Gold prices hold up despite headwinds

Feb 20, 2017 - 11:09 AM GMT
by

FastMarkets

Precious metals prices are little changed this morning, Monday February 20, with spot gold prices last at $1,234 per oz, this suggests prices are consolidating after Friday’s weakness when prices fell an average of 0.9%, with the PGM prices falling more than bullion prices.

Base metals prices on the London Metal Exchange are for the most part firmer this morning with three-month copper prices leading the way with a 0.8% gain to $6,019 per tonne, lead prices are up 0.7%, tin prices are off 0.8%, while the rest are little changed.

Volume has been average with 6,718 lots traded as of 07:00 GMT. This morning’s general firmness comes after a day of weakness for most of the metals on Friday February 17, which was led by 1.9% falls in lead and zinc prices.

In Shanghai this morning, the base metals on SHFE are mostly lower, copper prices are up 0.3% at 48,760 yuan per tonne, nickel prices are up 0.8%, while the rest are weaker with zinc off 1.9%, aluminium is off 0.8% while lead and tin are off marginally. Spot copper prices in Changjiang settled down 0.5% at 48,200-48,400 yuan per tonne, but with the futures now rising, it shows that early weakness in the market is being reversed, while the LME/Shanghai copper arb ratio is at 8.1.

In other metals in China, May iron ore prices are up 0.4% on the Dalian Commodity Exchange, on SHFE steel rebar prices are up 2.6%, while gold and silver prices are off 0.3% and 0.6%, respectively. In international markets, spot Brent crude oil prices are up 0.6% at $56.02 per barrel.

Equities ended little changed on Friday, the Euro Stoxx 50 closed down 0.1% and the Dow closed up just four points, but Asia this morning is firmer with the Nikkei up 0.1%, the Hang Seng is up 0.6%, the CSI 300 is up 1.5% and the Kospi is up 0.2%, although the ASX 200 is off 0.2%.

In FX, the dollar index is consolidating either side of the 101 level, it was recently quoted 100.83. The euro is at 1.0625, the sterling is flat at 1.2435, the yen is at 113.12 and the Australian dollar is firmer at 0.7685. The yuan is consolidating in low ground at 6.8746, while most of the other emerging market currencies we follow are consolidating with a slightly weaker bias following recent strength.

Data out today showed UK house prices rising more than expected and higher than expected German PPI, data out later includes a German Bundesbank monthly report, UK industrial order expectations and EU consumer confidence – see table below for more details. Most US markets are closed for the Presidents’ Day federal holiday.

The base metals generally seem to be consolidating in high ground following recent price strength that attracted scale up selling. The exception is nickel that is managing to continue with its rebound as the market puts a bullish slant on the developments over nickel ore shipments from Indonesia and the Philippines. Overall, the underlying tone seems bullish, but prices have already done a lot, so it may be that the market needs more proof that the fundamentals are tightening before prices can continue higher.

The precious metals continue to hold up in high ground and the fact they are doing so despite a hawkish US Fed and strength in other markets, which raises the opportunity cost of holding gold, suggests there is still enough nervousness about what lies ahead in the geopolitical arena to support the precious metals complex.

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

 

Overnight Performance
GMT 06:59 +/- +/- % Lots
Cu 6019 49 0.8% 2099
Al 1889.5 5 0.3% 1218
Ni 11090 20 0.2% 1501
Zn 2810.5 -0.5 0.0% 1496
Pb 2269 16 0.7% 398
Sn 19620 -155 -0.8% 6
Average 0.2%        6,718
Gold 1234.2 -0.55 0.0%  
Silver 17.964 -0.001 0.0%
Platinum 1001.1 2.1 0.2%
Palladium 775.4 -0.6 -0.1%
Average PM 0.0%

 

SHFE Prices 06:59 GMT RMB Change % Change
Cu 48760 160 0.3%
AL 14120 -120 -0.8%
Zn 22885 -455 -1.9%
Pb 18785 -45 -0.2%
Ni 91550 750 0.8%
Sn 147670 -170 -0.1%
Average change (base metals)     -0.3%
Rebar 3540 89 2.6%
Iron ore 701.5 2.5 0.4%
Au 276.6 -0.75 -0.3%
Ag 4207 -25 -0.6%

 

Economic Agenda
GMT Country Data Actual Expected Previous
12:01am UK Rightmove HPI m/m 2.0% 0.4%
7:00am Germany German PPI m/m 0.7% 0.3% 0.4%
All Day EU ECOFIN Meetings
 11:00am Germany German Buba Monthly Report
 11:00am UK CBI Industrial Order Expectations  5  5
All Day US Bank Holiday
3:00pm EU Consumer Confidence  -5  -5