are also mixed, silver is off 0.5 percent at $16.11, while gold is unchanged at $1,212.70 and the PGMs are stronger led by a 2.3 percent gain in palladium and platinum is up 0.8 percent. Latest CFTC data showed long liquidation and short selling in gold and silver.

In Shanghai, the base metals are up an average of 0.6 percent, nickel is up 2.3 percent, tin is up 0.8 percent, lead is off 0.5 percent, while aluminium and zinc are up 0.5 percent and copper is up 0.2 percent at Rmb 35,830.  Spot copper in Changjiang is up 0.1 percent at Rmb 35,790-35,890. The LME/Shanghai copper arb ratio is at 7.65.

In other metals in China, iron ore prices were last around $50.30, steel rebar is up 0.1 percent, gold prices are up 0.8 percent and silver is up 0.2 percent. In international markets, Brent crude is up 0.4 percent at $50.27.

Equities were firmer on Friday with the Euro Stoxx 50 up 0.4 percent and the Dow closed up 0.3 percent higher, while Asia is generally stronger with the Nikkei up one percent, the Hang Seng is up 1.3 percent, the ASX200 is off 0.5 percent, the CSI 300 is up 2.9 percent and the Kospi is up 0.8 percent. This morning the CSI 300 suffered a ten percent spike lower, but the plunge and rebound all happened within a minute.

The dollar index is firm at 95.69, as are sterling at 1.4668 and the aussie at 0.7244, the euro is looking vulnerable at 1.1130 and the yen is weak at 111.25. In emerging market currencies, the yuan is weaker at 6.5890, as is the ringgit, while the others are consolidating.

The economic calendar is busy, data out already showed a mixed picture on Japan, while Germany’s retail sales declined 0.9 percent. Later we get French CPI, German unemployment, Italian and EU unemployment rates, EU money supply, CPI and private loans, Italian CPI, with US data including personal income, spending, PCE price index, HPI, Chicago PMI and consumer confidence.  See table below for more details.

The base metals are looking firmer and seem to have put the recent weakness behind them. If they continue to do so then it will look like the weakness seen in May was more about profit-taking than the start of another down leg. We expect the markets will be quite nervous in June with the FOMC meeting and with the Brexit vote, but if the FOMC thinks the US and global markets are strong enough to absorb another US interest rate rise then that could be a sign of confidence.

The precious metals continued to weaken yesterday with gold prices reaching a low of $1,199.90 and silver reaching $15.90, but the lower prices have attracted some buying. like the base metals, we see the pullback in the precious metals as profit-taking and expect dip buying, which seems to be unfolding today.  

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Source: Bullion Desk News