Gold prices edge lower as dollar strengthens

Feb 21, 2017 - 8:48 AM GMT
by

FastMarkets

The precious metals are little changed this morning, Tuesday February 21, with spot gold prices off 0.2% at $1,234.18 per oz, silver prices are off 0.3%, while platinum is unchanged and palladium prices are up 0.1%. On Monday, gold, silver and platinum prices were firmer by an average of 0.3%, while palladium prices were off 0.6%.

Base metals prices are consolidating on the London Metal Exchange this morning with prices down an average of 0.3%, with all the metals, except tin, off between 0.2% for zinc and 0.7% for nickel – volume has been average with 6,164 lots traded as of 06:48 GMT.

Today’s slight pullback comes after a strong performance on Monday when the base metals complex closed up with average gains of 1.5%, led by lead and zinc that were up 2.8% and 2.5%, respectively, while three-month copper prices closed up 1.7% at $6,070 per tonne.

In Shanghai this morning, the base metals are firmer across the board by an average of 1.2% with gains between 0.3% for nickel and 2.1% for zinc, while copper prices are up 1.1% at 48,930 yuan per tonne. Spot copper prices in Changjiang are up 1.2% at 48,800-49,000 yuan per tonne and the LME/Shanghai copper arb ratio is at 8.09.

In other metals in China, May iron ore prices have surged 3.9% on the Dalian Commodity Exchange, on SHFE steel rebar prices are up 1.6%, while gold prices are off 0.2% and silver prices are up 0.2%. In international markets, spot Brent crude oil prices are up 0.2% at $56.21 per barrel.

Equities are holding up but not rallying much with the Euro Stoxx 50 closing up 0.1% on Monday and the Dow closing little changed. Asia this morning, for the most part, remains upbeat with the Nikkei up 0.7%, the Kospi is up 0.9%, the Hang Seng is off 0.6%, the CSI 300 is up 0.3% and the ASX 200 is off 0.1%.

In FX, the dollar index appears to be starting off on another up leg with the index recently quoted at 101.60 – some hawkish US Fed talk saying a March rate rise is not off the table is boosting the dollar. Conversely, other major currencies are weaker with the euro at 1.0584, the yen at 113.50, the Australian dollar at 0.7664 and the sterling at 1.2445. Emerging market currencies are also slightly weaker with the yuan at 6.8630 and the rest on a slight back footing.

The economic agenda is busy with the focus on flash manufacturing and services PMI data. Japan’s manufacturing PMI climbed to 53.5 from 52.7, but the country’s all industries activity dropped 0.3%. In addition to PMI data there is data out on French CPI, UK borrowing and UK inflation. Furthermore, there is an EU Ecofin meeting and US Federal Open Market Committee members Neel Kashkari and Patrick Harker are speaking – see table below for more details.

The base metals are for the most part consolidating this morning after rebounding on Monday. High prices appear to be attracting profit-taking and some selling, while the stronger dollar is a headwind too. That said, the underlying sentiment remains bullish and we expect that to remain the case as the seasonally stronger second quarter still lies ahead.

Gold prices are trading sideways, there appears to be supply above $1,240 per oz that is capping the upside for now. The fact prices are holding up given the strength in equities and the dollar suggests underlying sentiment remains bullish, but if prices fail to get upside momentum then there are likely to be bouts of stale long liquidation that cause price pullbacks. We would expect dips to be well supported though. Silver and the PGMs seems to be showing a bit more weakness this morning, which is in line with the weaker tone being seen in the base metals too.

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

 

 

Overnight Performance
GMT 06:48 +/- +/- % Lots
Cu 6051 -19 -0.3% 2669
Al 1892.5 -8.5 -0.4% 573
Ni 11080 -75 -0.7% 974
Zn 2875.5 -4.5 -0.2% 1749
Pb 2308 -8 -0.3% 199
Sn 19860 0 0.0%
Average -0.3%        6,164
Gold 1234.18 -2.92 -0.2%  
Silver 17.991 -0.049 -0.3%
Platinum 1000.9 -0.1 0.0%
Palladium 772 1 0.1%
Average PM -0.1%

 

 

SHFE Prices 06:47 GMT RMB Change % Change
Cu 48930 510 1.1%
AL 14230 180 1.3%
Zn 23385 470 2.1%
Pb 19075 285 1.5%
Ni 91320 230 0.3%
Sn 149020 1960 1.3%
Average change (base metals)     1.2%
Rebar 3572 55 1.6%
Iron ore 732.5 27.5 3.9%
Au 276.9 -0.45 -0.2%
Ag 4223 8 0.2%

 

 

Economic Agenda
GMT Country Data Actual Expected Previous
12:30am Japan Flash Manufacturing PMI 53.5 52.1 52.7
4:30am Japan All Industries Activity m/m -0.3% -0.2% 0.4%
 7:45am France French Final CPI m/m -0.2% -0.2%
8:00am France French Flash Manufacturing PMI 53.5 53.6
8:00am France French Flash Services PMI 53.8 54.1
8:30am Germany German Flash Manufacturing PMI 56.2 56.4
8:30am Germany German Flash Services PMI 53.6 53.4
9:00am EU Flash Manufacturing PMI 55 55.2
9:00am EU Flash Services PMI 53.7 53.7
9:30am UK Public Sector Net Borrowing -14.4B 6.4B
10:00am UK Inflation Report Hearings
All Day EU ECOFIN Meetings
1:50pm US FOMC Member Kashkari Speaks
1:50pm US Flash Manufacturing PMI 54.7 55
2:45pm US Flash Services PMI 55.8 55.6
5:00pm US FOMC Member Harker Speaks
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