METALS MORNING VIEW 24/01: Gold prices consolidate

Jan 24, 2017 - 9:14 AM GMT

In precious metals this morning, January 24, spot platinum prices are up 0.2%, palladium prices are little changed, silver prices are off 0.4% and gold prices are down 0.2% at $1,214.65 per oz.

The base metals for the most part are little changed this morning, lead prices are up 0.6%, copper and nickel prices are both up 0.3% with three-month copper at $5,827 per tonne, while aluminium, zinc and tin prices are off 0.1%. Volume has been average with 6,931 lots traded as of 06:58 GMT.

Base metals were bullish on Monday with gains seen across the metals ranging between 0.2% for tin and 1.5% for zinc, with copper, nickel and lead prices up around 0.9%, while aluminium prices closed up 0.3%. Copper prices closed at $5,757.50 per tonne.

In precious metals on Monday, palladium prices dropped 1.8%, the rest were up between 0.4% and 0.8%, with gold prices closing at $1,217.35 per oz.

In Shanghai, lead prices are down 0.7%, nickel prices are off 0.3%, while the others are firmer, with tin up 0.4%, copper prices are up 0.2% at 46,880 yuan per tonne and the rest are little changed. Spot copper prices in Changjiang are little changed at 46,780-46,980 yuan per tonne, the spread between spot and the March futures is at an equivalent of around $15 per tonne backwardation and the LME/Shanghai copper arb ratio is at 8.07.

In other markets in China, May iron ore prices on the Dalian Commodities Exchange are up 6.1%, steel rebar prices on the SHFE are up 3.5%, while the precious metals are little changed. In international markets, spot Brent crude oil prices are up 0.5% at $55.63 per barrel.

Equities were weaker on Monday with the Euro Stoxx 50 off 0.8% and the Dow closed down 0.1% at 19,799.85 – this morning the Nikkei is off 0.6%, the Hang Seng is up 0.2%, the CSI 300 and Kospi are little changed, while the ASX 200 is up 0.7%.

In FX, the pullback in the dollar index has paused, the low on Monday was 99.91, the index was recently quoted at 100.25, the euro likewise is consolidating at 1.0740, as are the sterling at 1.2470, the yen at 113.16 and the Australian dollar at 0.7565. The yuan is trending higher again, albeit not in a straight line, it was last at 6.8505 and most emerging market currencies are quietly firmer, which suggests little concern on the geopolitical front.

The economic agenda is busy today with a host of flash PMI data coming out. Data already out shows Japan’s PMI rising to 52.8 from 52.4, later there is PMI data out in France, Germany, the EU and the USA. In addition, there is the UK court ruling regarding Article 50, UK public sector borrowing requirement, US existing home sales and Richmond manufacturing index – see table below for more details.

The base metals are split into three camps, nickel and tin are weak and looking vulnerable, we wait to see if the strength in other metals leads to bargain hunting; aluminium is the opposite, prices are now consolidating having raced higher since early January, while copper, zinc and lead prices are edging higher and look well placed to extend gains, but seem in no hurry to do so. Overall, sentiment seems to remain bullish, but in the run-up to the Chinese Lunar New Year, we would expect consolidation and further choppiness as trading volumes start to thin.

The precious metals have had a strong run, the markets are still waiting for the US administration to announce more policy and in the absence of any shocks, consolidation may well set in.

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

Overnight Performance
GMT 06:58 +/- +/- % Lots
Cu 5827 16.5 0.3% 2278
Al 1848 -2 -0.1% 1155
Ni 9810 25 0.3% 2084
Zn 2789 -4 -0.1% 1146
Pb 2335 15 0.6% 247
Sn 20225 -20 -0.1% 21
Average   0.1%         6,931
Gold 1214.65 -2.7 -0.2%  
Silver 17.118 -0.077 -0.4%
Platinum 980.4 2.4 0.2%
Palladium 773.1 0.1 0.0%
Average PM   -0.1%
Economic Agenda
GMT Country Data Actual Expected Previous
12:30am Japan Flash Manufacturing PMI 52.8 52.3 52.4
 8:00am France French Flash Manufacturing PMI 53.4 53.5
 8:00am France French Flash Services PMI 53.2 52.9
8:30am Germany German Flash Manufacturing PMI 55.5 55.6
8:30am Germany German Flash Services PMI 54.6 54.3
9:00am EU Flash Manufacturing PMI 54.8 54.9
9:00am EU Flash Services PMI 53.9 53.7
9:30am UK EU Membership Court Ruling
9:30am UK Public Sector Net Borrowing 6.7B 12.2B
2:45pm US Flash Manufacturing PMI 54.6 54.3
3:00pm US Existing Home Sales 5.54M 5.61M
3:00pm US Richmond Manufacturing Index 7 8