Gold prices pause ahead of resistance

Mar 30, 2017 - 10:01 AM GMT
by

FastMarkets

Precious metals are split this morning, Thursday March 30, with spot gold and silver prices down 0.2% and 0.4%, respectively, with gold at $1,250.34 per oz, while the PGMs are firmer with platinum prices up 0.6% at $957.40 per oz and palladium prices up 0.3% at $788.70 per oz. Platinum prices are at a $293 per oz discount to gold prices.

Base metals prices on the London Metal Exchange are slightly weaker across the board this morning, with three-month prices down between 0.1% for aluminium and 0.5% for lead, nickel and copper, with the latter at $5,877 per tonne.

Volume has been light with 3,297 lots traded as of 06:20 BST. Today’s weaker tone follows a day of gains on Wednesday when prices closed up an average of 0.6%, which saw aluminium prices set fresh highs for the year at $1,961 per tonne.

In Shanghai, the May base metals contracts on the Shanghai Futures Exchange are mixed, zinc prices lead the upside with a 1.8% gain, while lead prices are off 1.2%, tin prices are down 0.2%. Nickel prices are up 0.5%, aluminium prices are little changed and copper prices are up 0.4% at 47,450 yuan per tonne. Spot copper prices in Changjiang are up 0.1% at 47,100-47,220 yuan per tonne, with the LME/Shanghai copper arb ratio at 8.07, which means the arb window remains closed.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange are slightly weaker, they are down 0.4%. On the SHFE, steel rebar prices are up 0.4%, while gold and silver prices are off an average of 0.2%. In international markets, spot Brent crude oil prices are up 0.1% at $52.48 per barrel and the yield on the 10-year US treasuries is weaker at around 2.39%.

Equities were mixed on Wednesday, despite the UK triggering Article 50 the Euro Stoxx 50 closed up 0.3% but the Dow closed down 0.2%. Equities in Asia this morning are for the most part weaker with the Nikkei off 0.9%, the Hang Seng is down 0.5%, the CSI 300 is down 1.13%, the Kospi is off 0.3%, but the ASX 200 is bucking the trend with a 0.4% gain.

In FX, the dollar index continues to rebound and was recently quoted at 100.04, conversely the euro is weaker at 1.0754, the yen is little changed at 111.14, while sterling at 1.2440 and the Australian dollar at 0.7659, are firmer than at this time on Wednesday. The yuan has firmed slightly to 6.8803, the rupee and peso are consolidating recent gains, the rand is on a back footing, while the rest are consolidating.

On the economic agenda there is CPI data out in Spain and Germany and US data includes initial jobless claims, final GDP, GDP prices, natural gas storage and US Federal Open Market Committee member Robert Kaplan is speaking – see table below for more details.

Aluminium prices stand out as the leader as they broke higher on Wednesday. Zinc, copper and lead prices are nibbling away at overhead resistance and we wait to see how much selling lurks above. Nickel prices have not managed to get much lift, they are seeing what underlying support is like, while tin prices have been quite choppy of late, but they do seem to have an upside bias again. There may be some position adjusting/book-squaring ahead of the end of the first quarter and we wait to see, as we expect, if consumer interest picks up as we move into the second quarter.

Gold prices have rebounded well but appear to have run into selling ahead of the February highs, but for now the sellers do not seem to be prepared to chase prices lower, so it may be a question of the buyers having to absorb what selling there is at these levels, before prices can move higher again. Silver is following gold, palladium prices are consolidating having recently set fresh highs, while platinum prices are fairly listless.

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