METALS MORNING VIEW: Base metals prices edge up in high ground

After some consolidation at the end of last week, further strength has returned to the base metals this week, with copper prices pushing the envelope on the upside, while the rest of the complex has also seen prices head back towards recent highs.

This morning, Wednesday August 30, base metals prices on the London Metal Exchange are up by an average of 0.4%, led by a 1% rise in zinc, while three-month copper prices are up 0.4% at $6,831 per tonne. Volume has been average with 7,842 lots traded as of 06:55 BST.

This morning’s continued strength follows a strong day on Tuesday when the complex closed up with average gains of 1.5%, led by a 2.6% gain in lead and a 2.3% rise in aluminium.

Precious metals prices are consolidating this morning after strong gains seen on Monday; gold and silver prices are little changed with spot gold at $1,310.80 per oz, while the PGMs are up by between 0.1% and 0.2%. This follows a day of price correction for bullion on Tuesday with gold and silver prices both down by 0.6%, while the PGMs were both up by 0.4%.

On the Shanghai Futures Exchange (SHFE) this morning, lead prices are in the driving seat with gains of 2.4%, copper, aluminium and zinc prices are up between by 0.2% and 0.5%, with copper at 52,800 yuan ($8,013) per tonne, while nickel prices are off by 0.8% and tin prices are down by 0.6%. Spot copper prices in Changjiang are off by 0.2% at 52,440-52,620 yuan per tonne and the LME/Shanghai copper arb ratio is weaker at 7.32.

Steel rebar prices on the Shanghai Futures Exchange are weaker, down by 1.6%, gold prices are off by 0.3% and silver prices are up by 0.1%, while January 2018 iron ore prices on the Dalian Commodity Exchange are down by 1.7% at 553.50 yuan per tonne.

In international markets, spot Brent crude oil prices are off 0.1% at $51.88 per barrel and the yield on US ten-year treasuries is weaker at 2.15% as is the German ten-year bund yield at 0.36% – both a sign that haven demand is strong, as indeed gold portrays.

Equities in Asia are mainly stronger this morning – gains are being seen on the Hang Seng (0.93%), the Nikkei (0.74%), the Kospi (0.22%), the CSI 300 (0.1%), while the ASX 200 is little changed. In the USA, the Dow Jones closed up 0.26% at 21,865.37 and in Europe, the Euro Stoxx 50 closed down 0.96% at 3,388.22.

The dollar index at 92.48 is rebounding after Tuesday’s drop to 91.62, the weakness on the back of falling bond yields, which in turn appear to be a factor of the impact of Hurricane Harvey and the escalation in tension over North Korea. Any rebound that gathers momentum could check the rallies in the metals. Conversely, the euro at 1.1955 has pulled back from Tuesday’s 1.2070 high, sterling at 1.2915 is under pressure again, the yen at 110.11 is weaker, while the Australian dollar at 0.7965 is stronger.

Emerging market currencies are for the most part flat, although the yuan is strong at 6.5911 – the strongest it has been since June 2016 – this suggests a vote of confidence in the economy and how the government is handling it.

On the economic agenda, Japan’s retail sales growth dipped to 1.9%, after 2.2%, but it beat the expected 1%. Later there is data on German and Spanish CPI, UK data on lending, US ADP non-farm pay rolls, preliminary GDP, GDP prices and crude oil inventories. In addition, US Federal Open Market Committee member Jerome Powell is speaking.

Copper prices have had a strong run to the upside and although we remain bullish, the current up leg is looking quite stretched now, so some consolidation seems likely, especially if the dollar rebounds. The rest of the metals have been consolidating in high ground for some time, so they may be ready to push higher and catch up with copper’s lead. Although all prices, with the possible exception of tin, are in high ground so we should expect scale-up forward selling and profiting-taking to make the upside going more of a struggle. This in turn increases the risk of corrections – key will be how well the dips are supported. On balance, we remain bullish for the base metals complex, but would not be surprised to see some consolidation.

Gold prices had been challenging the high ground below $1,300 per oz but had struggled to break higher, but the escalation in tension over North Korea provided the catalyst and the break higher looks bullish medium term. Short term there may need to be some consolidation and perhaps a test of the breakout level around $1,300 per oz. Silver is following gold’s lead, but is not looking as bullish, palladium prices continue to look stronger, but prices are already very high, while platinum prices are looking stronger and remain relatively weak to those of gold and palladium.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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METALS MORNING VIEW: Jackson Hole likely to dictate direction

The rallies in the base metals on the London Metal Exchange have generally continued in early trading today, Friday August 25, with prices up by an average of 0.4%, with aluminium, zinc, lead and copper prices up between 0.6% to 0.8%, while nickel is off 0.5% and tin is little changed. Three-month copper prices are at $6,740 per tonne.

This morning’s stronger tone follows a broadly weaker performance on Thursday when copper prices rallied 1.7%, while lead prices slipped 1.2%, aluminium and nickel were off by around 0.4% and zinc and tin were little changed.

Precious metals prices are up across the board this morning with gains averaging 0.3%, silver leads the gains with a 0.4% rise to $16.98 per oz, the platinum group metals (PGM) are both up by 0.3% and gold prices are up by 0.1% at $1,286.60 per oz.

On the Shanghai Futures Exchange (SHFE) this morning, lead prices are once again bucking the trend, they are down by 0.2%, while the rest are up between 0.1% for tin and 1.7% for copper, which was recently quoted at 52,630 yuan ($7,896) per tonne. Spot copper prices in Changjiang are up by 1.4% at 52,220-52,400 yuan per tonne and the LME/Shanghai copper arb ratio is weaker at 7.81 (down from 7.83 on Wednesday).

Steel rebar and iron ore prices in China continue to rebound after Wednesday’s weakness; SHFE rebar prices are up by 3% and iron ore prices on the Dalian Commodity Exchange are up by 0.3% at 585.50 yuan per tonne on the January 2018 contract, while gold and silver prices on SHFE are off by 0.2% and 0.3% respectively.

In international markets, spot Brent crude oil prices are up by 0.8% at $52.53 per barrel, concerns over hurricane Harvey in the Gulf of Mexico have lifted oil prices. The yield on US ten-year treasuries is firmer at 2.19% and the German ten-year bund yield is little changed at 0.38%.

Equities in Asia are mainly stronger this morning – gains are being seen on the CSI 300 (1.6%), the Hang Seng Index (+1.1%), the Nikkei (+0.5%) and the Kospi (+0.1%), while the ASX 200 is little changed. In the USA, the Dow Jones closed down 0.1% at 21,783.40 and in Europe, the Euro Stoxx 50 closed up 0.2% at 3,444.73.

The dollar index at 93.41 is consolidating above low ground, with the market waiting to hear what messages emerge for the central bankers’ meeting at Jackson Hole. The euro at 1.1780 and the Australian dollar at 0.7913 are also consolidating, while the yen at 109.67 is slightly weaker as is sterling at 1.2801. The yuan at 6.642 is firm, while the other emerging market currencies we follow are little changed.

On the economic agenda, Japan’s CPI picked up, while services PPI dropped, Germany’s final GDP was unchanged at 0.6%, while import prices eased 0.4%, compared with a 1.1% fall previously. Later there is data on German Ifo business climate. US data included durables goods orders, while the focus will be on speeches by US Federal Reserve chair Janet Yellen and European Central Bank president Mario Draghi at the Jackson Hole Symposium.

Price strength and consolidation seems to be the order of the day in the base metals, with tin and lead remaining the laggards. Given the overall upward momentum, we would not be surprised to see prices rise further, but as prices are in high ground we should expect bouts of forward selling and profit-taking to lead to choppy trading – key will be how well the dips are supported. On balance, we remain bullish for the base metals complex.

Precious metals prices are consolidating in high ground and gold, silver and PGM prices are holding up well for now. Given the geopolitical undercurrent that is not surprising for gold, but the PGMs may be more vulnerable to price corrections, especially palladium.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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METALS MORNING VIEW: Gold prices continue to hold up well – all eyes on Jackson Hole

Base metals traded on the London Metal Exchange are broadly higher this morning, Thursday August 24, with three-month copper, zinc, lead and tin prices up by between 0.2% and 0.5%, with copper prices at $6,612 per tonne, while aluminium and nickel prices are by off 0.3% and 0.6%, respectively.

Volume has been below average with 6,536 lots traded as of 06:25 BST, and for a change nickel volume has outpaced that of copper, aluminium and zinc.

Wednesday saw the LME base metals evenly split between gains in nickel (3%), aluminium (1.6%) and tin (0.7%) and losses in lead (-1.4%), zinc (-0.5%) and copper (-0.1%).

Precious metals prices are similarly split this morning with bullion prices lower, with gold at $1,289.02 per oz (-0.1%) and silver at $17.04 per oz (-0.2%), while the platinum group metals (PGMs) are higher by around 0.2% This follows a stronger day on Wednesday that saw the complex rise by an average of 0.5%.

On the Shanghai Futures Exchange (SHFE) this morning, lead prices are down 0.9%, while the rest are up between 0.2% for zinc and 2.4% for nickel, with aluminium up 1.6% and copper up 0.3% at 51,800 yuan ($7,773) per tonne. Spot copper prices in Changjiang are up 0.5% at 51,420-51,670 yuan per tonne and the LME/Shanghai copper arb ratio stands at 7.83 (down from 7.86 on Wednesday).

Steel rebar and iron ore prices in China have rebounded after Wednesday’s weakness; SHFE rebar prices are up 1.8% and iron ore prices on the Dalian Commodity Exchange are up 1.9% at 593 yuan per tonne on the January 2018 contract, while gold and silver prices on SHFE are little changed.

In international markets, spot Brent crude oil prices are up by 0.1% at $52.54 per barrel, the yield on US ten-year treasuries is weaker at 2.17% as is the German ten-year bund yield at 0.38%.

Equities in Asia are mixed this morning – gains are being seen on the Hang Seng Index (+0.5%), the Kospi (+0.4%) and the ASX 200 (+0.1%), while the Nikkei (-0.4%) and the CSI 300 (-0.3%) are weaker. In the USA, the Dow Jones closed down 0.4% at 21,812.09 and in Europe, the Euro Stoxx 50 closed down 0.5% at 3,438.63.

The dollar index is weaker again this morning at 93.25 – weighed by concerns over US president Donald Trump’s policies, or lack of them, and his threats to close down the government. Sterling at 1.2779 is heading lower, the euro at 1.1798 is consolidating, as is the Australian dollar at 0.7894, while the yen is firm at 109.11.

On the economic agenda there is a host of UK data including second estimate of GDP, business investment, index of services, mortgage approvals and CBI realised sales, while US data includes initial jobless claims, existing home sales, mortgage delinquencies and natural gas storage. In addition, the central bankers’ Jackson Hole Symposium gets underway, which is likely to keep the markets’ focus over the next few days.

The base metals are generally bullish, some more than others, with lead and tin the ones showing most volatility. The second quarter this year was if anything a period of price weakness as the markets had to absorb the extra metal that was enticed out of the woodwork by the run in price between November and February, but with that extra supply now absorbed, it does look as though supply tightness is in the driving seat. Overall, therefore, the trends continue to look bullish, but up at these higher price levels the metals are likely to have to absorb more selling/pricing, so choppy trading should be expected. On balance, we remain bullish for the base metals complex.

Precious metals prices are also consolidating, gold and silver prices are holding up well for now and given the geopolitical undercurrent that is not surprising, but the PGMs may be more vulnerable to price corrections, especially palladium.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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METALS MORNING VIEW: Gold prices pause ahead of this year’s highs

Base metals prices on the London Metal Exchange are for the most part consolidating this morning, Wednesday August 23, with three-month copper prices off by 0.1% at $6,582 per tonne, while zinc prices are up by 0.4% and nickel prices are off by 0.4%. Volume has been average with 8,662 lots traded as of 06:43 BST.

This comes after a split performance on Tuesday, when lead led the gains with a 3.2% rally, nickel prices closed up 1% and copper closed up 0.2%, while the rest were led lower by a 0.8% decline in tin prices.

Precious metals prices are up across the board this morning by an average of 0.3%, led by a 0.4% rise in silver prices, spot gold prices are up 0.2% at $1,285.86 per oz. This follows a down day on Tuesday when the complex closed off 0.6% on average, led by a 1% fall in palladium prices.

On the Shanghai Futures Exchange (SHFE) this morning, the base metals complex is for the most part weaker with prices off an average of 0.4%, led by a 1.7% drop in tin prices, aluminium and zinc prices are off 1.1% and copper prices are off 0.1% at 51,570 yuan ($7,739) per tonne. Bucking the trend are lead and nickel prices, up by 1.5% and 0.1%, respectively.

Spot copper prices in Changjiang are off 0.2% at 51,150-51,420 yuan per tonne and the LME/Shanghai copper arb ratio stands at 7.86 (unchanged from Tuesday).

Other metals in China are looking weaker, SHFE rebar prices are down 4.9% and iron ore prices on the Dalian Commodity exchange are down 3.7% at 580 yuan per tonne on the January 2018 contract, while gold and silver prices on SHFE are both down 0.4%.

In international markets, spot Brent crude oil prices are up by 0.2% at $51.71 per barrel, the yield on US ten-year treasuries is firmer at 2.21%, and the German ten-year bund yield is at 0.40%

Equities are for the most part stronger today – the Hang Seng Index (+0.9%), the Nikkei (+0.2%), the CSI 300 (0.1%) are higher, while the ASX 200 is off 0.3% and the Kospi is off 0.1%. In the USA, the Dow Jones closed up 0.9% at 21,799.89 and in Europe, the Euro Stoxx 50 closed up 0.94% at 3,455.59.

The dollar index is firmer this morning at 93.52, correspondingly the euro is weaker at 1.1758, sterling is drifting at 1.2820, the yen is at 119.43 and the Australian dollar is weaker at 0.7886.

The focus on the economic data front is the flash manufacturing and services PMI with Japan’s data on manufacturing improving to 52.8 from 52.1, later there is data out on France, Germany, the EU and the USA. In addition, there is data on EU consumer confidence, US new home sales and US crude oil inventories. European Central Bank president Mario Draghi and US Federal Open Market Committee member Robert Kaplan are also speaking.

For the most part, base metals prices are consolidating after their strong gains seen in mid-August or earlier. Tin and lead are the more volatile ones, but overall the trends continue to look bullish, but up at these higher price levels the metals are likely to have to absorb more selling/pricing, so choppy trading should be expected. Key will be how well dips are supported. On balance, we remain bullish for the base metals complex.

Precious metals prices are also consolidating, gold and silver prices are holding up well for now and given the geopolitical undercurrent that is not surprising, but the platinum group metals may be more vulnerable to price corrections, especially palladium.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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METALS MORNING VIEW 22/08: Stronger tone in metals prevails

Base metals traded on the London Metal Exchange are for the most part consolidating this morning, Tuesday August 22, after a generally strong performance on Monday when the complex closed up by an average of 1%.

This morning, three-month copper prices are up by 0.1% at $6,583 per tonne, while the rest of the complex is down by an average of 0.4%, led by a 0.6% fall in aluminium prices to $2,074 per tonne, while the rest are all off by 0.3%. Volume has been average with 8,902 lots traded as of 07:03 BST

Precious metals prices are little changed this morning, with spot gold prices down by 0.2% at $1,287.90, this after a firmer day on Monday when precious metals prices were pushed higher by a combination of stronger industrial metals and heightened geopolitical concerns over the USA and North Korea.

On the Shanghai Futures Exchange (SHFE) this morning, the base metals complex is quite mixed as nickel plays catch up with Monday’s LME performance, with prices up by 2.3%, while copper prices are up by 1.1% at 51,750 yuan ($7,776) per tonne and lead prices are off by 1.8%.

Spot copper prices in Changjiang are up by 0.9% at 51,300-51,500 yuan per tonne and the LME/Shanghai copper arb ratio stands at 7.86 (compared with 7.85 on Monday).

In other metals in China, SHFE rebar prices are little changed, gold prices are off by 0.2% and silver prices are off by 0.5%, while on the Dalian Commodity Exchange (DCE), January 2018 iron ore prices are up by 3.7% at 603 yuan per tonne.

In international markets, spot Brent crude oil prices are up by 0.4% at $51.91 per barrel, the yield on US ten-year treasuries is at 2.20%, and the German ten-year bund yield is at 0.41%

Equities are for the most part stronger today – the Hong Kong Hang Seng Index (+1.1%), the ASX 200 (+0.4%), the Kospi (0.4%), the CSI 300 (0.3%) are higher, while the Nikkei (-0.1%) is down slightly. In the USA, the Dow Jones closed up 0.13% at 21,703.75 and in Europe, the Euro Stoxx 50 closed up 0.65% at 3,423.53.

The dollar index is weaker this morning at 93.26 and most of the majors are consolidating with sterling at 1.2877, the euro at 1.1794 and the yen at 109.29, although the Australian dollar is firmer at 0.7942, helped by the stronger commodity prices.

On the economic front there is data on German and EU ZEW economic sentiment, UK CBI industrial orders, China’s leading indicators and the USA’s house price index and Richmond Manufacturing index. Looking ahead, investors will continue to scrutinise the political developments in the USA to make their investment decisions and will likely start to turn their attention to the speeches of central bank officials at the Jackson Hole Economic Symposium (August 24-26), including European Central Bank president Mario Draghi and US Federal Reserve chair Janet Yellen on August 26.

For the most part, the base metals prices continue to look bullish, some more so than others with tin and to a lesser extent lead the mains ones struggling, or more likely to run into forward selling, while forward selling seems less of an issue for the other base metals. On balance, we remain bullish for the base metals complex and expect dips to find good underlying support.

Precious metals are for the most part bullish, gold prices are holding up in high ground underpinned by geopolitical concerns focused on North Korea, while palladium’s supply shortage is keeping prices firm and platinum prices are following gold’s lead.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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Precious metal prices begin the week on a quiet note

Precious metals prices start the week on a quiet note, with gold (+0.1%), platinum (+0.1%) and palladium (+0.1%) up, while silver (-0.1%) is lower, which probably reflects a lack of haven demand as investors appear risk-on at the start of the week in spite of a continuingly tense geopolitical climate.

Precious metals may catch some bids in the days ahead due to a likely resurgence of risk aversion caused by geopolitical tensions between the USA and North Korea. Over the weekend, North Korean leader Kim Jong-un warned of a “second Korean War” as US-South Korea military exercises, viewed as “reckless behaviour” by the North Korean leader, start today. While investors are presently calm, a sudden spike in volatility across risk assets cannot be ruled out later this week, which should produce a positive environment for the complex, especially gold.

This follows a mixed session on Friday in which gold (-0.4%) and silver (-0.4%) were weaker compared with platinum (+0.2%) and palladium (+0.3%). Last week, palladium (+3.5%) was the star performer across the board in spite of the risk-off environment, which was probably owing to its relatively stronger correlation with the base metals.

Base metals traded on the London Metal Exchange are off to a good start to the week this morning, Monday August 21, posting an average gain of 1.0% as we write. This reflects a slight pick-up in sentiment, perhaps stemming from easier Chinese financial conditions after the People’s Bank of China (PBOC) injected a net 50 billion yuan ($7.49 billion) into the country’s financial institutions earlier today.

Nickel (+1.8%) is the strongest performer while tin (+0.4%) remains the laggard of the complex. Volume has been average with 9,046 lots traded as of 05:48 BST.

This comes after a mixed session on Friday, with the London Metal Exchange Index (LMEX) closing up 0.1%, where nickel (+3.0%) and zinc (+2.9%) outperformed, while lead (-2.0%) underperformed. Last week, despite a surge in global risk aversion caused by concerns over the Trump administration’s pro-business agenda, the LMEX registered a solid gain of 1.9%, with zinc (+8.1%) being the star performer.

On the Shanghai Futures Exchange (SHFE) this morning, the base metals complex is posting a decent average gain of 1.2% as we write. Nickel (+4.0%) is the outperformer while lead (-1.2%) is the only base metal in negative territory. Spot copper prices in Changjiang are up 0.9% at 50,820-51,020 yuan per tonne and the LME/Shanghai copper arb ratio stands at 7.85 (compared with 7.86 on Friday).

Equities are edging higher today – the Hong Kong Hang Seng Index (+0.52%) the CSI 300 index (+0.29%) are up with the exception of the Nikkei 225 (-0.35%) and the KOSPI index (unchanged) – after a weak trading session on Friday. In the USA, the Dow Jones closed down 0.35% at 21,675. In Europe, the Euro Stoxx 50 closed down 0.46% at 3,446. Although macro data releases surprised to the upside from both sides of the Atlantic, investors adopted a cautious attitude due to political worries in the USA following rumours of Cohn’s departure.

The dollar index is little changed (+0.03%) at 93.46 this morning after closing down 0.2% on Friday. The depreciation in the dollar against most currencies was caused primarily by the unwinding of carry trades due to the drop in risk appetite, while the expected path of US monetary policy remained broadly unchanged.

Looking at the day ahead, there will be no major macroeconomic data. Investors will therefore continue to scrutinise the political developments in the USA to make their investment decisions. Later this week, investors will turn their attention to the speeches of central bank officials at the Jackson Hole Economic Symposium (August 24-26), including European Central Bank president Mario Draghi and US Federal Reserve chair Janet Yellen on August 26.

Base metals may continue to push still higher in the coming days in spite of a possible return to risk aversion, principally because sentiment in base metals is primarily driven by China’s financing conditions, as we saw last week. In this vein, as long as the PBOC continues to inject steady liquidity in the economy, macro investors are likely to stay overweight for base metals, which should in turn attract momentum-based investors in light of a solid upward trend.

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Precious metals are mixed in spite of weak dollar

Precious metals prices are mixed this morning, with gold (-0.1%) and silver (-0.1%) down and the PGMs up, in spite of a weaker dollar, which should in theory push the entire complex higher.

This follows a mixed session on Thursday in which gold strengthened a little while the rest of the complex was under downward pressure in spite of a friendlier macro backdrop (ie lower US real rates, equity losses) due to the release of dovish US Federal Open Market Committee minutes on Wednesday and dovish Fed speech yesterday.

Base metals traded on the London Metal Exchange are ticking higher this morning, Friday August 18, which could reflect some tactical short-covering ahead of the weekend in spite of a return to risk-off mode, evidenced in losses across Asian equities and the appreciation in funding currencies such as the yen. Zinc (+1.4%) is the strongest performer while copper (-0.1%) and tin (-0.1%) are the laggards of the complex. Volume has been average with 8,347 lots traded as of 05:46 BST.

This comes after a weak session on Thursday, with the London Metal Exchange Index (LMEX) closing down 0.9%, reflecting some tactical profit-taking after strong gains registered on Wednesday, exacerbated by a sudden rise in risk aversion caused by heightened political uncertainty in the USA.

On the Shanghai Futures Exchange (SHFE) this morning, the base metals complex is under slight downward pressure, showing a small average loss of 0.5% as we write. Lead (-2.5%) is hit the most while zinc (+1.8%) is the only base metal in positive territory. Spot copper prices in Changjiang are up 1.5% at 50,450-50,570 yuan per tonne and the LME/Shanghai copper arb ratio stands at 7.86 (compared with 7.84 at the start of the week).

Equities are softer today, with the Nikkei 225 (-1.35%), the Hong Kong Hang Seng Index (-0.71%), the KOSPI index (-0.18%), and the CSI 300 index (-0.16%) all lower after a broad-based sell-off on Thursday. Most notably in the USA, the VIX (fear index) surged 32% to close at 15.55 on Thursday, triggered by rumours (albeit strongly denied by the White House) that US economic advisor Cohn would resign from his position.

The dollar index is little changed (-0.03%) at 93.59 this morning after strengthening somewhat on Thursday. The appreciation in the dollar was caused primarily by a fall in the euro following the dovish European Central Bank minutes, highlighting concerns about the risk of the euro “overshooting in the future”.

Looking at the day ahead, the economic agenda will be relatively light today. In Europe, investors will watch German PPI for July and the current account for June. In the USA, investors will monitor the Prelim UoM consumer sentiment and inflation expectations for August. Given the quiet macroeconomic data flow today, market players are likely to pay more attention to US politics and geopolitical developments to position their portfolios.

Base metals may experience some weakness today should the return to risk aversion continue and force eventually market players to cut exposure to the industrial metals following explosive gains earlier in the week. This would be consistent with the quiet physical market due to the low seasonal demand in the summer months. But given the overall positive sentiment toward the base metals, we expect dips to be bought.

Precious metals may catch some bid today because the market stress seen on Thursday was in our view a clear signal that the period of risk aversion, which started initially last week, was not complete. This should produce a fairly sweet environment for the complex (weaker dollar, lower US real rates), pushing prices higher. We would prefer gold and platinum over silver and palladium in a risk-off environment.

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Weak dollar and Fed give modest lift to precious metals

The weak dollar and dialling back of US Federal Reserve (Fed) monetary tightening expectations has given a modest lift to the precious metals, which stand up a net 0.3% at the time of writing. Palladium is holding in firm ground having touched a fresh 17-year high above $920 per oz.

For the precious metals diverging views in the FOMC are likely to push back rate-rise expectations, which is supportive for price sentiment. The question now is how markets react as Fed hawks continue to signal the central bank will continue to tighten monetary policy. Meanwhile palladium has made an upside break above $900 and could be set for further gains following the emergence of exchange-traded fund investment demand recently.

The base metals remain in a buoyant mood, as dollar weakness has supported follow-through buying after the minutes of the July US Federal Open Market Committee (FOMC) meeting showed growing division among policy setters over the path of interest rates given the lack of inflationary pressures.

The base metals trading on the London Metal Exchange are trading in positive ground; aluminium, zinc and lead have set fresh 2017 highs overnight after the complex surged higher on Wednesday, closing with a net 3.4% gain, driven by a mix of option, momentum and stop-loss buying, which saw lead and zinc surge by over 5.5% on the back of heavy trading volumes. At the time of writing the metals were up by an average of 0.8%, while volume has been strong with 9,414 lots traded on LME Select as of 07:20 BST.

On the Shanghai Futures Exchange (SHFE) this morning, prices up by a net 2.4% at the time of writing, led by lead, nickel and zinc as they react to the surge in LME prices on Wednesday.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange are up by 2.9% at 582.5 yuan per tonne while steel rebar futures on the SHFE are down by 0.7%.

Equities have seen a mixed start in Asia; the CSI 300 was up 0.2% while the Nikkei and Hang Seng were down by 0.1% and 0.2%, respectively.

In other markets, oil prices are little change so far and remain capped ahead of $50 per barrel by high output. The dollar index currently stands at 93.44, after closing down 0.4% in response to the FOMC minutes. The index set a low of 92.84 on August 3.

Figures overnight have shown a further pick-up in employment in Australia as the country added 27,900 jobs in July. The unemployment rate held unchanged at 5.6%. Later today, final CPI inflation readings from the Eurozone are expected to be unchanged from last week’s flash readings. From the USA, the Philly Fed manufacturing index and weekly jobless claim figures are expected to remain stable, as are industrial production and capacity utilisation.

Clearly sentiment towards the base metals is bullish, bolstered by expectations of stronger broad-based economic growth, but also as producer restraint has served to tighten the underlying fundamentals for many of the metals. For the moment the trend is to the upside however this run-up is in danger of running ahead of the fundamentals. There is also the danger stronger price will challenge producer restraint, which risks negating the bullish underlying fundamentals.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

The post Weak dollar and Fed give modest lift to precious metals appeared first on The Bullion Desk.

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METALS MORNING VIEW 16/08: Further volatility expected as aluminium, zinc push to new highs

In the precious metals, gold has stabilised above $1,270 per oz after upbeat retail sales figures from the USA, together with improved risk appetite, triggered a deeper correction from August 11’s closing level of around $1,289. The complex was up by a net 0.2% at the time of writing.

The precious metals appear to have found support at current levels. We expect gold will continue to find an element of dip-buying support given the current geopolitical climate. But the fact recent gains in both silver and platinum were fuelled by short covering rather than fresh longs suggests speculative investors are not overly bullish and both metals will be vulnerable to further pressure if bearish speculators re-engage.

The base metals are in a stronger mood this morning, Wednesday August 16, as markets stabilise following the recent spate of risk aversion created by rising tensions between the USA and North Korea, while a slightly softer tone in the dollar has lent modest support to the precious metals.

The base metals trading on the London Metal Exchange are largely trading in positive ground; aluminium (1.1%) and zinc (1.1%) are testing fresh 2017 highs, while nickel (1.1%) has stabilised after large stock inflows triggered further downside pressure on Tuesday. Tin is the exception, trading in negative territory (-0.1%) as rising Chinese stocks continue to put a cap on nearby price sentiment. At the time of writing the metals were up by an average of 0.7%, while volume has been light with 8,526 lots traded on LME Select as of 06:47 BST.

On the Shanghai Futures Exchange (SHFE) this morning, zinc prices are up by 1.9% and aluminium by 2%, although copper, nickel and tin are in negative territory at the time of writing.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange up by a modest 1.2% at 569.5 yuan per tonne while steel rebar futures on the SHFE are down by 0.7%.

Equities have seen a mixed start in Asia, echoing the sentiment in US markets on Tuesday; the Hang Seng was up 0.6%, while the Nikkei and CSI 300 were down by 0.1% and 0.2%, respectively.

In other markets oil prices have seen a stronger start with Nymex crude trading up 0.5% ahead of data which is expected to show a drop in crude oil inventories in the USA. The dollar index currently stands at 93.83, after closing on Tuesday with a 0.4% gain after strong retail sales figures from the USA bolstered expectations for third-quarter growth. The index set a low of 92.84 on August 3.

The macroeconomic agenda is busy today with the initial focus on the preliminary reading of second-quarter eurozone GDP. Despite the small pick-up in momentum reported from Germany last week and stronger signals from France recently, eurozone growth is forecast to be unchanged from the 0.6% rate reported in the first quarter. UK employment figures are also scheduled ahead of housing market figures from the USA. Building permits are forecast at an annualised 1.25 million units after they increased to 1.28 million units in June. Housing starts are seen stabilising at an annualised 1.22 million units, supported by strong job growth, improving wages and historically low mortgage rates.

The minutes of the US Federal Open Market Committee’s July meeting are also due, although no surprises are expected.

For the base metals, recent fundamental developments should help to provide underlying support and there could be additional option-related volatility in aluminium and zinc given large call positions around the $2,100 and $3,000 strikes. Settlements against the August prompt could also create volatility. But considering the scale of recent events there is the danger of some bullish exhaustion with a modest profit-taking correction likely in the short term.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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Precious metals prices are under pressure with the exception of palladium

Precious metals prices are under pressure with the exception of palladium (+0.3%) thanks to its higher correlation with risk assets. Silver (-0.8%) is down the most this morning. Haven trades are unwinding because investors are induced to buy the dips in risk assets.

This follows a broad-based sell-off on Monday because the resurgence of investor affinity for risk led market participants to unwind their risk-unfriendly positions (especially gold and platinum) and jump back into risk assets (like equities).

Base metals traded on the London Metal Exchange are edging higher this morning, Tuesday August 15, as global risk appetite continues to rise thanks to easing geopolitical tensions following the North Korean leader’s decision to back off plans to launch a military attack on the USA. Lead (+1.2%) is the strongest performer while copper (+0.2%) and tin (+0.2%) are the laggards. Volume has been average with 6,017 lots traded as of 06:30 BST.

This comes after an overall weak session on Monday, with the London Metal Exchange Index (LMEX) closing down 0.4%, as market participants adopted a cautious stance after disappointing Chinese data for July in spite of the notable recovery in global risk appetite. Nickel, registering a loss of 2.1%, was the worst performer across the board.

On the Shanghai Futures Exchange (SHFE) this morning, the base metals complex is marginally higher, with an average gain of 0.1%. Zinc (+1.5%) is the star performer while nickel (-1.4%) performs the worst. Spot copper prices in Changjiang are unchanged at 49,970-50,120 yuan per tonne and the LME/Shanghai copper arb ratio stands at 7.85 (compared with 7.84 on Monday).

Equities continue to rebound today, with the Nikkei 225 (+1.35%), the KOSPI index (+0.63%), the Hong Kong Hang Seng Index (+0.29%), and the CSI 300 index (+0.28%) all higher after a broad-based rally on Monday. The VIX (fear index) tumbled around 20% to close at 12.33 on Monday, a tangible sign that investors welcomed the easing of geopolitical tensions between the USA and North Korea.

The dollar index is edging 0.14% higher to 93.54 after recording a gain of 0.37% on Monday. The rebound in the dollar reflects the rebuilding of carry trades and the steeper expected path of the US federal funds rate due to the dissipation of market stress. The probability of one Fed rate increase by year-end jumped to 45% on Monday, from 37% on August 11, according to the CME FedWatch Tool.

Let us now turn to economic data released earlier this morning in Asia. In Japan, industrial production accelerated at a stronger pace than expected at 2.2% month on month in June (compared with 1.6% expected) from a 1.6% rise in May. This should fuel further global risk appetite.

Looking at the day ahead, the economic calendar will be relatively light. In US data, investors will look to business inventories for June, retail sales and import prices for July, as well as the Empire manufacturing index and the NAHB housing market index for August. This may have some implications on the dollar, which in turn may influence metals pricing.

Base metals may continue to strengthen because investors are induced to rebuild long exposure to risk assets after last week’s risk-off mood. But given the recent negative surprises in China’s macro data, we will carefully watch domestic financial conditions as we acknowledge that a renewed tightening could prevent market players from implementing long positions across the industrial metals.

Precious metals may witness a little bit more of profit-taking because the easing geopolitical tensions are likely to exert upward pressure on the dollar and US real rates via a steepening of the expected path of the Fed funds rate. But this bout of profit-taking may prove short-lived due to the presence of domestic problems (most notably the debt ceiling) around the USA.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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METALS MORNING VIEW 14/08: Base metals shrug off China’s macro data misses

Base metals traded on the London Metal Exchange are resilient this morning, Monday August 14, in spite of a raft of weaker-than-expected Chinese macro data releases. Aluminium (-0.4%) and tin (-0.4%) are down the most while lead (+0.5%) performs the best. Volume has been fairly low, with 5,411 lots traded as of 06:00 BST.

This comes after an overall weaker session on Friday, with the London Metal Exchange Index (LMEX) closing down 0.4%, chiefly driven by an unwinding of reflation-oriented trades following the escalating rhetoric US and North Korea leaders and the release of disappointing inflation data in the USA.

Precious metals prices are mixed, with gold (-0.2%) and platinum (-0.2%) down but silver (+0.4%) and palladium (+0.1%) up. This reflects a slight decline in risk aversion after US and Chinese presidents spoke on the phone over the weekend to resolve the North Korean crisis. This follows a mixed trading session on Friday because haven buying on geopolitical tensions was counterbalanced by weakened inflation expectations after the US consumer price index (CPI) miss.

On the Shanghai Futures Exchange (SHFE) this morning, the base metals complex is slightly down, with an average loss of 0.6%. Nickel (-1.5%) performs the worst, while copper (+0.3%) is the only base metal in positive territory. Spot copper prices in Changjiang are up 0.3% at 49,970-50,120 yuan per tonne and the LME/Shanghai copper arb ratio stands at 7.84.

Equities are off to a good start to the week, with Hong Kong Hang Seng Index (+1.17%), the CSI 300 index (+0.88%), and the KOSPI index (+0.57%) all up after a sell-off in European equities on Friday (due to risk aversion and a stronger euro) but a small recovery in US stocks (reflecting lower US Federal Reserve tightening expectations).

The dollar index is edging 0.14% higher to 93.20 after slipping 0.36% to 93.07 on Friday, driven by an unwinding of carry trades (reflecting the drop in investor affinity for risk) and a lower expected path of Federal funds rates (with the probability of one rate increase by year-end falling to 34% after the US CPI miss from 40%).

Let us now turn to economic data released earlier this morning in Asia. In Japan, gross domestic product (GDP) rose at a stronger pace than expected at 1.0% in the second quarter, marking its highest print over two years. In China, a raft of activity data (retail sales, industrial production, and fixed asset investment) for July noticeably missed market expectations. Yet, global risk sentiment has not deteriorated because the perceived tail risk of a military conflict in the Korean peninsula seems to have eased somewhat over the weekend.

Looking at the day ahead, the economic calendar will be very light, with investors likely to focus their attention to industrial production for June in the Eurozone.

Base metals are likely to trade slightly higher once disappointing Chinese data is digested by the market. Although the geopolitical climate remains tense, base metals are likely to continue to benefit from a positive sentiment. As such, we expect momentum-based buyers to remain the driver of the market in the days ahead.

Precious metals may continue to enjoy upward pressure because investors are likely to gradually lift their risk-unfriendly positions in their portfolios in light of the recent geopolitical developments. We prefer gold and platinum to silver and palladium because the former group has stronger haven characteristics (viewed as more “precious” by the market) than the latter.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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Precious metals remin firm as US-North Korea sabre rattling mounts

Precious metals remain firm, with gold and silver holding near multi-week highs at $1,285 and $17.05 per oz, respectively, supported by flight-to-safety demand.

The precious metals will be sensitive to shifting expectations in Fed monetary policy; particularly if today’s CPI figures fail to reflect the pick-up in inflation currently forecast. Wider risk aversion will likely create some downside pressure, however the metals could find fresh upside momentum if US/North Korea tension escalate, triggering fresh demand for haven assets.

The base metals are under pressure today as escalating geopolitical tensions between the USA and North Korea continue to trigger risk aversion, triggering profit-taking after bullish sentiment pushed many of the metals to fresh multi-month highs this week.

The base metals trading on the London Metal Exchange have been led lower by a sharp profit-taking dip in nickel, which stands down over 2% at the time of writing. The rest are off by an average of 0.7%, with lead prices off 1% and copper prices off 0.4% at $6,348 per tonne. Volume has been high with 12,270 lots traded as of 06:45 BST.

On the Shanghai Futures Exchange (SHFE) this morning, copper prices are down by 1%, zinc is down by 1.4% and lead by a deeper 2.1% at the time of writing.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange have given back some recent gains, prices are off 4.5% at 570 yuan per tonne. On the SHFE, steel rebar prices are down 3.2%.

Equities remain under pressure this morning, adding to continued sell-off in the US market, which triggered a 44% jump in the VIX volatility index. The CSI 300 and Hang Seng were down 1.3% and 1.6%, respectively, at the time of writing. Japanese markets are closed for a national holiday.

In other markets oil prices have slipped lower with Nymex crude down 0.7%. The dollar index currently stands at 93.42, although still above its recent low of 92.84 on August 3.

The macroeconomic agenda is busy today and includes French and German CPI inflation figures for July. Inflation data is also expected from the USA and could prove pivotal to market direction as an absence of inflation has led investors to dial back their expectations for monetary tightening by the US Federal Reserve (Fed). Market expectation for the Fed to raise interest rates at the December Federal Open Market Committee (FOMC) meeting stands at 41%, according to the CME Fedwatch. FOMC members Robert Kaplan (Dallas) and Neel Kashkari (Minnesota) are also scheduled to speak today.

For the base metals recent fundamental developments should help to provide underlying support, but considering the scale of recent gains some profit taking/consolidation is likely. For the moment we expect corrections to prove short-lived, but with equity market near lifetime highs there is the risk a much deeper correction could be in the making, which would likely drag the base metals lower.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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METALS MORNING VIEW 10/08: Metals prices remain upbeat, even as geopolitical tensions pick up

The precious metals are firmer, up by a net 0.3%, led by increases in silver and PGM prices as rising tensions between the USA and North Korea prompt a modest short-covering rally.

Precious metals may continue to push higher in the days ahead if US/North Korea tensions escalate. Markets will also be sensitive to shifting expectations in Fed monetary policy, particularly if tomorrow’s CPI figures fail to reflect the pick-up in inflation currently forecast.

The metals complex continues to carry positive momentum, even as rising geopolitical tensions trigger a modest correction in global equity markets after the Dow Jones Industrial Average closed in lower for a third consecutive day. Sabre rattling between Pyongyang and Washington continues after North Korean state media reported authorities are working on plans to fire four missiles near the US territory of Guam, which will be ready by mid-August.

The base metals traded on the London Metal Exchange were up a net 0.4% on the back of modest volume; a total of 8,320 lots had traded on Select as of 07:00 BST. Lead (1%) is leading the advance so far today, followed by tin (0.9%) and nickel (0.5%). Meanwhile copper was little changed as prices consolidate recent gains.

Equities are under slight selling pressure this morning, adding to the soft close to the US market. The CSI 300 was down 0.6% at the time of writing while Nikkei 225 was marginally lower (-0.1%), after data from Japan showed core machinery orders disappointed, contracting by 1.9% for a third consecutive month.

In other markets oil prices have stabilised ahead of $50 per barrel after US oil inventories recorded a larger-than-forecast 6.5 million barrel drop last week. The dollar index currently stands at 93.69, although still above its recent low of 92.84 on August 3. The Japanese yen has found some haven bids.

Overnight the Reserve Bank of New Zealand held its base interest-rate at a record low of 1.75%; Governor Graeme Wheeler reiterated that policy would stay loose for a considerable time to come.

The macroeconomic agenda is busier today and includes UK construction and industrial output for June, French industrial production and weekly jobless claims from the USA. Markets will also be watching comments from Federal Reserve Bank of New York President and Federal Open Market Committee number-two William Dudley ahead of US consumer price index (CPI) inflation data tomorrow.

Fundamental developments will continue to provide underlying price support to the base metals, although the soft tone in equities and rising geopolitical tension could create headwinds for price, and an element of profit taking is unsurprising given the scale of recent gains.

Precious metals may continue to push higher in the days ahead if US/North Korea tensions escalate. Markets will also be sensitive to shifting expectations in Fed monetary policy, particularly if tomorrow’s CPI figures fail to reflect the pick-up in inflation currently forecast.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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LIVE FUTURES REPORT 08/08: Comex copper price rise fizzles out

Comex copper prices consolidated on the morning of Tuesday August 8 in the USA amid a lack of new drivers during what is typically a quiet trading period.

Copper for September delivery on the Comex division of the New York Mercantile Exchange slipped 0.55 cents or 0.2% lower to $2.9015 per lb.

“In the very short term, our bias has turned cautiously bullish. Copper’s strong advance from the May low has registered a series of higher highs and higher lows but since July there have been no major pullbacks,” Metal Bulletin analyst Andy Farida said. “So the bullish momentum may have been excessive and could very soon run out of energy.”

In today’s data, although China’s unwrought copper and copper-fabricated products import volumes rose 8.3% year on year in July following better-than-expected demand, volumes for the first seven months of 2017 were down 15% from a year previously.

China imported 390,000 tonnes of unwrought copper and copper fabricated products last month, flat compared with June but 8.3% higher than volumes in July 2016, according to preliminary Chinese customs data on Tuesday August 8.

“Demand from the property sector was largely expected to cool due to China’s credit tightening policies [implemented] since the fourth quarter of last year; however, data from the first half [of the year] remains positive, which means that will at least support demand for another half year because of the lag in usage,” a Shanghai-based analyst said.

Additionally, Comex gold for December settlement dipped by $3.50 or 0.3% to $1,268.20 per oz. Trading has ranged very narrowly from $1,262.70 to $1,271 so far.

Currency moves and data releases

• The dollar index has weakened this morning – it was recently down 0.14% at 93.32. This comes after the index had rebounded to 93.765 on August 4 following the release of strong US jobs data.
• In other commodities, the Texas light sweet crude oil spot price was down 0.18% at $49.30 per barrel.
• In Chinese data, exports rose 7.2% in July from a year earlier while imports grew 11%, both well below analysts’ forecasts. Meanwhile, the country’s trade balance in yuan-denominated figures reached 321 billion in July, surpassing an expected reading of 293.5 billion yuan
• In the USA, the NFIB small business index for July at 105.2 was above the forecast of 103.6.

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Precious metals under slight upward pressure on back of weak dollar

Precious metals prices are under slight upward pressure on the back of a weaker dollar. Platinum and palladium are up 0.4% each, somewhat outperforming gold (+0.3%) and silver (+0.2%). This comes after a mixed session on Monday in which gold and silver experienced intraday weakness due to a lack of haven bids, reflected in the CBOE Volatility Index at a 50-year low, and platinum and palladium proved resilient thanks to their higher correlation with base metals.

Base metals traded on the London Metal Exchange are under slight downward pressure this morning, in part due to the release of disappointing Chinese trade data for July. While nickel (-0.8%) performs the worst, aluminium (+0.1%) is the only base metal in positive territory. Volume has been average with 7,613 lots traded as of 05:47 BST.

This comes after a solid start to the week – the LME base metals recorded an average gain of 1.2% on Monday, while aluminium rallied 3.4%, the strongest performer across the board.

On the Shanghai Futures Exchange (SHFE) this morning, the base metals complex enjoys some buying pressure, with an average gain of 0.9%. Aluminium (+2.6%), zinc (+1.8%), and lead (+1.3%) perform the best while tin (-0.7%) is the weakest. Spot copper prices in Changjiang are up 0.5% at 50,250-50,600 yuan per tonne and the LME/Shanghai copper arb ratio has weakened slightly to 7.90, from 7.92 on Monday.

Equities are under slight selling pressure this morning, especially the Nikkei 225 (-0.34%) the CSI 300 (-0.15%) following China’s poor trade data for July (i.e. weaker-than-expected imports and exports). But broad-equities had a good start to the week, with world stocks hitting a new record high on Monday in spite of marked weakness in oil and continuing geopolitical tensions over North Korea.

The dollar index – at 93.33 – witnesses some weakness for a second straight day on Tuesday, although it remains above its recent low of 92.84 on August 3. Although sentiment toward the dollar is presently weak and may point to further downward pressure, the “short dollar” trade is overcrowded, judging by its spec positioning, leading us to think that additional pressure should prove limited. If US macro data surprises to the upside (especially the July consumer price index reading due Friday), the rebound in the dollar may prove sustainable.

The macroeconomic agenda is fairly heavy today. Economic data released earlier this morning in Asia showed that in Japan, the bank lending growth for July and the current account were in line with consensus; while in China, the trade surplus for July was stronger than expected although both imports and exports disappointed. Data expected later today includes Japan’s economy watchers sentiment index for July, the German and French trade balances for June and the USA’s NFIB index for July, Jolts job openings for June and the IBD/TIPP economic optimism for August.

Base metals are likely to digest relatively quickly China’s poor trade data released earlier this morning because although trade growth slowed at a stronger pace than expected in July, macro investors are not overly concerned, as evidenced by the appreciation in the yuan. This suggests to us that investor sentiment toward China remains fairly positive, which should push base metals prices higher. With nickel and tin having meaningfully underperformed in the complex so far this year, they could play some catch-up in this environment.

Precious metals may continue to push higher in the days ahead because the market may focus again on downside risks to the US economy after being caught by surprise by the solid US jobs report released on August 4. But as long as risk appetite remains sound, we may prefer PGMs (especially palladium) over gold and silver.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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LIVE FUTURES REPORT: Comex gold for December settlement dipped

Comex gold for December settlement dipped by $2.20 or 0.2% to $1,262.40 per oz. Trading has ranged very narrowly from $1,261.30 to $1,265 so far.

On Friday, US data showed the country added 209,000 jobs in July, better than the expected reading of 182,000. Meanwhile, the June US trade deficit of $43.6 billion was a slight improvement on consensus of $43.9 billion.

In contrast, Comex copper prices started the week on a solid footing although positive US employment data released at the end of last week is also providing support to the dollar.

Copper for September delivery on the Comex division of the New York Mercantile Exchange rose 1.05 cents or 0.3% to trade recently at $2.8955 per lb on the morning of Monday August 7.

Copper had spent most of last week in negative territory but its recovery more recently must contend with with a recovering dollar. The dollar index was recently at 93.48.

“The recent short-lived nature of price pressure suggests underlying sentiment remains bullish; however, prices are likely to be come increasingly volatile in the short term because speculative positioning has become extremely polarized,” Metal Bulletin analyst James Moore said.

Oil prices and data releases

• In other commodities, the Texas light sweet crude oil spot price dipped 1.29% to $48.94 per barrel.
• In data today, the UK’s Halifax house price index came in at 0.4%, a touch above the forecast of 0.3%. The EU Sentix investor confidence was roughly in line at 27.7.
• Later, the USA’s monthly labour market conditions index and consumer credit data are due.

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SILVER TODAY: Focus on US jobs data

Forecast: Very short term (1M): Short term (3M): Medium term (6M): Long term (12M):   Resistances: R2 17.10 – 200 DMA Support:  S1  15.63 – 2016 low S2 14.69 – 2017 low Legend:   D/MMA – daily/monthly moving average U/DTL – uptrend/downtrend line ADX – average directional index RSI – relative strength index
Technical drivers Silver has rebounded since hitting a 2017 low earlier in July. Silver is now above its 20 DMA, a sign of positive momentum, although below its 200 DMA is resistance that could be tough to overcome. We are constructive on silver over the very short term, a view that we opened on July 12 at $15.89 per oz to play a tactical rebound in an oversold environment. Our stop/loss is at the 2017 low. Momentum-based indicators Momentum is positive while the ADX is above 20, implying a strong uptrend. Macro and micro drivers Silver managed to rebound yesterday alongside gold when slightly disappointing US macro data was sufficient to weaken the dollar and pressure US real rates lower. But silver remains about flat on the week amid weaker safe-haven flows and a strong risk-on mood earlier this week. The VIX remains at an extremely low level, pointing to extensive complacency across financial markets. While this may continue for longer, the recent hawkishness among major central banks may trigger a spike in volatility via tighter global financial conditions. In this case, a powerful wave of safe-haven buying may ensue. Today, investors will scrutinize the US jobs report for July, which could have meaningful implications for the trajectory of Federal Reserve tightening. With the market currently pricing in only a 50% probability for another rate Fed rate increase by year-end, stronger US jobs numbers (especially on the wages side) could trigger a hawkish Fed repricing, which in turn could push the dollar and US real rates higher. This would be negative for silver. Investment and speculative flows Silver ETF investors have sold about 123 tonnes of silver this week after 125 tonnes in last week. Speculators lifted their net long fund position (NLFP) massively for the first time in seven weeks over July 18-25, according to the Commodities Futures Trading Commission, mainly via short-covering. This confirms our intuition that a powerful bout of short-covering was ineluctable amid overly bearish positioning. Conclusion We are positive on silver over the very short term to play a technical rather than a fundamental rebound. We see some upside potential while the excessively bearish speculative positioning is in the process of being normalised. But today is likely to result in stronger volatility in the silver market. We are constructive over the next three and six months because we expect strong safe-haven buying in the coming month and fading risk appetite because of the Fed’s determination to tighten financial conditions despite slower growth. We remain positive over the longer term because we expect silver to play a growing role in the diversification of portfolios because of its safe-haven characteristics. Please see our Silver spotlight for June for more details.
All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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METALS MORNING VIEW 07/08: Some profit-taking in metals despite weaker dollar, equity gains

Precious metals prices are broadly unchanged, with the exception of platinum, down 0.3%, after outperforming its peers at the end of last week. This quiet start to the week follows a marked sell-off on Friday, mostly driven by a strong increase in the dollar and US real rates following the US jobs data release, which probably prompted some speculative selling across the board.

Base metals traded on the London Metal Exchange are under slight downward pressure at the start of the week in spite of some dollar weakness and solid global risk appetite. The only exception is aluminium, up about 1%, reflecting positive micro dynamics. Volume has been high, with 12,760 lots traded as of 04:35 BST.

This comes after an overall slightly weaker session on Friday, in part owing to the notable rebound in the dollar following the release of a solid US jobs report for July.

On the Shanghai Futures Exchange (SHFE) this morning, the base metals complex is on the rise. Aluminium and lead perform the best, up 2.6% and 1.8%, respectively, while tin is the only base metal in negative territory (-0.2%) as of 9:13 London Time. Spot copper prices in Changjiang are up 0.3% at 50,050-50,350 yuan per tonne and the LME/Shanghai copper arb ratio is up at 7.92 (from 7.90 on Friday).

Equities are off to a good start this week, with the Nikkei 225 (+0.61%), Hang Seng (+0.35%), and the Kospi (+0.49%) all up after a robust rally across broad-based equities on Friday, reflecting a risk-on environment in spite of continuing tensions between the USA and Russia following the recent US sanctions and Russia’s retaliations as well as continued heightened uncertainty over the North Korean crisis.

The dollar index is experiencing some weakness today, down 0.22%, after enjoying a decent appreciation of 0.76% on Friday driven by positive US macro surprises in the labour market. Whether the recent strength in the dollar following its 15-month low last week continues is far from certain considering the excessively bearish sentiment towards the currency at present.

The macroeconomic agenda is fairly light today. Investors will monitor the leading indicator index in Japan for June, the Sentix investor confidence index in Europe for August and the labour market condition index in the USA for July. In addition, US Federal Open Market Committee member Neel Kashkari is speaking.

Base metals are likely to trade sideways with a possible upward bias as investors continue to express a strong interest for reflation-oriented trades following signs that China’s economic growth momentum will remain solid in the third quarter of the year. Copper appears to be the most well placed to benefit from this risk-on environment due to its significant potential for short-covering considering its excessive gross short spec positioning on the Comex.

Precious metals may witness some buying on the dips once the market finishes digesting the strong US jobs numbers released at the end of last week. Yet, we acknowledge that the rebound in the dollar may continue a little longer after it reached oversold territory. This may therefore undermine the uptrend in the precious metals complex. We tend to favour platinum at this juncture, because sentiment seems to have shifted from very negative to very positive in recent days.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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Major Gold Mining Co. of Cal.

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Uvada Gold and Silver Mining and Milling Co.

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Freeport-McMoRan Copper Gold Inc.

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Gold Center Mining and Development Co.

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London Gold Mines Co.

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Mint Gold Mining Milling co.

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Gold prices consolidate ahead of US employment report

Precious metals prices are stronger by an average of 0.4% this morning,  Friday August 4, led by a 0.6% gain in platinum to $966 per oz. Palladium prices are up 0.4% at $886.50 per oz, silver prices are also up 0.4% at $16.70 per oz, while gold prices are up 0.1% at $1,269.44 per oz. This after a generally stronger day on Thursday when platinum prices rose 1.7%, gold prices were up 0.3% and silver prices were up 0.6%, while palladium prices bucked the trend, slipping 1%.

Base metals traded on the London Metal Exchange are firmer across the board, with prices up by an average of 0.3% this morning. Zinc prices are once again leading the advance with a 0.9% gain to $2,819 per tonne, while the rest are up between 0.1% and 0.4%, with copper prices up 0.4% at $6,370 per tonne. Volume has been average with 6,497 lots traded as of 07:01 BST.

This comes after a generally weaker performance on Thursday, which saw gains in nickel, lead and tin prices, averaging 0.3%, while the rest were off an average of 0.4%.

On the Shanghai Futures Exchange (SHFE) this morning, tin prices are up 0.7%, lead and zinc prices are up 0.4% and 0.3%, respectively, while the rest are all off 0.1%, with copper prices at 50,300 yuan ($7,487) per tonne. Spot copper prices in Changjiang are down 0.2% at 50,060-50,210 yuan per tonne and the LME/Shanghai copper arb ratio is weaker at 7.90.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange are up 1.3% at 576 yuan per tonne. On the SHFE, steel rebar prices are up 3.3%, while gold prices are up 0.2% and silver prices are off 0.1%.

In international markets, spot Brent crude oil prices are down 0.1% at $51.85 per barrel, the yield on US ten-year treasuries is weaker at 2.22%, and the German ten-year bund yield has fallen to 0.45%. Weaker bond yields suggest risk-off, perhaps with the market sighing after another grand jury was set up to probe into Russia’s interference in last year’s US election.

Equities were slightly firmer on Thursday with the Euro Stoxx 50 closing up 0.2% and the Dow closed up little changed at 22.007.58, having earlier set a fresh high at 22,044.85. The S&P 500 and Nasdaq composite were down 0.2% and 0.4%, respectively. Asian markets this morning are for the most part weaker with the Nikkei down 0.4%, the ASX 200 is off 0.2%, the CSI 300 and Hang Seng are little changed, while the Kospi is up 0.4%, but this comes after a 1.6% drop on Thursday.

The dollar index remains on a back footing at 92.75, the recent low being 92.53 – we wait to see whether today’s US employment report can provide support. While the dollar remains weak, the euro at 1.880 is strong, sterling weakened on Thursday and at 1.3135 remains off recent highs, the Australian dollar is consolidating at 0.7971, while the yen is firm at 110.11. The yuan at 6.7183 is strong, as are the rupee at 63.69 and the real at 3.1116, while the other emerging currencies we follow are little changed.

Today’s economic focus will be on the US employment report, where non-farm payrolls are expected to have climbed 180,000, with the unemployment rate falling to 4.3%. Data out already showed a 0.4% decline in Japan’s average cash earnings, while German factory orders climbed 1%. Later there is data on Italian retail sales and data on US trade balance.

The base metals are looking firmer again having had a few days of rest this week, nickel and lead have taken over the lead on the upside but copper, zinc and tin look well placed to push higher, while aluminium still seems to be in no hurry to follow, with prices seeming more likely to test support rather than resistance. We remain mildly bullish for the base metals complex especially while the dollar remains weak – any rebound in the dollar, which could be seen if the US employment report surprises in the upside, could create a headwind for the metals in the short term.

Gold prices are consolidating recent gains, they are in the upper half of the $1,200-$1,300 per oz sideways range that prices have been oscillating in since March. The weaker dollar seems to be the main bullish factor, so we should be prepared for some volatility when the US payroll data is released at 13:30 BST. Silver is shadowing gold’s performance, platinum finally seems to be playing catch-up on the upside, while palladium prices have run into supply ahead of the June highs.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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LIVE FUTURES REPORT 03/08: Comex copper retreats for third straight day; gold price also lower

Comex copper was trading at around a one-week low on the morning of Thursday August 3, dipping for the third consecutive day but largely maintaining this week’s theme of consolidation.

The copper price for September delivery on the Comex division of the New York Mercantile Exchange slipped 0.65 cents or 0.2% lower to $2.8780 per lb.

“Copper prices corrected in the second quarter following the temporary increase in supply prompted by higher prices between November and February,” Metal Bulletin head of research William Adams. “The correction ran its course until mid-May but, since then, prices have been heading higher again, suggesting tighter fundamentals.”

The dollar index remains weak, most recently trading at 92.94. It hit a new one-year low of 92.78 on Monday.

Comex gold for August settlement fell $6.80 or 0.5% to $1,265.0 per oz. Trade has ranged from $1,256.60 to $1,267.40 so far today.

Oil and data

• In other commodities, the Texas light sweet crude oil spot price was recently up 0.63% at $49.90 per barrel.
• In data, China’s Caixin services PMI for July at 51.5 missed the expected 51.9 and was below June’s reading of 51.6 while the European final services PMI was in line with forecasts at 55.4.
• Here in the USA, Challenger job cuts year-over-year in July were down 37.6%, while weekly unemployment claims stood at 240,000, a touch below economic consensus of 242,000. Later, the US final services PMI, the ISM non-manufacturing PMI, factory orders and natural gas storage numbers are all due for release.

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The Fall and Rise of the Gold Standard

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Black Mountain Gold Mining Company

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Gold prices consolidate gains, watching the dollar

FastMarkets

Base metals prices on the London Metal Exchange are for the most part weaker this morning, Wednesday August 2. Aluminium is the exception, its prices are up 0.7% at $1,923 per tonne, while the rest are off by an average of 0.2%, with zinc prices off 0.5% and copper prices off 0.3% at $6,328 per tonne. Volume has been high at 12,379 lots as of 07:15 BST – this may be due to it being option declaration this morning.

This comes after a day of general weakness on Tuesday when the complex closed off by an average of 0.3%, led by a 1% drop in tin prices to $20,525 per tonne, with zinc off 0.5% and copper and aluminium off 0.4%, nickel was little changed and lead bucked the trend with a 0.3% gain.

Precious metals are split this morning with bullion prices off around 0.4%, with spot gold prices at $1,265.15 per oz, while the PGMs are little changed. On Tuesday, silver prices dropped 0.7%, gold prices closed little changed at $1,268.65, but earlier in the day prices had extended gains by trading up to $1,274 per oz, while the PGMs were up either side of 0.7%

On the Shanghai Futures Exchange (SHFE) this morning, aluminium prices are up by 2.2%, lead prices are up 0.4%, while the rest are weaker, led by a 1.2% drop in tin prices, with copper prices off 0.6% at 50,020 yuan ($7,434) per tonne and zinc prices off 0.5%. Spot copper prices in Changjiang are down 0.4% at 49,850-50,050 yuan per tonne and the LME/Shanghai copper arb ratio is at 7.91.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange have given back some recent gains, prices are off 1.1% at 567 yuan per tonne. On the SHFE, steel rebar prices are up 0.5%, while gold prices are off 0.1% and silver prices are off 0.4%.

In international markets, spot Brent crude oil prices are little changed at $51.41 per barrel, the yield on US ten-year treasuries is weaker at 2.26% and the German ten-year bund yield is weaker at 0.49%.

Equities were stronger on Tuesday with the Euro Stoxx 50 closing up 0.8% and the Dow, S&P 500 and Nasdaq composite closing up between 0.2% and 0.3%, lifted by earnings and US financial stocks. Asian markets are mainly firmer as they follow the USA’s lead with the Nikkei up 0.5%, the Hang Seng is up 0.7%, the Kospi is up 0.2%, the CSI 300 is little changed, while the ASX 200 is off 0.5%.

The dollar index remains weak at 93.01, the recent lows being 92.78. The euro is strong at 1.1826, but is consolidating, sterling is strong at 1.3211, the yen is weaker at 110.72, as is the Australian dollar at 0.7964. The yuan at 6.7255 is consolidating, the high on Tuesday being 6.7145. The rand and peso are weaker, the rupee is stronger, while the other emerging currencies we follow are little changed-to-firmer.

Data out last night showed US total vehicle sales of 16.7 million units, annualised, which was up from 16.5 million units in June. Data out today, includes UK shop prices, Japan’s monetary base and consumer confidence that picked up to 43.8 from 43.3, while later we have the Spanish unemployment change, UK construction PMI, EU PPI, US ADP non-farm employment change and crude oil inventories.

After follow-through strength on Monday, copper prices have been consolidating, they are generally holding up well, but have lost upward momentum. Today’s option declaration may be one reason for this, although with copper generally going it alone, potential buyers may be thinking twice about the need to chase prices higher. Nickel is the metal that is following copper closest, followed by tin, while lead, zinc and aluminium have been reluctant to follow, although today, aluminium and lead are showing some strength. We wait to see if there is more broad-based upward direction once option declaration is out of the way.

Gold prices are holding up well, they have in recent days broken up above the long-term downtrend line, which started off the 2011 highs, with the weaker dollar and lower treasury yields helping to provide support. Key will be whether the dollar continues to remain weak, which is likely to mean the US Federal Reserve has to remain less than hawkish, which may be a big ask. Outside the financial drivers, any pick-up in geopolitical issues could also fuel the rally. Silver is following gold’s lead, it has the potential to see short-covering emerge, platinum is also tagging along behind gold, while palladium’s latest rebound appears to have run into some selling ahead of previous high ground.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

FastMarkets.com

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