Gold prices hold up relatively well, weaker dollar helping

Apr 26, 2017 - 8:50 AM GMT


Gold and silver prices are little changed this morning with spot prices at $1,263.25 per oz and 17.57 per oz respectively, while the PGMs are firmer by an average of 0.4%. This follows a generally weaker performance yesterday when silver prices fell 1.7%, gold prices fell 1% and platinum prices fell 0.8%, while palladium bucked the trend with a 0.4% rise.

With the market expecting Emmanuel Macron to be the next French president, haven trades are losing their shine, hence bullion prices and the yen are on back footings and that may well remain the case until after the May 7 election – unless geopolitical tensions rise elsewhere.

The base metals traded on the London Metal Exchange are up across the board this morning, Wednesday April 26, with three-month prices up an average of 0.4% led by a 0.8% rise in zinc prices.

Copper prices are up 0.2% at $5,723 per tonne. Volume has, however, been low with 3,754 lots traded as of 06:38 BST. This firmer tone follows a mixed performance on Tuesday, when copper, aluminium and lead prices rose around 1.4%, zinc prices climbed 0.8%, but nickel and tin prices fell around 1%.


Metals prices on the Shanghai Futures Exchange are also up across the board, suggesting the wave of weakness that has hit that market in recent weeks may have passed. Prices across the base metals complex are up an average of 0.7% this morning, with lead prices up 1.3% and with zinc and copper prices up 1%, with the latter at 46,360 yuan per tonne.

Spot copper prices in Changjiang are up 0.2% at 46,160-46,310 yuan per tonne and the LME/Shanghai copper arb ratio was trading around 8.10.

In other metals in China, September iron ore futures are up 3.1% on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are up 2.3%, gold prices are down 0.4% and silver prices are off 0.5%.

In international markets, spot Brent crude oil prices are up 0.1% at $52.03 per barrel and the yield on the US ten-year treasuries has increased to 2.34%.

Equities remained buoyant yesterday with the Euro Stoxx 50 closing up 0.2%, it held on to all of its 4% gain from Monday and the Dax set a fresh all-time high. The Dow closed up 1.1% at 20,996.

The firmer tone has spread through Asia this morning, with the Nikkei up 1%, the ASX 200 is up 0.8%, the Hang Seng is up 0.7%, the Kospi is up 0.6% and the CSI 300 is up 0.3%.

The dollar index has broken below support setting a fresh low for the year at 98.69 yesterday. It was recently quoted at 98.75 – this may help underpin commodity prices. The euro at 1.0946 is pushing higher, sterling at 1.2835 is poised below resistance at 1.2860 – it looks well placed to break higher – while the aussie is weaker at 0.7513, as is the yen at 111.35.

In emerging market (EM) currencies, the yuan is flat at 6.8856, the rupee is strengthening, as is the ringgit, while the rest are either consolidating ,or slightly weaker.

The economic agenda is light today: Japan’s all industries activity climbed 0.7%, after a 0.4% fall previously and later today data on US crude oil inventories is released – see table below for more details.

The base metals are edging higher after recent weakness, nickel and tin seem the two metals struggling to get some lift and as such they remain the most vulnerable. Aluminium prices look the strongest as they have retreated the least in recent weeks, while the rest have pulled back quite far – the pullbacks could be consolidation after the strong gains seen in the fourth quarter last year and in the first part of this year, which is what we think is the case – although sentiment does not seem bullish so this stronger tone in recent days could be a feint move higher. On balance, we still remain friendly towards the base metals’ outlooks and are waiting to see if this upward move attracts more followers.

Gold prices have pulled back from the recent highs, but they are holding up relatively well, especially considering the weaker yen and rebound in sentiment as seen by the rebound in equity prices. The weaker dollar may well be helping to cushion any pullback. Silver and platinum are looking weaker, while palladium prices continue to hold up well.


Overnight Performance
BST 06:38 +/- +/- % Lots
Cu 5723 9 0.2% 1310
Al 1964 2 0.1% 356
Ni 9325 25 0.3% 1134
Zn 2626.5 21 0.8% 829
Pb 2180 11 0.5% 102
Sn 19610 75 0.4% 23
Average 0.4%       3,754
Gold 1263.24 -0.06 0.0%  
Silver 17.57 -0.01 -0.1%
Platinum 954.1 2.1 0.2%
Palladium 801.5 4.5 0.6%
Average PM 0.2%


SHFE Prices 06:39 BST RMB Change % Change
Cu         46,360 480 1.0%
AL         14,425 95 0.7%
Zn         21,695 210 1.0%
Pb         16,145 215 1.3%
Ni         78,180 70 0.1%
Sn       137,670 360 0.3%
Average change (base metals)     0.7%
Rebar           2,997 67 2.3%
Iron ore              511 15.5 3.1%
Au              283 -1.05 -0.4%
Ag           4,127 -19 -0.5%


Economic Agenda
BST Country Data Actual Expected Previous
5:30am Japan All Industries Activity m/m 0.7% 0.8% -0.4%
 3:30pm US Crude Oil Inventories -1.1M -1.0M