Gold prices are under pressure and looking vulnerable

Precious metals were mixed yesterday, platinum, palladium and silver closed lower by an average of 1.3 percent, while gold was little changed, albeit in low ground at $1,312.85. Base metals closed mixed yesterday with zinc and aluminium in positive territory, while nickel and lead led on the downside with losses of 1.9 and 1.7 percent respectively. Copper closed off 0.9 percent at $4,833.50 having had an intraday spike lower to $4,783.50 and tin closed off 0.4 percent at $19,970.

This morning with China closed, the markets have been quiet with the base metals up an average of 0.2 percent, ranged between copper being off 0.1 percent at $4,828 and nickel being up 0.3 percent at $10,350. Volume remains light with 1,270 lots traded as of 06:35 BST. Zinc and aluminium have traded the most with 477 and 398 lots respectively, while coper has only traded 163 lots.

Precious metals are little changed this morning, with gold prices off 0.1 percent at $1,311.72. In international markets Brent crude is last at $50.67.

Equities were slightly weaker yesterday with the Euro Stoxx 50 closing off 0.1 percent and the Dow closed off 0.3 percent, this despite some supportive PMI data. Asian markets are slightly more upbeat, the Nikkei is up 0.7 percent, the Kospi is up 0.5 percent and the Hang Seng and ASX 200 are up 0.1 percent.

In FX, the dollar is rallying, last at 95.94, the yen is weaker at 102.23, as are the euro at 1.1191, sterling at 1.2842, the post Brexit-vote low was 1.2795, while the aussie is holding up near high ground, last at 0.7670. Emerging market currencies are little changed, but may weaken given the firmer dollar, although the rouble is stronger on the back of oil being back above $50.

The economic calendar is fairly light, Japan’s monetary bases grew slightly less than expected, consumer confidence was stronger, later we get Spanish unemployment change, UK construction PMI and EU PPI – see table below for more details.

Given generally better economic data, especially in China, there is some room to be more optimistic about demand and that should go a long way in supporting metal prices as it has so often been the weak link this year. With supply restraints and deficits emerging the supply side has improved compared with recent years and now a stronger demand outlook may prompt more in the way of restocking.

To what degree the metals have already discounted this is another question. All the metals with the exception of copper have set fresh highs for the year in recent months, copper’s high was set back in March, aluminium’s and nickel’s were in August, while the rest have been setting highs in recent days. As such, we feel the upward trends will continue for now and maybe copper will have some catching up to do.

The precious metals, with the exception of palladium, are under pressure and looking vulnerable. Platinum has already broken below recent support and gold and silver prices are holding down in low ground. The stronger dollar and better economic data may well prompt more long liquidation by funds. The divergence between the PGMs is odd, especially with wage negotiations continuing in South Africa.

 

Overnight Performance
BST	06:35	+/-	+/- %	Lots
Cu	4828	-5.5	-0.1%	163
Al	1677	-1	-0.1%	398
Ni	10350	35	0.3%	82
Zn	2413	4	0.2%	477
Pb	2098.5	5	0.2%	148
Sn	19990	20	0.1%	2
	Average		0.1%	1,270
Gold	1311.72	-1.13	-0.1%
Silver	18.873	0.003	0.0%
Platinum	1005.3	0.3	0.0%
Palladium	709.5	-0.5	-0.1%
	Average PM		0.0%

 

Economic Agenda
BST	Country	Data	Actual	Expected	Previous
12:50am	Japan	Monetary Base y/y	22.7%	23.4%	24.2%
All Day	China	Bank Holiday
4:45am	Japan	10-y Bond Auction	-0.06|3.8		-0.05|3.7
6:00am	Japan	Consumer Confidence	43	41.8	42
8:00am	Spain	Spanish Unemployment Change		23.5K	14.4K
9:30am	UK	Construction PMI		49.1	49.2
10:00am	EU	PPI m/m		0.0%	0.1%

The post Gold prices are under pressure and looking vulnerable appeared first on The Bullion Desk.

from The Bullion Desk http://ift.tt/2dsBZhQ
via IFTTT