METAL MORNING VIEW 25/01: Gold prices slip as safe-haven interest wanes

Jan 25, 2017 - 7:56 AM GMT
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FastMarkets

By William Adamswilliam.adams@fastmarkets.com

January 25, 2017, 07:42 GMT

Precious metals are off an average of 0.2% this morning, Wednesday January 25, gold and silver prices are down 0.5% with spot gold prices at $1,203.13 per oz, while platinum is off 0.2% and palladium is bucking the trend with a 0.3% gain. On Tuesday, bullion prices were down around 0.7%, while the PGMs were up around 1.5%.

Base metals this morning, are consolidating. Prices are on average off 0.3%, between 0.1% for copper at $5,937 per tonne and 0.7% for nickel at $9,760 per tonne, while aluminium is bucking the trend, its prices are up 0.3%

This consolidation, however, comes after strong gains averaging 1.6% on Tuesday. Lead outperformed with prices up 2.7% while copper prices were up 2.3% at $5,945.50 per tonne.

In Shanghai this morning, the base metals are for the most part up with average gains of 0.8%, nickel prices are the only ones in negative territory, prices are down 0.6%, zinc prices are little changed, while lead prices are up 0.6%, tin prices are up 1.3%, copper prices are up 1.5% at 47,560 yuan per tonne and aluminium is leading the pack with a 2.1% rise. Spot copper prices in Changjiang are up 1.3% at 47,390-47,590 yuan per tonne, the LME/Shanghai copper arb ratio is weaker at 8.01 and the spread between the spot and March futures contracts is either side of level.

In other markets in China, May iron ore futures on the Dalian Commodity Exchange are up 1%, on SHFE steel rebar prices are up 1.3%, while gold and silver prices are both down 1.5%. In international markets, spot Brent crude oil prices are up 0.3% at $55.93 per barrel.

Equities were upbeat on Tuesday helped by stronger earnings expectations, the Euro Stoxx 50 closed up 0.3%, the S&P 500 and Nasdaq touched intraday records and the Dow closed up 0.6% at 19,912.71. Equities in Asia are stronger this morning – the Nikkei is up 1.4%, helped by stronger Japanese exports, the Hang Seng and the Kospi are up 0.2%, the CSI 300 is up 0.2% and the ASX 200 is up 0.4%.

In FX, the dollar index is hovering in low ground, it was recently quoted at 100.30, the low on Friday January 20, was 99.91. The euro at 1.0752 is holding just below recent highs, the sterling is firmer at 1.2523, the yen is consolidating around 113.67 and the Australian dollar is weaker at 0.7537.

Data out late yesterday showed Japan posted its first trade surplus in six years in 2016, later there is data out on German Ifo business climate, there is a 30-year German bond auction, data on UK industrial order expectations, US house prices and crude oil inventories – see table below for more details.

Aluminium prices have been leading on the upside, the move has been helped by further talk of production cutbacks in China on the back of stricter environmental standards. Lead prices also performed well, with copper and zinc following, tin prices rebounded, while nickel prices remain depressed as they continue to suffer following Indonesia’s ore export rule changes, but elsewhere in the nickel market availability is looking tighter. For now the path of least resistance is to the upside for most of the metals, but the markets would be in danger of seeing risk-off should there be any political shocks out of the USA.

Gold prices are starting to struggle and that seems to be on the back of a lack of shocks from the early days of the new US administration, but as it is still early days, we would be surprised if there was too much long liquidation. The PGMs remain upbeat and the strength in other industrial metals may well help the PGMs hold on to their gains more, even if gold prices slip.

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

Overnight Performance
GMT 06:02 +/- +/- % Lots
Cu 5937 -8.5 -0.1% 2160
Al 1872.5 6.5 0.3% 2166
Ni 9760 -65 -0.7% 1225
Zn 2816.5 -13 -0.5% 1423
Pb 2374 -8 -0.3% 209
Sn 20520 -80 -0.4% 10
  Average -0.3%         7,193
Gold 1203.13 -5.87 -0.5%  
Silver 16.979 -0.086 -0.5%  
Platinum 989 -2 -0.2%  
Palladium 787.3 2.3 0.3%  
  Average PM   -0.2%  
SHFE Prices 06:06 GMT RMB Change % Change
Cu 47560 690 1.5%
AL 14035 295 2.1%
Zn 22760 25 0.1%
Pb 18750 105 0.6%
Ni 82050 -480 -0.6%
Sn 147310 1930 1.3%
Average change (base metals) 0   0.8%
Rebar 3304 41 1.3%
Iron ore 640 6.5 1.0%
Au 268.6 -4.1 -1.5%
Ag 4064 -61 -1.5%
Economic Agenda
GMT Country Data Actual Expected Previous
9:00am Germany German Ifo Business Climate 111.3 111
Germany German 30-y Bond Auction 0.64|1.7
11:00am UK CBI Industrial Order Expectations 2 0
2:00pm US HPI m/m 0.4% 0.4%
3:30pm US Crude Oil Inventories   1.5M 2.3M
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