Metals prices run into some resistance

The base metals ended Friday on a mixed note with lead falling 1.5 percent to $1,917, tin was up 1.1 percent, zinc was off 0.4 percent, aluminium was up 0.4 percent while nickel and copper were little changed with copper closing at $4,856. Precious metal were also mixed with palladium up 1.2 percent at $698, while silver was off one percent and platinum and gold were little changed.

This morning, the base metals are lower across the board with 0.5 percent average losses, led by a one percent decline in nickel, zinc is off 0.7 percent and aluminium off 0.5 percent, the rest are off between 0.1 and 0.3 percent with copper at $4,842. Volume has been average, but more aluminium and zinc have traded than copper.

The precious metals are down an average of 0.7 percent, led by 0.9 percent declines in the PGMs, with gold off 0.2 percent at $1,334.40.

In Shanghai, the base metals are mostly lower, the exception is tin that is up 0.3 percent, the rest are down between 0.1 percent for copper at Rmb 37,740 and 1.8 percent for zinc, with lead off 1.1 percent. Spot copper in Changjiang is unchanged at Rmb 37,800-37,900, the spread with the November contract is at an equivalent of $24 per tonne back, while the LME/Shanghai arb ratio is weaker at 7.76, meaning the arb window is closed.

In other metals in China, iron ore prices are unchanged, while steel rebar is up 0.9 percent, gold is off 0.3 percent and silver is off 1.9 percent. In international markets, Brent crude oil is up 0.7 percent at $46.30, with the market braced to see if there is any progress on OPEC members freezing output when the meet in Algeria this week.

Equities were weaker on Friday with the Euro Stoxx 50 closing down 0.6 percent and the Dow closed off 0.7 percent. In Asia this morning, the Nikkei is down 1.4 percent, the Hang Seng is off 0.9 percent, the CSI is off one percent, the Kospi is down 0.4 percent, while the ASX 200 is little changed.

In FX, the dollar index is flat at 95.48, the euro is firm at 1.1225, sterling is weak at 1.2964, the aussie is consolidating at 0.7620 and the yen is strong at 100.85. The yuan is last at 6.6727 and other emerging market currencies are generally in high ground, the exception being the ringgit that is looking weaker.

On the economic agenda there is data on German Ifo business climate, Italian retail sales, UK mortgage approvals, US new home sales and ECB President Mario Draghi and FOMC member Daniel Tarullo are speaking – see table below for more details.

The base metals have generally been firmer of late with most of the metals holding on to most of their gains, while lead and zinc have run into some selling, especially lead. With prices off this morning it does look like overhead resistance levels are proving effective for now. We still see the upside as the path of least resistance, but prices will have to absorb scale up selling along the way, so we are looking for prices to continue to move sideways-to-higher.

Gold prices ran up last week but prices have run into resistance ahead of previous highs, the same is true for silver, while palladium is looking stronger than platinum. Gold CFTC data for the week up to September 20 showed significant long liquidation, but given the gains that started on September 21, it does look as though buying returned in the latter part of last week and the ETF data supports that, with gold ETF holdings setting a fresh high for the year on Friday, as did silver holdings.

 

Overnight Performance
BST	06:51	+/-	+/- %	Lots
Cu	4842	-14	-0.3%	1342
Al	1628.5	-8	-0.5%	1830
Ni	10535	-105	-1.0%	908
Zn	2260	-16.5	-0.7%	1751
Pb	1913	-4	-0.2%	184
Sn	19630	-10	-0.1%	34
	Average		-0.5%	6,049
Gold	1334.4	-3.15	-0.2%
Silver	19.538	-0.127	-0.6%
Platinum	1040.1	-9.9	-0.9%
Palladium	692	-6	-0.9%
	Average PM		-0.7%

 

SHFE Prices 06:52 BST	RMB	Change	% Change
Cu	37740	-30	-0.1%
AL	12385	-45	-0.4%
Zn	17625	-325	-1.8%
Pb	14395	-155	-1.1%
Ni	81910	-270	-0.3%
Sn	127020	350	0.3%
Average change (base metals)	0		-0.6%
Rebar	2319	21	0.9%
Au	287.7	-0.9	-0.3%
Ag	4330	-83	-1.9%

 

Economic Agenda
BST	Country	Data	Actual	Expected	Previous
6:36am	Japan	BOJ Gov Kuroda Speaks
9:00am	Germany	German Ifo Business Climate		106.3	106.2
9:00am	Italy	Italian Retail Sales m/m		0.0%	0.2%
9:30am	UK	BBA Mortgage Approvals		37.2K	37.7K
3:00pm	US	New Home Sales		598K	654K
4:05pm	EU	ECB President Draghi Speaks
4:45pm	US	FOMC Member Tarullo Speaks

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