Gold prices remain on a back footing

Mar 7, 2017 - 8:18 AM GMT
by

FastMarkets

Precious metals are for the most part little changed with palladium prices up 0.3%, while the rest are either side of unchanged with spot gold prices at $1,226.11 per oz. Precious metals were weaker on Monday with prices down an average of 1.1%.

Base metals prices on the London Metal exchange this morning, Tuesday March 7, are for the most part weaker, with three-month prices down an average of 0.4%, led by a 0.8% fall in nickel prices to $10,985 per tonne. Copper is the only metal bucking the trend, it is up 0.2% at $5,868 per tonne.

This morning’s general weakness follows a weaker performance on Monday when metals were down an average of 0.6%. Volume this morning has been average with 5,379 lots traded as of 06:22 GMT.

In Shanghai this morning, the base metals trading on the Shanghai Futures Exchange are down across the board with average losses of 1.2%, led by a 2.1% drop in lead prices, zinc prices are down 1.7%, aluminium prices are down 1.4% and copper prices are off 0.9% at 47,710 yuan per tonne. Spot copper prices in Changjiang are off 1% at 47,410-47,560 yuan per tonne and the LME/Shanghai copper arb ratio is at 8.14.

In other metals in China, May iron ore prices on the Dalian Commodity Exchange are down 2.8%, on SHFE steel rebar prices are off 1.3%, gold prices are down 0.3% and silver prices are down 0.2%. In international markets, spot Brent crude prices are off 0.2% at $55.84 per barrel and the yield on the US 10-year treasuries is at 2.49%.

Equities were weaker on Monday with the Euro Stoxx 50 closing down 0.5% and the Dow closing 0.2% lower. Asia for the most part is more upbeat, the Nikkei is down 0.2%, the Hang Seng is up 0.4%, the CSI 300 is up 0.1%, the ASX200 is up 0.3% and the Kospi is up 0.6%. As such, it seems the brief bout of nervousness seen in recent days has petered out – we wait to see if that starts to underpin the base metals prices.

In FX, the dollar index is edging higher again after Friday’s dip, the index was recently quoted at 101.67, while the low on Monday was 101.22. The euro at 1.0584 is consolidating, as is the yen at 113.98, the sterling is weaker at 1.2224, while the Australian dollar is firmer at 0.7612. The yuan is trending lower again, it was recently quoted at 6.8967, the rupee and peso are stronger, while the other emerging market currencies are consolidating.

The economic agenda is fairly busy today, Japan’s core CPI edged higher to 0.2%, later there is data on Germany factory orders, the French government budget balance, UK HPI, EU revised GDP, with US data including trade balance, IBD/TIPP economic optimism and consumer credit – see table below for more details.

The base metals remain on a weaker footing, which we think was prompted by the lowering of China’s growth target, but underlying tails on Monday’s chart candlesticks did suggest bargain hunting and nickel managed to avoid the weakness in the previous day’s trade. However, while equities in Asia are buoyant, the improved sentiment has not flowed through to the base metals yet – we wait to see if it does as European trading gathers momentum. Support on copper is seen at $5,835 per tonne. Overall we expect dips to remain supported as underlying sentiment still seems to be bullish for the metals and it seems that although the market expects a US rate rise later next week, the fact the USA feels strong enough to raise rates is being seen as a positive sign.

Gold prices are also weaker, prospects for a US rate rise are no doubt weighing on prices and further weakness cannot be ruled out in the run up to the US Federal Open Market Committee meeting next week, but as we have seen following the two previous rate rises, gold prices managed to rally in the aftermath of the rises. Silver and platinum prices are following gold’s lead and are weaker, while palladium is generally holding up well.

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

 

Overnight Performance
GMT 06:23 +/- +/- % Lots
Cu 5868 13 0.2% 1552
Al 1873 -4 -0.2% 688
Ni 10985 -90 -0.8% 1027
Zn 2730 -14 -0.5% 1683
Pb 2230.5 -13 -0.6% 423
Sn 19350 -55 -0.3% 6
Average -0.4%        5,379
Gold 1226.11 0.36 0.0%  
Silver 17.729 -0.026 -0.1%
Platinum 975.3 0.3 0.0%
Palladium 772.3 2.3 0.3%
Average PM 0.1%

 

SHFE Prices 06:22 GMT RMB Change % Change
Cu 47710 -440 -0.9%
AL 13745 -200 -1.4%
Zn 22235 -375 -1.7%
Pb 18000 -385 -2.1%
Ni 90930 -150 -0.2%
Sn 144500 -1130 -0.8%
Average change (base metals) -1.2%
Rebar 3465 -46 -1.3%
Iron ore 660 -19 -2.8%
Au 276.45 -0.85 -0.3%
Ag 4163 -8 -0.2%

 

Economic Agenda
GMT Country Data Actual Expected Previous
12:01am UK BRC Retail Sales Monitor y/y -0.4% -0.6%
5:00am Japan BOJ Core CPI y/y 0.2% 0.1%
 7:00am Germany German Factory Orders m/m -2.5% 5.2%
7:45am France French Gov Budget Balance -69.0B
8:30am UK Halifax HPI m/m 0.4% -0.9%
10:00am EU Revised GDP q/q 0.4% 0.4%
1:30pm US Trade Balance -47.0B -44.3B
3:00pm US IBD/TIPP Economic Optimism 57.1 56.4
8:00pm US Consumer Credit m/m 19.1B 14.2B
11:50pm Japan Final GDP q/q 0.4% 0.2%
11:50pm Japan Bank Lending y/y 2.5%
11:50pm Japan Current Account 1.46T 1.67T
11:50pm Japan Final GDP Price Index y/y -0.1% -0.1%