Metals prices already rebounding, helped by PMI data and oil

• Oil production cuts and generally firmer PMI data support sentiment

Base metals consolidated on November 30, with prices closing up an average of 0.5%, led by a 2.8% rise in three-month tin prices to $21,065 per tonne, zinc and lead prices closed lower by 1.2% and 0.3% respectively, while the rest were firmer with copper prices closing up 1% at $5,795 per tonne. Precious metals saw spot gold, silver and platinum prices drop 1.3%, 0.9 and 1% respectively, while palladium continued to climb, with a 0.8% gain to $766 per oz.

This morning, December 1, the base metals are up across the board with three-month prices up an average of 1%, ranged between 0.4% for copper ($5,817/[per tonne) and tin prices and 1.9% gains for lead and zinc prices. Nickel and aluminium prices are up 0.7% and 0.6%, respectively.

Precious metals are firmer this morning with spot prices up an average of 0.6%, gold prices are up 0.3% at $1,176.22 per oz, silver, platinum and palladium are up 0.5%, 0.6% and 0.8%, respectively.

In Shanghai, the base metals are up an average of 1.4%, tin prices are up 2.7%, copper prices are up 2.3% at Rmb 47,280 per tonne, lead prices are unchanged, while the rest are up between 0.2% for zinc prices and 1.8% for aluminium prices. Spot copper prices in Changjiang are up 0.5% to Rmb 46,670-46,870 per tonne – again with copper futures up that much more than the spot price it suggests the rally gathered momentum after spot prices were been settled. The LME/Shanghai copper arbitrage window should be reopen with the ratio at 1:8.13.

In other metals in China, iron ore prices are rebounding with the May contract up 4.9%, on SHFE steel rebar prices are also up 4.9%, while gold and silver prices are down 1% and 0.7%, respectively. In international markets spot Brent crude prices are up 1.8% at $52.40 per tonne.

The Euro Stoxx 50 closed up 0.4% and the Dow closed little changed on November 30, and Asia this morning is more upbeat with the Nikkei up 1.1%, the Hang Seng is up 0.4%, the CSI 300 is up 0.5%, the Kospi is little changed and the ASX200 is up 1.1%.

In FX, the dollar index rebounded yesterday on the back of good ADP non-farm employment change, it reached a high of 101.84, but it is slipping this morning and is recently quoted at 101.24. The euro is consolidating at 1.0624, sterling is edging higher at 1.2529, the yen weakened yesterday to 114.82, but was recently quoted at 113.95 and the aussie is consolidating at 0.7412. The yuan is holding in low ground at 6.9000 and the other emerging market currencies are getting some light lift off recent lows – firmer oil prices may well be helping to stabilise the currencies.

Today is another busy day for economic data – official PMI data in China beat expectations, the Caixin PMI dropped to 50.9, from 51.2 and PMI data edged higher in Japan, see table below for more details. Later there is PMI data out across Europe and the US, unemployment data in Italy, UK and US, plus other US data on construction spending, natural gas storage and total vehicle sales.

The recent pullback in base metals prices that started on Monday, November 28, have been fairly sharp but also short-lived it would seem with prices generally running into dip buying yesterday, November 30, and follow through buying this morning. At face value this suggests underlying sentiment is still bullish. As we have said in recent days, we expect higher than normal volatility until after option declaration on December 7, but the OPEC deal, combined with better data of late, does suggest a brighter outlook for commodities, although prices do already look overbought, but they can remain in that mode for an extended period, especially if supported by stronger economic data.

The precious metals, with the exception of palladium, have been looking vulnerable as the stayed around in low ground and spot gold and platinum prices did sell-off this morning, but once again the dips have attracted buying. Given all the political uncertainty that lies ahead, we expect gold to pick-up further safe-haven demand, but the market is for now no doubt focused on a likely December 14, US interest rate rise. It may need to get that out of the way before finding a base.

 

Overnight Performance
GMT	06:26	+/-	+/- %	Lots
Cu	5817	22	0.4%	3737
Al	1742	11	0.6%	1524
Ni	11250	80	0.7%	1475
Zn	2754	52	1.9%	2728
Pb	2390	45	1.9%	333
Sn	21155	90	0.4%	33
	Average		1.0%	9,830
Gold	1176.22	3.97	0.3%
Silver	16.566	0.076	0.5%
Platinum	914.1	6.1	0.7%
Palladium	771.8	5.8	0.8%
	Average PM		0.6%

 

SHFE Prices 06:28 GMT	RMB	Change	% Change
Cu	47280	1060	2.3%
AL	13615	240	1.8%
Zn	23055	40	0.2%
Pb	21270	0	0.0%
Ni	93520	1080	1.2%
Sn	144940	3770	2.7%
Average change (base metals)	0		1.4%
Rebar	3189	149	4.9%
Au	268.6	-2.7	-1.0%
Ag	4130	-30	-0.7%

 

Economic Agenda
GMT	Country	Data	Actual	Expected	Previous
12:30am	Japan	Final Manufacturing PMI	51.3	51.1	51.1
1:00am	China	Manufacturing PMI	51.7	51	51.2
1:00am	China	Non-Manufacturing PMI	54.7		54
1:45am	China	Caixin Manufacturing PMI	50.9	51.0	51.2
6:59am	UK	Nationwide HPI m/m	0.1%	0.2%	0.0%
8:15am	Spain	Manufacturing PMI		53.7	53.3
8:45am	italy	Manufacturing PMI		51.4	50.9
8:50am	France	Final Manufacturing PMI		51.5	51.5
8:55am	Germany	Final Manufacturing PMI		54.4	54.4
9:00am	EU	Final Manufacturing PMI		53.7	53.7
9:00am	Italy	Monthly Unemployment Rate		11.6%	11.7%
9:30am	UK	Manufacturing PMI		54.5	54.3
10:00am	EU	Unemployment Rate		10.0%	10.0%
12:30pm	US	Challenger Job Cuts y/y			-39.1%
1:30pm	US	Unemployment Claims		253K	251K
2:45pm	US	Final Manufacturing PMI		53.9	53.9
3:00pm	US	ISM Manufacturing PMI		52.3	51.9
3:00pm	US	Construction Spending m/m		0.6%	-0.4%
3:00pm	US	ISM Manufacturing Prices		52	54.5
3:30pm	US	Natural Gas Storage		-52B	-2B
All Day	US	Total Vehicle Sales		17.9M	18.3M

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Gold slips under $1,160/oz after strong US data

The spot gold price slipped under $1,160 per oz during Asian trading hours on Thursday December 1 following the overnight release of stronger-than-expected US economic data.

The spot gold price was recently quoted at $1,169.15/1,169.45 per oz, down $3.35 on the previous close. Trade has ranged from $1,162.05 to $1,173.95 so far. 1162.05, the lower end is the lowest since February 5.

In US data released Wednesday, the ADP non-farm employment change – a precursor to Friday’s blockbuster US jobs report – showed 216,000 Americans joining the labour market in November, besting the forecast of 161,000 and indicating that the labour market remains healthy.

October US personal income rose 0.6% month-on-month, above expectations of 0.4%, though personal spending grew 0.3%, below forecast of 0.5%. The Chicago November PMI was at 57.6, the highest reading since January 2015, while core PCE price for October was in line with consensus at 0.1%.

The recent rash of positive data is expected to produce higher rates when the US Federal Open Market Committee (FOMC) meets in a few weeks – it would be the first rate hike since December 2015.

Market participants currently see a 94% chance of a US rate hike in December, according to the CME FedWatch Tool.

“We expect lower lows [for gold] in December until the Fed meets on December 13-14. Although we expect the Fed to raise rates at the meeting, the message it delivers could surprise on the dovish side, highlighting key downside risks to the US economic outlook. This could give gold a boost, hence our neutral short-term view [of 1-3 months],” Boris Mikanikrezai, a Metal Bulletin Research analyst, said.

“We expect gold strength to resume late in the first quarter of 2017 when the market starts to express doubts about the success of Trump’s policies. We are constructive over the medium term [in 3-6 months],” he added.

In other commodities, the Brent crude oil spot price hit as high as 52.33 on Wednesday, the highest since October 20 after OPEC members, for the first time in eight years, agreed on a production cut which will curtail output to 32.5 million barrels per day. The agreement is expected to be implemented in January and will be in place for six months.

Issues remain around adherence to the agreement, the involvement of non-OPEC members like Russia, as well as reaction from the rest of the industry like US shale oil – there is a risk higher oil prices could reactivate more dormant shale oil production, ANZ Research said on Thursday morning.

The Brent crude oil spot price was recently at $51.87 on Thursday, up 0.76% from its previous close.

In other data, China’s official manufacturing PMI was at 51.7 in November, according to data announced by the National Bureau of Statistics (NBS) on Thursday. The figure was better than market forecast of 51 and October’s reading of 51.2. An above 50 reading signifies expansion, and below, contraction.

This was the highest reading in two years amid improving production and demand, expansion in consumer goods manufacturing, growth in high technology manufacturing, and improvements in imports and exports, the NBS said.

The Caixin manufacturing PMI for November came in at 50.9 in line with expectations but lower than October’s reading of 51.2.

Though the November PMI came in lower than October’s figure, it nonetheless marked the second-highest reading in two years, indicating the manufacturing industry continued to pick up steam, Zhong Zhengsheng, Director of Macroeconomic Analysis at CEBM Group said.

“The Chinese economy continued to improve in November, although it lost some momentum compared to the previous month. Inventory and employment data also showed the foundation of growth is not solid yet and investors have to remain vigilant about the risk of a downturn in coming months,” he added.

The official PMI is more focused on large state-owned firms, while the independently surveyed Caixin PMI is closely watched for conditions among the country’s private sector.

China’s non-manufacturing PMI, which represents the service sector, came in at 54.7 for November, up from 54.0 in October.

US data due later on Thursday includes Challenger job cuts, weekly unemployment claims, final manufacturing PMI, ISM manufacturing PMI, construction spending and ISM manufacturing prices.

In currencies, the US dollar index fell 0.15% to 101.41 recently on Thursday.

In equities, the Shanghai Composite gained 0.52% to 3,267.05 so far today.

In the other precious metals, the spot silver price decreased $0.075 to $16.41/16.43 per oz. Platinum at $907/912 per oz was up $2, while palladium rose $8 to $771/776 per oz.

On the Shanghai Futures Exchange, gold for June delivery was recently at 267.55 yuan ($39) per gram, and the June silver was at 4,111 yuan per kilogram.

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Comex copper recovers amid strong US jobs data

Comex copper prices bounced-back Wednesday, November 30 after spending early trading in negative territory with strong US data providing a lift to the entire base metals complex.

Copper for March delivery on the Comex division of the New York Mercantile Exchange rose 0.90 cents or 0.3% to $2.6190 per pound. Trade has ranged from $2.5505 to $2.6335.

Comex gold for December settlement dipped $7.20 or 0.6% to $1,183.60 per oz. Trade has ranged $1,181.20 to $1,196.80.

This morning, in a preview of the Friday’s jobs report, ADP non-farm employment change in November showed 216,000 Americans joined the labor market, besting the forecast of 161,000.

It’s yet another sign that the US economy is growing at a healthy clip heading into the Federal Open Market Committee (FOMC) in a few weeks. The policy-board is expected to raise rates next month, signaling that the economy is projected to expand for the ninth consecutive year.

“We are seeing a generally more positive tone in the base metals today, as buyers seemed to have re-emerged,” INTL FCStone analyst Edward Meir said. “Whether this is the start of another reliable “buy-the-dip” strategy or a bull trap remains to be seen.”

Chinese speculators were the principal drivers of the rally at the start of the week but reports that the Dalian and Zhengzhou exchanges will increase margins across a range of industrial and agricultural commodities from today dampened sentiment.

As well, the Shanghai Futures Exchange (SHFE) announced it will cap new positions of several steel rebar futures contracts to 8,000 lots per account for some non-hedging clients.

“As Chinese authorities try to rein in excessive speculation in areas such as property, huge amounts of cash looking for a home has been channelled into commodities and as these ‘overheat’ so exchanges are also forced to act,” Sucden said in a note.

The PBoC raised deposits for first-time buyers to 35% from 30% previously. Deposit requirements for second properties have also climbed to 70%.

In data today, the EU CPI flash estimate and the core CPI estimate were as expected at 0.6% and 0.8% respectively.

Here in the US, CORE PCE price index month-over-month in October was in-line with expectations at a 0.1% uptick, while personal spending and income grew at 0.3% and 0.6% respectively.

Market participants will now focus on upcoming Chinese manufacturing PMI and non-manufacturing PMI, while the US has PMI numbers, unemployment data and non-farm payroll data of note.

Turning to European markets, Germany’s DAX and France’s CAC-40 were up 0.2% and 0.6% respectively, while the dollar strengthened by 0.3% to 1.0624 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex jumped $3.25 or 7.2% to $48.48 per barrel, while Comex silver for December settlement was recently trading at $16.730 per oz., down 10 cents

(Editing by Tom Jennemann)

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Gold price creeps higher on bargain hunting, softer dollar

The gold price was steady on the morning of Wednesday November 30 in London, inching higher thanks to some bargain hunting and a slip in the dollar.

The spot gold price was recently at $1,188.70/1,189 per oz, up $0.65 on the close.

“The metal looks to be treading water into December’s FOMC meeting as bargain hunters continue to buoy the metal on dips toward $1,180, while offers on the way to $1,200 are proving difficult to break through,” MKS noted.

The dollar index is holding above 100 for now – it recently traded at 100.95, down 0.02% on Tuesday’s close.

Data today includes the EU CPI flash estimate and the core flash estimate as well as the ADP non-farm employment change, the core PCE price index, the Chicago PMI and pending home sales from the US. The week’s key data event is Friday’s non-farm payrolls report.

The spot silver price at $16.725/16.760 per oz was up $0.110 while platinum at $918/923 per oz was $3 higher.

Palladium continues to outperform, climbing $9 to $767/772 per oz – around its highest since June 2015 – on expectations of solid economic growth in both the US and China. 

 

(Editing by Mark Shaw)

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Corrections underway in metals prices, where will support be found?

The corrections in the base metals continued on Tuesday, November 29, with three-month prices closing down an average of 2.5%, with lead prices leading the declines with a 3.7% drop, while aluminium prices were down the least with a 0.9% drop to $1,719 per tonne. Copper prices closed off 2.3% at $5,739.50 per tonne. Precious metals prices were generally weaker by an average of 0.5%, palladium prices continued to buck the trend with a 0.5% gain to $760 per oz, the rest were lower, with spot gold prices off 0.5% at $1,188.25 per oz.

This morning November 30, the base metals complex is down an average of 0.8%, lead is the only one holding ground, the rest are down between 0.5% for tin and 1.7% for nickel. Copper prices are down 1.4% to 5,662 per tonne. Volumes remain high with 18,172 lots traded as of 06:04 GMT.

Precious metals are firmer this morning, up an average of 0.2% with spot gold prices up 0.1% at $1,189.60.

In Shanghai, the base metals futures prices are down heavily, off an average of 6.1%, led by 7% declines in lead and zinc, while February copper is down 5.7% at Rmb 45,230 per tonne, see table below for more details. Spot copper in Changjiang is down 2.9% at Rmb 46,430-46,630 per tonne, this suggests the futures have carried on selling-off since the spot prices were set. The LME Shanghai copper arb ratio has eased to 1:7.96, which may well mean the arb window has closed.

In other markets in China, May iron ore prices on the Dalian Commodity Exchange are down 7.9%, on SHFE steel rebar prices are down 7%, silver prices are off 1% and gold prices are off 0.2%. In international markets, spot Brent crude prices are up 1% at $47.66.

Equities remained upbeat yesterday, November 29, with the Euro Stoxx50 up 0.7% and the Dow closed up 0.1%. This morning the Nikkei is little changed, the Hang Seng and Kospi are up 0.3%, the CSI 300 is down 0.7% and the ASX 200 is down 0.3%.  So far with the equities not slumping, the corrections in the base metals look to be fairly localised.

In FX, the dollar index is consolidating at lower levels, it was recently quoted at 101.80, the euro is at 1.0637, sterling is flat at 1.2479, the yen is off recent lows, it was recently quoted at 112.60 and the aussie is firmer at 0.7478. The yuan is firmer at 6.8852, the recent low being 6.9330. The other emerging market currencies we follow are for the most part consolidating after recent weakness.

There is a host of data out today, Japanese housing starts climbed 13.7%, which was better than expected, later there is data on German retail sales, unemployment change, UK bank test results,  French, Italian and EU CPI, with US data including personal income, spending and prices, Chicago PMI, pending home sales and crude oil inventories. There is also the much-awaited OPEC meeting and bank of England Governor Mark Carney, ECB President Mario Draghi, German Bundesbank Jens Weidmann and FOMC member Jerome Powell are speaking – see table below for more details.

We said in Monday’s Morning View report that although we are bullish on the fundamentals, we were less bullish on prices at these levels and it does look as though some sharp corrections are now unfolding. With options declaration next Wednesday the swings in prices will be adding volume to the market as delta-hedgers have to take on and remove cover as options swing from being in and out of the money. With corrections underway it will now be interesting to see how bullish underlying sentiment is. Generally prices started to gather momentum the week before LME Week, they were  boosted by President-elect Donald Trump’s win, which combined with optimism for more infrastructure spending in China, fuelled the rallies. Given the price gains and option declaration in a week’s time we would now expect a period of drawn out consolidation.  If the pullbacks turn out to be short-lived downward spikes, then that would suggest sentiment remains bullish.

Precious metals are split between palladium that has shot higher and the rest that are consolidating just above recent lows and as such remain vulnerable. On balance, we are looking for bargain hunting in the precious metals to emerge, but it may well take a base to be built before confidence returns.

 

Overnight Performance
GMT	06:04	+/-	+/- %	Lots
Cu	5662	-77.5	-1.4%	7619
Al	1707	-12	-0.7%	2603
Ni	10965	-185	-1.7%	3035
Zn	2715	-20	-0.7%	4273
Pb	2354	1	0.0%	544
Sn	20390	-110	-0.5%	98
	Average		-0.8%	18,172
Gold	1189.58	1.33	0.1%
Silver	16.678	0.043	0.3%
Platinum	919.6	2.6	0.3%
Palladium	761	1	0.1%
	Average PM		0.2%

 

SHFE Prices 06:04 GMT	RMB	Change	% Change
Cu	45230	-2720	-5.7%
AL	13130	-595	-4.3%
Zn	22545	-1700	-7.0%
Pb	20670	-1560	-7.0%
Ni	90430	-6380	-6.6%
Sn	137640	-8520	-5.8%
Average change (base metals)	0		-6.1%
Rebar	3000	-226	-7.0%
Au	271.25	-2.25	-0.8%
Ag	4150	-44	-1.0%

 

Economic Agenda
GMT	Country	Data	Actual	Expected	Previous
5:00am	Japan	Housing Starts y/y	13.7%	11.5%	10.0%
7:00am	Germany	Retail Sales m/m		1.0%	-1.4%
7:00am	UK	Bank Stress Test Results
7:00am	UK	BOE Financial Stability Report
7:00am	UK	FPC Statement
7:45am	France	Prelim CPI m/m		-0.1%	0.0%
8:55am	Germany	Unemployment Change		-5K	-13K
All Day	ALL	OPEC Meetings
10:00am	EU	CPI Flash Estimate y/y		0.6%	0.5%
10:00am	EU	Core CPI Flash Estimate y/y		0.8%	0.8%
10:00am	Italy	Prelim CPI m/m		-0.2%	-0.1%
12:30pm	EU	ECB President Draghi Speaks
1:15pm	US	ADP Non-Farm Employment Change		165K	147K
1:30pm	US	Core PCE Price Index m/m		0.1%	0.1%
1:30pm	US	Personal Spending m/m		0.5%	0.5%
1:30pm	US	Personal Income m/m		0.4%	0.3%
2:45pm	US	Chicago PMI		52	50.6
3:00pm	US	Pending Home Sales m/m		0%	2%
3:30pm	US	Crude Oil Inventories			-1.3M
4:00pm	Germany	German Buba President Weidmann Speaks
4:45pm	US	FOMC Member Powell Speaks
7:00pm	US	Beige Book

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Gold stays under $1,200/oz but supported by dip-buying

The spot gold price inched higher during Asian trading hours on Wednesday November 30 on support from dip-buying but remains under $1,200 per oz.

The spot gold price was recently quoted at $1,192.50/1,192.80 per oz, up $4.40 on the previous close. Trade has ranged from $1,187.95 to $1,195.00 so far.

“Dip-buying from the physical sector continues to provide underlying support but we maintain our view that gold will remain under modest pressure in the short-term, at least until the December FOMC meeting,” Metal Bulletin Research analyst, James Moore, said.

The US Federal Open Market Committee (FOMC) will announce its Federal Funds rate on December 14 – 98.6% of market participants expect the FOMC to announce a rate hike on the day, according to the CME FedWatch Tool.

Gold has been regaining ground over recent days with price rallying back towards the $1,200 per oz-mark, Joshua Mahony, a market analyst at IG, said.

“However, as long as price remains below $1,200, a bearish outlook is in play,” he noted.

In other commodities, the Brent crude oil spot price rose 0.67% to $47.55 per barrel recently on Wednesday. Investors are watching the outcome of an OPEC meeting later in the day where members will discuss production cuts to curb oversupply in the market.

A failure to reach an agreement will likely see oil prices test the strong support of $43-44 per barrel, though if an agreement is reached, oil prices will likely test the year’s high of $53 per barrel very quickly, ANZ Research said on Wednesday morning.

In US data released Tuesday, preliminary third quarter US GDP rose 3.2% quarter-over-quarter, above the 3% forecast and one of highest expansionary periods since the Great Recession. CB consumer confidence shows Americans are growing more optimistic with the November reading coming in at 107.1, a major upset of a 101.3 expectation.

The preliminary GDP price index during the third quarter, however, came in at a slightly disappointing 1.4% – 1.5% was expected after reaching the same mark in the previous quarter.

US data due later today includes the ADP non-farm employment change, core PCE price index, personal spending, personal income, Chicago PMI, pending home sales and crude oil inventory.

In currencies, the US dollar index rose 0.04% to 101.03 recently on Wednesday.

In equities, the Shanghai Composite slipped 0.86% to 3,254.62 so far today.

In the other precious metals, the spot silver price increased $0.04 to $16.65/16.69 per oz. Platinum at $920/925 per oz was up $5.50, while palladium rose $4 to $761/766 per oz.

On the Shanghai Futures Exchange, gold for June delivery was recently at 272.05 yuan ($40) per gram, and the June silver was at 4,177 yuan per kilogram.

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GOLD TODAY – Prices consolidate but remain vulnerable

Short Term: Medium Term: Long Term: Resistances: R1 1191.60 Oct 2015 high R2 1235 20 DMA R3 1250 40 DMA R4 1280 200 DMA R5 1298 Lower line Jul>Sep flag R6 1328 Long-term DTL (all-time/Oct 2012 high) R7 1375.25 High so far R8 1380 38.2% retracement ( Sep 2011 high > Nov 2015 low) R9 1388.70 High Mar 2014 R10 1434 High Aug 2013 Support: S1 1298 100 DMA S2 1280 200 DMA S3 1274 UTL YTD rally S4 1250 40 DMA S5 1235 20 DMA S6 1224 DTL Oct 2012/May 2016 S7 1206 61.8% retracement Dec 2015 low – May 2016 high S8 1207 Support line Apr-Jun S9 1181 61.8% retracement YTD rally S10 1168 DTL Aug 2013/Mar 2014 S11 1164 50% retracement Dec 2015 low – Mar 2016 high S12 1112.50 Jan 8 peak S13 1086 1999-2011 50% Fibo S14 1046.40 Dec 2015 low Stochastics:Crossed higher in low ground Legend: R/SL= Resistance/support line UTL = Uptrend line BB = Bollinger band Fibo = Fibonacci retracement line Technical Comment Analysis A modest relief rally is under way in gold after the metal dipped to a nine-month low of $1,171.30 per oz last week, finding support from the August 2013/March 2014 DTL. Gains stalled ahead of $1,200 per oz yesterday. The stochastics have crossed higher but the fast line has turned lower, implying fading momentum. We expect further support around $1,181 per oz – the 61.8% Fibo of the year-to-date rally – and at $1,168 (August 2013/March 2014 DTL). Additional support is seen at $1,164 per oz – the 50% retracement from the Dec 2015 low to the May 2016 high Resistance above is seen at $1,220 and from the 20 DMA at $1,235 per oz. Macro picture  The latest CoT data showed net length among Comex speculators dropped a further 10,575 contracts or 6% in the week to November 22. Funds/CTAs liquidated a further 4,104 contracts of longs. But the recent price correction has also attracted short-selling – the gross short position increased 6,471 contracts last week. The gross short position totals 74,561 contracts compared with 62,515 contracts early in September but is still well below the peak of 149,042 contracts in December 2015, which suggests that speculators, while not overly bullish, are not particularly bearish either. ETF holdings continue to decline as investors rotate into riskier asset classes. ETF holdings total 2,060 tonnes, down from a recent 2016 peak of 2,176 tonnes. There remains the risk of further disinvestment in the short term. Prices have broken below the May-June lows between $1,207 and $1,199.90 per oz – investors added a sizeable 135 tonnes of gold in June. But ETF holdings remain up 580 tonnes so far this year, which implies investors still view gold as a portfolio diversifier. Meanwhile, physical demand has picked up thanks to seasonal demand for jewellery but also because lower prices have triggered a pick-up in demand for coins and bars from retail investors. Indian gold imports jumped to an estimated 86 tonnes in October – this compares with an average of only 26 tonnes in the July-September period. Reports also point to a rush of wholesale-level buying, triggered by concerns official may take further measures to curbs imports and monetise existing gold stocks after the government recently withdraw high-denomination bank notes from circulation. Meanwhile, the latest data from the US Mint showed American eagle coin sales are running at a 133,000-oz pace so far in November, the fastest pace since January. According to the WGC, global gold demand fell 10% year-on-year to 992.8 tonnes in the third quarter. Stronger investment demand, which rose 44% year-on-year, was more than offset by weaker jewellery demand, which fell 21% year-on-year. Conclusion Dip-buying from the physical sector continues to provide underlying support but we maintain our view that gold will remain under modest pressure in the short term, at least until the December FOMC meeting. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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Spot gold price edges lower on sustained selling pressure

Gold trended slightly lower on the morning of Tuesday November 29 in London while investors shun safe-haven assets amid an uptick in global sentiment and the widely held assumption that the Federal Reserve will raise interest rates next month.

The spot gold price of $1,189.65/1,290.90 per oz was down $4.80 on Monday’s close. Still, this is up from the Friday lows of $1,171.33 per oz, its softest since February 8 this year.

In currencies, the dollar index has risen 0.21% to 101.41 on Tuesday. It had fallen as low as 100.63 on Monday, its lowest since November 22.

In today’s data, the US will release its preliminary GDP, its GDP price index and the S&P composite.

Later this week, Chinese manufacturing and non-manufacturing PMIs and US PMIs, unemployment data and non-farm payrolls are of note.

The spot silver price was little changed at $16.590/16.610 per oz. Platinum was $2 higher at $923/928 per oz while palladium was also gained $2 to $753/759 per oz.

(Editing by Mark Shaw)

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Lead Prices Hit A 3-Year High, Did You Miss It?

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Steel Prices Rising In Asia, Tokyo Steel Manufacturing Hikes Rates

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Black Friday, Fake News And Gold

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Not giving up our long base metals/short precious metals view

• Global risk-on sentiment pauses. Base metals pull back and precious metals gain some upward momentum.
• The economic agenda is fairly busy today. Although volatility across financial markets may surge, we expect risk appetite to resume in the very near term.
• As a result, base metals (and palladium) are likely to continue to perform better than precious metals this week.

Base metals on the LME retreated on Monday, November 28, in part in response to a pause in global risk-on sentiment, after experiencing significant price gains last week. Zinc, selling off 2.1%, was the worst performer while tin, edging 0.5% higher, was the only industrial metal to end in positive territory. Precious metals were a touch stronger – while palladium gained further upward momentum and set fresh 2016 highs, other precious metals were attempted to rebound after falling for a third straight time last week.

This morning, base metals on the LME are slightly weaker amid decent volumes as profit-taking continues. Copper, dropping 2%, is hit the most. Precious metals are under marginal selling pressure, with the complex edging 0.2% lower on average.

In Shanghai, the base metals contracts are moving a little lower, with the complex down 0.6 percent on average. Copper, tumbling 3.3%, is again the worst performer, while lead, rallying nearly 5%, continues to outperform as domestic tightness intensifies. Meanwhile, spot copper in Changjiang is down 1.4 percent at 47,820-48,020 yuan, while the backwardation with the futures is at $117 per tonne, and the LME/Shanghai copper arb ratio remains open at 1:8.16.

Bonds – The US government bond market strengthened a little yesterday after weakening sharply last week on stronger economic and inflation expectations. Key economic data on US inflation and employment are due to be released this week. Any positive surprise may prompt a renew wave of US government bond selling, pushing yields higher.

Stocks – Broad equities were a touch weaker on Monday. US equities retreated somewhat after hitting fresh all-time highs last week, with the Dow Jones closing 0.3 % down at 19,098. European equities continued to lack of underlying strength, having traded in a narrow range since August. The Euro Stoxx 50 moved 1.04% lower but remained above the psychological 3,000 mark. Given growing political uncertainty in Europe, we expect further capital flows from Europe to the US, thereby underpinning the outperformance of US equities relative to European equities. Looking at equities this morning, Asian equities are trading weaker, with the exception of CSI 300 (+1%), because investors adopt a cautious stance after the pause in risk sentiment seen in the Western countries the day before.

FX – The dollar is stabilising in the early hours of the trading day, with the DXY firmly above 101, after being under selling pressure yesterday. The DXY climbed last week to its highest since March 2003. Contrary to precious metals, base metals have been insensitive to the surging dollar. We expect the dollar to gain further upward momentum this week, which should exacerbate the divergence between precious and industrial metals.

In terms of the day ahead, the economic agenda will be fairly busy. We will kick off in Europe with inflation statistics in Germany and Spain for November as well as French consumer spending for October. In the US, we will pay a close attention to the release of the preliminary Q3 GDP reading and the CB consumer confidence index for November. In addition, Fed governor Powell is due to speak about the economic outlook and as such, may influence the market’s conviction about a Fed’s rate increase at the December 13-14 meeting. Against this, volatility across base and metal precious could pick up, we feel.

Near-term outlook:

Base metals may continue to enjoy further upward pressure because investors are likely to boost further their allocation in favour of risk assets at the expense of “risk-free” assets. Given that US stocks are at record highs, investors may tactically favour base metals. We are friendly toward all base metals over a 1-month horizon but we see downside risks to our forecasts growing for copper because of overstretched speculative positioning (raising the likelihood of a reversal) and tin because of unconvincing technicals.  

Precious metals are likely to experience renewed selling pressure once global risk-on sentiment resumes. We expect investors to continue to unwind their elevated long exposure to safe-haven assets, most notably gold and silver, and lift their exposure to risk assets in a bid to take advantage of stronger growth dynamics expected next year.

 

Overnight Performance
GMT	05:11	+/-	+/- %	Lots
Cu	5759	-116	-2.0%	5302
Al	1733	-2	-0.1%	1606
Ni	11390	-130	-1.1%	2134
Zn	2846	25.5	0.9%	4272
Pb	2461.5	18.5	0.8%	586
Sn	21100	150	0.7%	28
	Average		-0.1%	13,928
Gold	1191.2	-3.4	-0.3%
Silver	16.611	-0.059	-0.4%
Platinum	925.8	1.8	0.2%
Palladium	753.5	-2.5	-0.3%
	Average PM		-0.2%

 

SHFE Prices 05:11 GMT	RMB	Change	% Change
Cu	47010	-1590	-3.3%
AL	13625	-395	-2.8%
Zn	23850	155	0.7%
Pb	22060	1035	4.9%
Ni	93580	-2350	-2.4%
Sn	145700	-1180	-0.8%
Average change (base metals)			-0.6%
Rebar	3188	-93	-2.8%
Au	272.65	-0.55	-0.2%
Ag	4184	1	0.0%

 

Economic Agenda
GMT	Country	Data	Actual	Expected	Previous
7:00am	EU	German Import Prices m/m		0.6%	0.1%
–	EU	German Prelim CPI m/m		0.1%	0.2%
7:45am	EU	French Consumer Spending m/m		0.2%	-0.2%
8:00am	EU	Spanish Flash CPI y/y		0.5%	0.7%
1:30pm	US	Prelim GDP q/q		3.0%	2.9%
1:30pm	US	Prelim GDP Price Index q/q		1.5%	1.5%
2:00pm	US	S&P/CS Composite-20 HPI y/y		5.3%	5.1%
2:15pm	US	FOMC Member Dudley Speaks
3:00pm	US	CB Consumer Confidence		101.3	98.6
5:40pm	US	FOMC Member Powell Speech

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Gold Speculators Drop Bullish Net Positions To Lowest Since March

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Gold edges lower as US dollar regains strength

The spot gold price edged lower during Asian trading hours on Tuesday November 29 as the US dollar regained strength.

The spot gold price was recently quoted at $1,189.65/1,189.95 per oz, down $4.70 on the previous close. Trade has ranged from $1,188.20 to $1,195.25 so far.

The US dollar index had fallen to as low as 100.63 on Monday, this was the lowest since November 22. But it has since risen 0.2% to 101.40 Tuesday.

“As we said before the US election, gold was likely to trade erratically but, once prices have adjusted to the result, our base line is that the bull market will continue,” William Adams, an analyst at Metal Bulletin Research, said.

“With the president-elect already talking tough on trade, we think there is still a lot of uncertainty that may make investors nervous. We would remain bullish for the metal.”

In other commodities, the Brent crude oil spot price was recently at $47.81 per barrel on Tuesday, down 0.42% from the previous day’s close.

In equities, the Shanghai Composite rose 0.45% to 3,291.66 so far today.

US data due later on Tuesday includes the third quarter preliminary GDP, preliminary GDP price index, S&P/CS Composite-20 HPI and CB consumer confidence.

In the other precious metals, the spot silver price decreased $0.1 to $16.565/16.595 per oz. Platinum at $921/926 per oz was down $1, while palladium was unchanged at $752/757 per oz.

On the Shanghai Futures Exchange, gold for June delivery was recently at 273.50 yuan ($40) per gram, and the June silver was at 4,198 yuan per kilogram.

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Gold's Fall, Oil's Broken Trend

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Gold rebounds on US dollar weakness

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Copper, gold prices rise; start week with optimistic tone

The Comex copper price surged to its highest June 2015 on Monday morning amid persistent fund buying and a pause in the dollar’s rally.

Copper for March delivery on the Comex division of the New York Mercantile Exchange gained one cent or 0.4% to $2.6780 per pound. Earlier, the contract touched $2.7400, its highest since June 2015.

Comex gold for December settlement rose $9.70 or 0.8% to $1,188.10 per oz. Trade has ranged from $1,182.50 to $1,197.20 so far

“There is no sign yet of any real large correction, and as long as the funds are happy to play the long side, the market looks like a good ‘buy’,” a trader said.

The broad-based metals rally started around LME Week, continued through the US presidential election and is still going strong as December nears. Solid manufacturing data from China and the US show both economies are growing at healthy rates and the Chinese government has shown a willingness to maintain accommodative monetary policies to support GDP growth at 6.5-7%.

Another factor in the higher prices is the pause in the dollar’s rally – the dollar index was at 101.52, having been as high as 102.05 in the previous week, its highest since March 2003.

Still, the market is unchanged fundamentally despite the wave of optimism, traders said.

“We remain quietly bullish for the fundamentals because of a stronger China but at these price levels we are not bullish on prices,” Metal Bulletin analyst William Adams said. “We would run with the upward momentum for now but would be wary it may not last too long – perhaps until just after options declaration.”

Turning to European markets, Germany’s DAX and France’s CAC-40 were down 0.7% and 0.8% respectively while the dollar was unchanged at 1.0591 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex increased 54 cents or 1.2% to $46.60 per barrel, while Comex silver for December settlement at $16.625 per oz was up 15.5 cents.

(Editing by Mark Shaw)

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Time To Polish Some Silver

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Zinc Prices Hit An 8-Year High: Did You Miss The Rally?

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Good News And Bad News For Silver Speculators

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Spot gold price picks up slightly, dollar rally pauses

Gold was in positive territory on the morning of Monday November 28 in London, with a slightly weaker dollar generally underpinning precious metals prices.

The dollar index was recently at 101.05, having been as high as 102.05 in the previous week, its highest since March 2003.

The spot gold price was recently quoted at $1,192.00/1,192.30 per oz, up $8.20 on the previous close. Trade has ranged from $1,187.05 to $1,197.70 so far.

The spot silver price was last at $16.690/16.715 per oz, up 18 cents. Platinum climbed $15 to $915/920 per oz and palladium at $750/755 per oz was up $12.

“The precious metals have fallen out of favour in recent weeks – the strength of other markets has provided more opportunity,” Metal Bulletin analyst William Adams said.

“But with a lot of significant political uncertainty lying ahead, we expect bargain hunting in gold to support prices – gold should provide a good hedge against fallout from what political policy changes lie ahead, as well as from any correction in super-charged markets,” he added.

Support for the yellow metal sits around $1,180 per oz while resistance is at $1,200 and then $1,210, MKS said in a note.

Softer spot prices may encourage physical demand while the holiday seasons in both Asia and Europe approach, Commerzbank noted.

(Editing by Mark Shaw)

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PALLADIUM TODAY – Struggling to make serious headway above $745/oz

Short Term: Medium Term: Long Term: Resistances: R1 521- 524 Former support R2 544 50% Fibo Jan-Apr R3 554 DTL Sep 2014 R4 573 Dec 2015 high R5 606 Mar 23 high R6 614 200 DMA R7 618 Apr 2016 high R8 653 20 DMA R9 727 Oct 3 2016 high R10 724-729 Former spike lows R11 747 High Aug 10 R12 803 High May 2015 Support: S1 682 50% fibo 2014>2016 drop ($911-452) S2 663 38.2% retracement Jun>Aug rally S3 679 100 DMA S4 670 40 DMA S5 693 20 DMA S6 637 50% retracement Jun>Aug rally S7 635 Apr 2016 high S8 645 UTL Jan/Feb lows S9 611 61.8% retracement Jun>Aug rally S10 554 DTL Sep 2014 S11 530.50 Feb peak S12 452 2016 Low Stochastics:Converging in high ground Legend: MACD = Moving average convergence divergence Fibo = Fibonacci retracement line (H)SL = (Horizontal) support line BB = Bollinger band DMA = Daily moving average Technical Comment Analysis Palladium remains underpinned in high ground, having set a fresh 2016 peak at $749.50 per oz last week. Selling pressure have been well received so far, as implied by the longer lower shadows on the recent daily candlestick formations. But the failure to make further headway suggests the metal lacks momentum. This is reflected in the stochastics, which have converged in high ground, and the RSI, which looks overbought. Immediate support is seen around $725 per oz from the early-October high. Additional support is seen between $693 and $670 per oz, where the 20, 100, 55 and 40 DMAs are clustered. Support below is seen at $611 (the 61.8% Fibo of the June-August rally), at $604 (200 DMA) and at $591 from the medium-term rally. A break higher would target the band of resistance at $780-830 from October 2014-May 2015. Macro factors Meetings this week of Opec members, who are trying to curb oil production and end years of oversupply, could prove pivotal for short-term palladium prices, given the implications for fuel costs and the knock-on effect on spending on big-ticket items.   ETFs holdings have dropped sharply in the past week – record rand-denominated palladium prices have triggered liquidation by South African investors. Holdings now total 1.91 million oz, down 1.18 million oz or almost 40% from their peak of 3.096 million oz in August 2014. The global palladium market will record a 651,000-oz deficit in 2016 compared with the 843,000-oz deficit forecast previously by Johnson Matthey. It sees total supply rising 1% to 9.03 million oz – a near-10% rise in recycling volumes will offset static mine production. Palladium demand from the autocatalyst sector is set to increase 2% to 7.8 million oz, fuelled by growth in sales of gasoline-powered cars. JM forecasts another year of substantial deficit in 2017 – demand will continue to outstrip growth in supply despite rising supply from recycling volumes. The latest round of vehicle sales results continue to signal rising underlying PGM demand. Chinese passenger vehicle sales continue to record strong grow, rising 20.3% year-on-year in October, according to the latest figures from the China Association of Automobile Manufacturers. Sales totalled 19.1 million vehicles in the first ten months, up 15.4% on January-October 2015. Passenger vehicle sales in Europe were up 7.2% in January-October. But the latest US figures show signs of fatigue, with sales down by 0.2% year-on-year in the first ten months. Palladium’s fundamentals will continue to improve – fallout from the Volkswagen ‘Dieselgate’ scandal will lead to a shift away from diesel-powered vehicles in Europe. Carmaker Renault recently suggested diesels could disappear from most of its European car range. Conclusion Palladium is holding in high ground despite absorbing a sizeable amount of ETF liquidation and may get a lift from the renewed bullish sentiment in the wider commodity complex. But the fact the metal is struggling to make serious headway above $745 per oz suggests gains continue to release pent-up scrap supplies and that some consolidation may be necessary in the short term. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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