Gold prices drift in quiet conditions

Apr 27, 2017 - 8:43 AM GMT
by

FastMarkets

Gold and the other precious metals are little changed this morning, Thursday April 27, with spot gold prices off 0.1% at $1,267.24 per oz. This follows on from Wednesday when gold and palladium prices were firmer, while silver and platinum prices were weaker.

The base metals traded on the London Metal Exchange are down across the board this morning, with three-month prices off an average of 0.3%.

Prices are down between 0.2% for tin and 0.5% for nickel, with copper prices down 0.4% at $5,709 per tonne. Volume has been light with 3,630 lots traded as of 06:30 BST.

This follows a generally stronger performance on Wednesday that saw gains average 0.8%, led by a 1.9% rebound in tin prices to $19,910 per tonne, while copper and aluminium prices gained 0.4%.

Metals prices on the Shanghai Futures Exchange are up an average of 0.3% this morning, led by a 1.7% rebound in tin prices, nickel prices remain weak with a 0.7% decline, aluminium prices are off 0.4%, lead and zinc prices are up either side of 0.6% and copper is little changed at 46,290 yuan per tonne.

Spot copper prices in Changjiang are off 0.1% at 46,130-46,280 yuan per tonne and the LME/Shanghai copper arb ratio was trading at around 8.11.

In other metals in China, September iron ore futures are down 1.1% on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are unchanged and gold and silver prices are little changed.

In international markets, spot Brent crude oil prices are up 0.2% at $51.58 per barrel and the yield on the US ten-year treasuries has eased to 2.31%.

Equities remained buoyant on Wednesday with the Euro Stoxx 50 and Dow only off by around 0.1%, after what has been a strong run higher. The US tax plan excited the markets for a while, but that faded by the close. In Asia this morning, the Nikkei is off 0.2%, the Hang Seng is up 0.1%, the CSI 300 is off 0.3% and the ASX 200 and Kospi are up 0.1%.

The dollar index at 98.93 remains vulnerable as it sits on a support line running under a series of lows dating back to December 2016. The euro at 1.0902 is consolidating recent strength, the yen at 111.23 and the Australian dollar at 0.7483 are consolidating recent weakness and the sterling has broken higher above resistance at 1.2860, it being recently quoted at 1.2869.

In emerging market (EM) currencies, the yuan is weaker at 6.8968, the rupee remains strong at 64.095, the ringgit is strengthening, the peso is reversing recent weakness, while the rest are consolidating.

The economic agenda is busy with an update on Japan’s monetary policy, later there is data on German GfK consumer climate, German and Spanish preliminary CPI, Spanish unemployment rate, UK realised sales, the EU monetary policy decision and press conference. US data includes durable goods orders, initial jobless claims, goods trade balance, wholesale inventories, pending home sales and natural gas storage – see table below for more details.

Most of the base metals appear to have found bases and are trying to rebound, all to varying levels of success. Aluminium prices are the closest to setting fresh highs with three-month prices recently trading at $1,963 per tonne, when the end-of-March high was at $1,981. Nickel, however, is the one metal still heading lower, with prices reaching $9,215 per tonne this morning. This weakness probably reflects the pick-up in China’s nickel ore/concentrate imports from Indonesia, which helped counter falling imports from the Philippines. On balance we remain mildly bullish for the base metals’ fundamentals but volume on the LME remains low so it may take a pick-up in volume before prices become more directional again.

Gold prices are on a back footing, but they are holding up better than we expected given how the market seems to be less concerned about the French election now. The weaker dollar, however, may be providing extra support. Silver and platinum are looking weaker, while palladium prices continue to hold up well. We would not be surprised to see gold prices weaken further, before resuming the overall up trend.

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