Metals morning view: Gold prices slightly firmer this morning

Feb 27, 2018 - 8:39 AM GMT

Precious metals prices are for the most part slightly firmer this morning, with gold prices up by 0.1% ($1,333.86 per oz), silver prices are unchanged ($16.63 per oz) and the platinum group metals are both up by 0.2%, with platinum at $999.30 per oz and palladium at $1,061.50 per oz. This follows a stronger performance on Monday when the complex closed up with gains averaging 0.7%, led by a 1.3% rise in palladium prices.

The recent pullback in gold prices has run into support and prices are rebounding – the lack of dollar strength in recent days is no doubt providing support. We expect general bullishness being seen in metals and oil to carry precious metals higher.

Base metals traded on the London Metal Exchange are up across the board by an average of 0.4% this morning, Tuesday February 27.

Aluminium prices lead the way with a gain of 0.7%, while the rest are up between 0.1% for zinc and 0.4% for tin, with copper prices up by 0.3% at $7,136 per tonne. Volume has been average with 6,677 lots traded as of 07.12 am London time.

This follows a day of general strength for most of the metals on Monday – the complex closed up by an average of 0.5%, although copper and aluminium prices did give back the strength they had earlier on in the day.

On the Shanghai Futures Exchange, the base metals are for the most part firmer – aluminium and copper prices are little changed, with copper at 53,350 yuan ($8,443) per tonne, while the rest are up between 0.5% and 1%, with nickel in the driving seat. Spot copper prices in Changjiang are off by 0.1% at 52,840-53,020 yuan per tonne and the LME/Shanghai copper arbitrage ratio stands at 7.48.

In other metals in China, iron ore prices are down by 0.6% at 546.50 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are up by 0.8%, while gold prices are off by 0.2% and silver prices are up by 0.2%.

In wider markets, spot Brent crude oil prices are off by 0.33% at $67.32 per barrel, the yield on US 10-year treasuries is little changed at 2.86%, as is the German 10-year bund yield at 0.66%.

Equity markets in Asia are mixed this morning: Nikkei (+1.07%), Hang Seng (-0.65%), CSI 300 (-1.44%), ASX 200 (+0.24%) and Kospi (-0.06%). This follows gains in western markets on Monday, where in the United States the Dow Jones closed up by 1.58% at 25,709.27, and in Europe where the Euro Stoxx 50 closed up by 0.63% at 3,463.18.

The dollar index’s rebound ran out of steam on Thursday and it has since been consolidating with a slightly weaker bias – this morning it is at around 89.79. This is leading to consolidation in the other currency majors: euro (1.2325), sterling (1.3972), yen (106.89) and Australian dollar (0.7844). The yuan is firm at 6.3075 and the emerging market currencies we follow are for the most part consolidating.

Economic data out today includes Japan’s core consumer price index (CPI) that edged up to 0.8% from 0.7% previously, later there is data on German and Spanish CPI, US durable goods orders and goods trade balance, wholesale inventories, house prices, consumer confidence and the Richmond manufacturing index. In addition, Germany’s Bundesbank president Jens Weidmann and US Federal Reserve chair Jerome Powell are speaking.

Base metals prices are generally holding up well, with zinc, nickel and tin prices all in high ground and well placed to challenge recent highs, while copper is in mid-ground and aluminium and lead prices are further from their highs. Our view remains bullish, given concerted global growth and supply restraints following the past five years of reduced producer capex, but for now prices seem in no rush to break higher.

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