среда, 28 февраля 2018 г.
Metals morning view: Gold prices dropped sharply after Fed’s hawkish comments
Precious metals prices dropped sharply yesterday on the back of hawkish talk from the new US Federal Reserve Chair Jerome Powell, with prices closing down an average of 1.3%, with spot gold prices closing at $1,318.15 per oz. This morning prices are consolidating with gold at $1,318.92 per oz, silver at $16.39 per oz, platinum at $980 per oz and palladium at $1,046.20 per oz.
We are not surprised by gold’s reaction to the latest Federal Reserve speak, we wait to see if the dollar breaks higher – if it does then we would expect that to be a headwind for gold prices, although given the possibility of equity and bond markets becoming more jittery, gold may attract more haven buying – so again we expect dips to be supported.
Base metals traded on the London Metal Exchange are mainly weaker this morning, Wednesday February 28, with prices off by an average of 0.4%.
Lead prices lead the decline with a 1% drop, followed by copper prices (-0.6%) at $6,989 per tonne. Tin, zinc and nickel prices are off between 0.2% and 0.4%, while aluminium prices are little changed.
This follows a day of general weakness on Tuesday that saw copper, nickel, zinc and lead prices drop an average of 0.8%, while aluminium and tin prices bucked the trend with gains of 0.4% and 0.8% respectively.
On the Shanghai Futures Exchange, the base metals are for the most part weaker, led by a 1.6% drop in lead prices and a 1.5% fall in copper prices to 52,520 yuan ($8,299) per tonne, with zinc prices down by 1.1% and nickel prices off by 0.5%. Aluminium and tin prices are bucking the trend with gains of 0.6% and 0.3% respectively. Spot copper prices in Changjiang are off by 1% at 52,300-52,480 yuan per tonne and the LME/Shanghai copper arbitrage ratio has edged out to 7.51, from 7.48 on Tuesday.
In other metals in China, iron ore prices are down by 0.5% at 543 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are little changed, while gold and silver prices are off by around 1%.
In wider markets, spot Brent crude oil prices are weaker at $63.31 per barrel, while the yield on US 10-year treasuries is stronger at 2.9%, as is the German 10-year bund yield at 0.68%.
Equity markets in Asia are weak across the board this morning following Powell’s comments: Nikkei (-1.44%), Hang Seng (-1.54%), CSI 300 (-0.87%), ASX 200 (-0.68%) and Kospi (-1.17%). This follows weakness in western markets on Tuesday, where in the United States the Dow Jones closed down by 1.16% at 25,410.03, and in Europe where the Euro Stoxx 50 closed down by 0.15% at 3,458.03.
The dollar index’s rebound has restarted with the index recently quoted at 90.48 – yesterday’s high was 90.5, while the high from February 9 was 90.57. With a potential double bottom on the dollar index chart, a break up above 90.57 could well signal further dollar gains. The dollar strength is prompting weakness in the other currency majors: euro (1.2212), sterling (1.3887), yen (107.16) and Australian dollar (0.7801). The yuan has weakened too, moving to 6.3300 and the emerging market currencies we follow are all weaker too.
In addition to Powell’s hawkishness that took the market by surprise, Chinese purchasing managers’ index (PMI) data disappointed the market too with manufacturing PMI falling to 50.3, from 51.3, and non-manufacturing PMI dropping to 54.4, from 55.3. How much of the weakness is due to the Lunar New Year holiday remains to be seen. Japan’s housing starts fell and German GfK consumer climate eased to 10.8 from 11. Data out later includes French consumer spending, French consumer price index (CPI) and gross domestic product (GDP), German unemployment change, EU and Italian CPI, US GDP, Chicago PMI, US pending home sales and crude oil inventories.
The base metals had generally been holding up well but were not making headway, so it seems as though disappointed liquidation selling has emerged. Once again, we wait to see how well supported the dips are. We would not be surprised if the reaction to the more hawkish Powell talk is a flash in the pan – but if tomorrow’s manufacturing PMI are weaker than expected, which they are generally expected to be, then prices may end up needing to consolidate for longer. Our underlying view remains bullish, given concerted global growth and supply restraints following the past five years of reduced producer capital expenditure, but for now prices seem in no rush to break higher, so may have further to test on the downside.
Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.
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вторник, 27 февраля 2018 г.
Metals morning view: Gold prices slightly firmer this morning
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.
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понедельник, 26 февраля 2018 г.
воскресенье, 25 февраля 2018 г.
пятница, 23 февраля 2018 г.
Metals morning view: Gold prices weaker following a day of strength
Gold prices are weaker this morning, with prices off 0.4% at $1,326.53 per oz, silver and platinum prices are little changed and palladium prices are up by 0.2%. This follows a day of strength on Thursday, when gold, silver and platinum closed up between 0.3% and 0.5% and palladium closed up 1.8%.
The down draft in gold prices seems to have halted now that the dollar’s rebound is paused. For now we would expect further consolidation, but we expect the general bullishness in metals to lead prices higher again before too long. We expect dips to remain well supported.
The base metals complex on the London Metal Exchange is mixed this morning, Friday February 23, with prices down by an average of 0.2%. Zinc prices lead the decline with a 0.8% fall to $3,501 per tonne, copper and nickel prices are off by 0.4% with the former at $7,143 per tonne, aluminium prices are bucking the trend with a 0.4% rise, while the rest are little changed.
Volume has returned to around average with 7,917 lots traded as of 06:56 am London time.
This follows a day of recovery on Thursday when prices dropped intraday before rebounding in the afternoon, which has left underlying tails on most of the metals’ candlestick charts.
On the Shanghai Futures Exchange, the base metals are for the most part stronger this morning, with gains averaging 1.1%. At the extremes nickel prices are up by 2.1% and tin prices are down by 0.1%, while copper prices are up by 1.6% at 53,620 yuan ($8,448) per tonne. Spot copper prices in Changjiang are up by 1.5% at 52,940-53,120 yuan per tonne and the LME/Shanghai copper arbitrage ratio stands at 7.51.
In other metals in China, iron ore prices are up by 2.0% at 548.00 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are up by 1.5%, while gold prices are up by 0.35 and silver prices are up by 0.5%.
In wider markets, spot Brent crude oil prices are up by 0.11% at $66.24 per barrel, the yield on US 10-year treasuries has eased to 2.92%, as has the German 10-year bund yield which was recently quoted at 0.70%.
Equity markets in Asia are stronger across the board this morning: Nikkei (+0.72%), Hang Seng (+1.13%), CSI 300 (+0.45%), ASX 200 (+0.82%) and Kospi (+1.54%). This follows gains in western markets on Thursday, where in the United States the Dow Jones closed up by 0.66% at 24,962.48, and in Europe where the Euro Stoxx 50 closed up by 0.05% at 3,431.99.
The dollar index’s rebound ran out of steam yesterday and is consolidating this morning at around 89.99. This is leading to consolidation in the other currency majors: euro (1.2286), sterling (1.3931), yen (107.07) and Australian dollar (0.7817). The yuan is fairly flat at 6.3417 – before the Lunar New Year holiday it was around 6.3440 – and the emerging market currencies we follow are also consolidating.
On the economic calendar there is data on German final GDP, which came in unchanged at 0.6%, later there is EU CPI, China leading indicators and the Federal Reserve’s monetary policy report. In addition, UK’s Monetary Policy Committee member David Ramsden and Federal Open Market Committee members William Dudley, Loretta Mester and John Williams are speaking.
Thursday’s intraday price dips on the base metals that were followed by strong rebounds implies good bargain hunting interest, even if there is not yet much interest to chase prices higher. As such, we may well see prices hold up in high ground for longer while traders adjust and get more used to these price levels, before the rallies extend further.
| Overnight Performance | ||||
| GMT | 06:56 | +/- | +/- % | Lots |
| Cu | 7,143 | -27.5 | -0.4% | 3,163 |
| Al | 2,195 | 9.0 | 0.4% | 1,141 |
| Ni | 13,765 | -55.0 | -0.4% | 1,124 |
| Zn | 3,501 | -29.0 | -0.8% | 2,170 |
| Pb | 2,553 | 1.0 | 0.0% | 295 |
| Sn | 21,440 | -45.0 | -0.2% | 24 |
| Average BM | -0.2% | 7,917 | ||
| Gold | 1,326.53 | -4.02 | -0.3% | |
| Silver | 16.56 | -0.02 | -0.1% | |
| Platinum | 995.00 | 0.00 | 0.0% | |
| Palladium | 1,040.00 | 2.00 | 0.2% | |
| Average PM | -0.1% | |||
| SHFE Prices 06:55 GMT | RMB | Change | % Change |
| Cu | 53,620 | 850 | 1.6% |
| AL | 14,340 | 190 | 1.3% |
| Zn | 26,620 | 210 | 0.8% |
| Pb | 19,405 | 175 | 0.9% |
| Ni | 105,050 | 2,140 | 2.1% |
| Sn | 147,600 | – 210 | -0.1% |
| Average change (base metals) | 1.1% | ||
| Rebar | 3,940.00 | 59.00 | 1.5% |
| Au | 274.60 | 0.75 | 0.3% |
| Ag | 3,697.00 | 20.00 | 0.5% |
| Iron Ore (DCE) May’18 | 548 | 10.5 | 2.0% |
| Economic calendar | |||||
| GMT | Country | Data | Actual | Expected | Previous |
| 7:00am | Germany | German Final GDP q/q | 0.6% | 0.6% | 0.6% |
| 10:00am | EU | Final CPI y/y | 1.3% | 1.3% | |
| 10:00am | EU | Final Core CPI y/y | 1.0% | 1.0% | |
| 12:00pm | UK | MPC Member Ramsden Speaks | |||
| 2:00pm | China | CB Leading Index m/m | 1.7% | ||
| 3:15pm | US | FOMC Member Dudley Speaks | |||
| 4:00pm | US | Fed Monetary Policy Report | |||
| 6:30pm | US | FOMC Member Mester Speaks | |||
| 8:40pm | US | FOMC Member Williams Speaks | |||
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четверг, 22 февраля 2018 г.
Metals morning view: Precious metals prices weaker as China returns from holiday
Precious metals prices are for the most part weaker, with gold, silver and platinum prices off an average of 0.4%, while palladium prices are up 0.1%. The firmer dollar is no doubt weighing on sentiment.
Another turn around in the dollar has weighed on gold, especially as it has happened when gold prices are once again challenging recent highs. While the US treasury auctions have been underway, yields have remained bid and that has underpinned the dollar and weighed on gold. We wait to see what follows once the auctions are out the way. We expect dips to remain well supported.
The metals prices on the London Metal Exchange on Thursday February 22 are down an average of 1.6%, with nickel prices down the most with a 2.3% decline to $13,460 per tonne and copper prices off 1.6% at $7,024 per tonne.
With China back at work after the Lunar New year holiday, volumes on the LME have been high with 16,127 lots traded as of 07:32 am London time.
Wednesday’s trading had seen some strength ahead of China’s return to work, with copper, aluminium, nickel and tin closing up by an average of 1.2% – although lead and zinc closed down an average of 0.7%. This morning’s performance suggests Chinese traders have returned to seefirmer prices and have sold into them.
In wider markets, spot Brent crude oil prices are weaker by 0.28% at $64.84 per barrel and the yield on US 10-year treasuries remains firm at 2.94% as US treasury auctions are underway, and the German 10-year bund yield has firmed to 0.73%.
In equity markets, China has returned on a positive footing with the CSI 300 up 2.16%. Elsewhere, the ASX 200 is up 0.12%, while the Nikkei is down 1.07%, the Hang Seng is off 1.31% and the Kospi is down 0.63%. This follows a weaker performance in western markets on Wednesday, where in the United States the Dow Jones closed down by 0.67% at 24,797.78, and in Europe where the Euro Stoxx 50 closed down by 0.14% at 3,430.16.
The dollar index’s rebound continues, it was recently quoted at 90.16, the fifth consecutive day of gains. This is applying some downward pressure on other currencies, with the euro at 1.2271, sterling at 1.3882 and the Australian dollar at 0.7796. But the yen’s slide had halted – it was recently quoted at 107.40, having touched 107.90 yesterday. The yuan has dropped to 6.3616 – before the Lunar New Year holiday it was around 6.3440 – and the emerging market currencies we follow remain on a back footing, which reflects the slightly firmer dollar and concern over rising US treasury yields.
The economic calendar is busy today as it includes French CPI, the German Ifo business climate, UK data on GDP, business investment, index of services and CBI realized sales, with US data including initial jobless claims, leading indicators, natural gas storage and crude oil inventories. In addition, Federal Open Market Committee member Raphael Bostic is speaking.
The base metals are on a back footing this morning. The fact Chinese traders have not come back in a bullish mood suggests overhead resistance may prove difficult to overcome for a while. With yesterday’s PMI reading, ex-US weaker than January’s readings, the economic climate looks less bullish. But that said, with most readings above 55 – so well above the 50 divide -, the global economy remains in expansion mode and that is bullish for the outlook for metals demand. As such, we would let this weakness runs its course and see the dips as leading to buying opportunities.
| Overnight Performance | ||||
| GMT | 07:32 | +/- | +/- % | Lots |
| Cu | 7,024 | -111.5 | -1.6% | 3,988 |
| Al | 2,174 | -33.5 | -1.5% | 3,869 |
| Ni | 13,460 | -320.0 | -2.3% | 1,882 |
| Zn | 3,460 | -75.5 | -2.1% | 5,534 |
| Pb | 2,526 | -36.5 | -1.4% | 822 |
| Sn | 21,495 | -110.0 | -0.5% | 32 |
| Average BM | -1.6% | 16,127 | ||
| Gold | 1,320.98 | -5.17 | -0.4% | |
| Silver | 16.43 | -0.08 | -0.5% | |
| Platinum | 987.50 | -2.50 | -0.3% | |
| Palladium | 1,021.50 | 1.50 | 0.1% | |
| Average PM | -0.2% | |||
| SHFE Prices 07:34 GMT | RMB | Change | % Change |
| Cu | 52,760 | 200 | 0.4% |
| AL | 14,130 | – 140 | -1.0% |
| Zn | 26,325 | – 155 | -0.6% |
| Pb | 19,270 | 80 | 0.4% |
| Ni | 102,810 | 470 | 0.5% |
| Sn | 147,140 | – 1,270 | -0.9% |
| Average change (base metals) | -0.2% | ||
| Rebar | 3,862.00 | – 72.00 | -1.8% |
| Au | 273.85 | – 1.15 | -0.4% |
| Ag | 3,676.00 | – 31.00 | -0.8% |
| Iron Ore (DCE) May’18 | 538.5 | 3 | 0.6% |
| Economic calendar | |||||
| GMT | Country | Data | Actual | Expected | Previous |
| 7:45am | France | French Final CPI m/m | -0.1% | -0.1% | |
| 9:00am | Germany | German Ifo Business Climate | 117.1 | 117.6 | |
| 9:30am | UK | Second Estimate GDP q/q | 0.5% | 0.5% | |
| 9:30am | UK | Prelim Business Investment q/q | 0.5% | 0.5% | |
| 9:30am | UK | Index of Services 3m/3m | 0.4% | 0.4% | |
| 11:00am | UK | CBI Realized Sales | 13 | 12 | |
| 12:30pm | EU | ECB Monetary Policy Meeting Accounts | |||
| 1:30pm | US | Unemployment Claims | 230K | 230K | |
| 3:00pm | US | CB Leading Index m/m | 0.7% | 0.6% | |
| 3:00pm | US | FOMC Member Dudley Speaks | |||
| 3:30pm | US | Natural Gas Storage | -121B | -194B | |
| 4:00pm | US | Crude Oil Inventories | 2.2M | 1.8M | |
| 5:10pm | US | FOMC Member Bostic Speaks | |||
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среда, 21 февраля 2018 г.
Metals morning view: Precious metals prices weaker following dollar turnaround
Precious metals prices are weaker this morning, with the complex down an average of 0.2%. Spot gold prices are at $1,328.05 per oz. This follows a general day of weakness on Tuesday when the complex closed down an average of 0.7%, which was partially driven by a firmer US dollar index.
Another turn-around in the dollar has weighed on gold, especially as it happened when gold prices were once again challenging recent highs. Platinum is holding up relatively well, silver less so and palladium is consolidating after its latest half-hearted rebound. With the US treasury auctions underway, for now yields are likely to remain bid and that is likely to underpin the dollar and weigh on gold, but we do expect gold prices to remain well supported as concerns over higher bond yields and the impact that may have on equity and bond prices may prompt some pick-up in safe-haven buying.
The metals prices on the London Metal Exchange are mixed this morning, Wednesday February 21, with nickel and tin prices firmer by 0.4%, while the rest are lower by between 0.1% and 0.5%. Copper prices are off 0.1% at $7,068 per tonne.
Volumes remain light with 1,862 lots traded as of 07:05 am London time – we expect this to change tomorrow with China returning from the Lunar New Year holiday.
Tuesday’s trading was for the most part weaker, with copper, aluminium, lead and zinc closing down an average of 0.8%, while nickel and tin were little changed. The cash/three-month spread on aluminium has also eased to $30-32 per tonne backwardation, from $50 on Tuesday morning.
In wider markets, spot Brent crude oil prices are weaker by 0.52% at $64.67 per barrel and the yield on US 10-year treasuries remains firm at 2.91% as US treasury auctions are underway. On the other hand, the German 10-year bund yield has eased to 0.72%, from 0.75% on Tuesday.
Equity markets in Asia are firmer – the Nikkei is up by 0.21%, the Kospi is up 0.60%, the ASX 200 is up 0.05% and the Hang Seng is up 1.71%. This follows a mixed performance in western markets on Monday, where in the United States the Dow Jones closed down by 1.01% at 24,964.75, and in Europe where the Euro Stoxx 50 closed up by 0.8% at 3,435.08.
The dollar index’s rebound continues, being recently quoted at 89.89 – the fourth consecutive day of gains. This is applying some downward pressure on other currencies, with the euro at 1.2317, sterling at 1.3980, yen at 107.82 and the Australian dollar at 0.7845. The emerging market currencies we follow are on a back footing, which reflects the slightly firmer dollar.
The economic calendar is busy today and includes flash PMI data and the minutes of the latest FOMC meeting. Data out already from Japan shows flash manufacturing PMI dipping to 54 from 54.8 in January and all industries activity rising 0.5% in December, from 1% in November. In addition, there is employment and borrowing data out of the UK and US, initial jobless claims and existing home sales data.
Two weeks ago metals prices were selling off, last week they were rebounding and this week they are consolidating. But, with China on holiday so far this week, we are not surprised prices are rudderless, with a slight weaker bias. Today’s manufacturing PMI data may provide some direction, but overall we would expect traders to sit on the side lines until China returns to work in force, but that may not be seen until next week. We still expect dips to be remain well supported.
| Overnight Performance | ||||
| GMT | 07:05 | +/- | +/- % | Lots |
| Cu | 7,068 | -9.0 | -0.1% | 551 |
| Al | 2,177 | -10.5 | -0.5% | 646 |
| Ni | 13,570 | 50.0 | 0.4% | 180 |
| Zn | 3,547 | -4.0 | -0.1% | 316 |
| Pb | 2,580 | -8.5 | -0.3% | 166 |
| Sn | 21,475 | 85.0 | 0.4% | 3 |
| Average BM | 0.0% | 1,862 | ||
| Gold | 1,328.05 | -1.90 | -0.1% | |
| Silver | 16.43 | -0.03 | -0.2% | |
| Platinum | 996.60 | -0.40 | 0.0% | |
| Palladium | 1,029.70 | -4.30 | -0.4% | |
| Average PM | -0.2% | |||
| Economic calendar | |||||
| GMT | Country | Data | Actual | Expected | Previous |
| 12:30am | Japan | Flash Manufacturing PMI | 54 | 55.2 | 54.8 |
| 4:30am | Japan | All Industries Activity m/m | 0.5% | 0.5% | 1.0% |
| 8:00am | France | French Flash Manufacturing PMI | 58.1 | 58.4 | |
| 8:00am | France | French Flash Services PMI | 59.1 | 59.2 | |
| 8:30am | Germany | German Flash Manufacturing PMI | 60.6 | 61.1 | |
| 8:30am | Germany | German Flash Services PMI | 56.9 | 57.3 | |
| 9:00am | EU | Flash Manufacturing PMI | 59.2 | 59.6 | |
| 9:00am | EU | Flash Services PMI | 57.7 | 58 | |
| 9:30am | UK | Average Earnings Index 3m/y | 2.5% | 2.5% | |
| 9:30am | UK | Claimant Count Change | 2.3K | 8.6K | |
| 9:30am | UK | Public Sector Net Borrowing | -11.5B | 1.0B | |
| 9:30am | UK | Unemployment Rate | 4.3% | 4.3% | |
| 2:15pm | UK | Inflation Report Hearings | |||
| 2:45pm | US | Flash Manufacturing PMI | 55.4 | 55.5 | |
| 2:45pm | US | Flash Services PMI | 53.8 | 53.3 | |
| 3:00pm | US | Existing Home Sales | 5.61M | 5.57M | |
| 7:00pm | US | FOMC Meeting Minutes | |||
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вторник, 20 февраля 2018 г.
Metals morning view: Precious metals prices split, gold and silver down
Precious metals prices are split between bullion and the platinum group metals (PGMs) with spot gold and silver prices down either side of 0.5% and the PGMs little changed. Spot gold was recently quoted at $1,339.61 per oz. This follows a quiet day for most of the precious metals on Monday, the exception being palladium were prices dropped 1%.
A rebound in the dollar is creating a bit of a headwind for gold and silver prices, but gold generally seems in favor and the broad based sell-off from two weeks ago may be encouraging some rotation out of equities and bonds into gold. Platinum prices are looking well placed to challenge resistance above $1,000 per oz and palladium prices seem to be rebounding after their recent 15.8% correction. A stronger dollar may delay moves to the upside though.
The metals prices on the London Metal Exchange are mixed this morning, Tuesday February 20, with aluminium and tin prices firmer by 0.2% and 0.7% respectively, while the rest are lower by an average of 0.7%. Copper prices are down 0.6% at $7,094 per tonne.
Needless to say, with China still on holiday volumes have been light with 1,625 lots traded as of 06:57 am London time.
This follows a mixed performance on Monday, when aluminium, nickel and zinc prices were little changed, with copper, lead and tin prices off 0.6%, 0.7% and 1.7% respectively. The main development on Monday was the increased tightness in aluminium spreads that saw the cash/three-month spread move out to $50 per tonne backwardation, with most of the tightness concentrated in the cash to March date.
Exchanges remain closed in China for the Lunar New Year holiday and will not reopen until Thursday February 22.
In wider markets, spot Brent crude oil prices are little changed at $65.57 per barrel and the yield on US 10-year treasuries has climbed again to 2.91% and the German 10-year bund yield is firmer too at 0.75%.
Equity markets in Asia are for the most part weaker – the Nikkei is down by 1.01%, the Kospi is down 1.13%, the ASX 200 is off 0.1% and the Hang Seng is up 0.05%. This follows weakness in western markets on Monday, where in Europe the Euro Stoxx 50 closed down by 0.55% at 3,407.79.
The dollar index’s rebound continues, it was recently quoted at 89.44, this after a fresh low of 88.25 on February 16. This is applying some downward pressure on other currencies with the euro at 1.2377, sterling at 1.3968, yen at 106.88 and the Australian dollar at 0.7924. The emerging market currencies we follow are if anything on a slight back footing, which reflects the slightly firmer dollar.
Economic data out already today showed a pick-up in German PPI to 0.5% from 0.2%, later there is data on German and EU ZEW economic sentiment, EU consumer confidence, UK industrial order expectations and there is an EU Econfin meeting.
Last week’s rebounds in the base metals have paused for now but prices are for the most part poised under recent highs and look well placed to continue to rally. Needless to say with China on holiday until Thursday, trading activity may be subdued. We remain bullish overall and expect dips to remain well supported, but we need to be cautious given the broad based correction two weeks ago in case rising bond yields prompt another bout of jitters. The tightness in aluminium spreads, which comes ahead of tomorrow’s third Wednesday, combined with the large stock increases of late, are probably just to do with shorts rolling February positions and we would expect that to pass over the next few days, although the next three days of LME stocks data could still hold some surprises is shorts are going to deliver against their February shorts, rather than roll them..
| Overnight Performance | ||||
| GMT | 06:57 | +/- | +/- % | Lots |
| Cu | 7,094 | -44.0 | -0.6% | 517 |
| Al | 2,205 | 3.5 | 0.2% | 447 |
| Ni | 13,545 | -125.0 | -0.9% | 288 |
| Zn | 3,548 | -19.5 | -0.5% | 175 |
| Pb | 2,569 | -19.5 | -0.8% | 192 |
| Sn | 21,540 | 140.0 | 0.7% | 6 |
| Average BM | -0.3% | 1,625 | ||
| Gold | 1,339.61 | -5.74 | -0.4% | |
| Silver | 16.54 | -0.10 | -0.6% | |
| Platinum | 1,003.80 | 0.80 | 0.1% | |
| Palladium | 1,030.80 | -1.20 | -0.1% | |
| Average PM | -0.3% | |||
| Economic calendar | |||||
| GMT | Country | Data | Actual | Expected | Previous |
| 7:00am | Germany | German PPI m/m | 0.5% | 0.3% | 0.2% |
| 10:00am | Germany | German ZEW Economic Sentiment | 16 | 20.4 | |
| 10:00am | EU | ZEW Economic Sentiment | 28.4 | 31.8 | |
| All Day | EU | ECOFIN Meetings | |||
| 11:00am | UK | CBI Industrial Order Expectations | 12 | 14 | |
| 3:00pm | EU | Consumer Confidence | 1 | 1 | |
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понедельник, 19 февраля 2018 г.
Precious metal prices are firmer despite dollar rebound headwind
Precious metals prices are firmer with the complex up an average of 0.6%, led by a 1.1% rise in platinum prices, while gold prices are up 0.1% at $1,347.38 per tonne – this follows a day of weakness for bullion prices with gold and silver off 0.5% and 1.4%, while platinum prices were up 0.3% and palladium prices closed up 2.5%.
A rebound in the dollar is creating a bit of a headwind for gold and silver prices, but gold generally seems in favor and the broad based sell-off from two weeks ago may be encouraging some rotation out of equities and bonds into gold. Platinum prices are looking well placed to challenge resistance above $1,000 per oz and palladium prices seem to be rebounding after their recent 15.8% correction.
The metals complex on the London Metal Exchange is down an average of 0.1%, with the exceptions of aluminium that is off 0.6% ($2,186 per tonne) and nickel that is up 0.8% ($13,775 per tonne). Copper prices are off 0.1% at $7,177 per tonne.
Volumes have been light with 2,354 lots traded as of 07:53 am London time.
This follows a mixed performance on Friday when aluminium and tin prices were up 2.1% and 0.9% respectively, nickel prices were down 3.4%, while the rest were off between 0.1% and 0.4%.
Exchanges remain closed in China for the Lunar New Year holiday and will not reopen until Thursday February 22.
In wider markets, spot Brent crude oil prices are up by 0.38% at $65.10 per barrel and the yield on US 10-year treasuries has eased to 2.88%, as has the German 10-year bund yield at 0.72%.
Equity markets in Asia are firmer – the Nikkei is up by 1.97%, the Kospi is up 0.87% and the ASX 200 is up by 0.64%. This follows continued rebounds in western markets on Friday, where in the United States the Dow Jones closed up by 0.08% at 25,219.38, and in Europe where the Euro Stoxx 50 closed up by 1.10% at 3,426.80.
The dollar index is rebounding, it was recently quoted at 89.14, this after a fresh low of 88.25 on February 16. This has taken the bid out of other currencies with the euro at 1.2414, sterling at 1.4017, the yen at 106.53 and the Australian dollar at 0.7927.
Economic data out today is limited – UK house prices climbed 0.8%, later there is data on the EU current account, there is a Bundesbank monthly report and Bank of England governor Mark Carney is speaking.
The rebounds in the base metals have paused for now but prices are for the most part poised under recent highs and look well placed to continue to rally. Needless to say with China on holiday until Thursday trading activity may be subdued. We remain bullish overall and expect dips to remain well supported.
| Overnight Performance | ||||
| GMT | 07:53 | +/- | +/- % | Lots |
| Cu | 7,177 | -7.0 | -0.1% | 629 |
| Al | 2,186 | -13.5 | -0.6% | 1,050 |
| Ni | 13,775 | 105.0 | 0.8% | 144 |
| Zn | 3,554 | -12.0 | -0.3% | 368 |
| Pb | 2,606 | -2.0 | -0.1% | 152 |
| Sn | 21,750 | -15.0 | -0.1% | 11 |
| Average BM | -0.1% | 2,354 | ||
| Gold | 1,347.38 | 0.43 | 0.0% | |
| Silver | 16.68 | 0.06 | 0.4% | |
| Platinum | 1,012.90 | 10.90 | 1.1% | |
| Palladium | 1,050.10 | 8.10 | 0.8% | |
| Average PM | 0.6% | |||
| Economic calendar | |||||
| GMT | Country | Data | Actual | Expected | Previous |
| 12:01am | UK | Rightmove HPI m/m | 0.8% | 0.7% | |
| 9:00am | EU | Current Account | 30.5B | 32.5B | |
| All Day | EU | Eurogroup Meetings | |||
| 11:00am | Germany | German Buba Monthly Report | |||
| All Day | US | Bank Holiday | |||
| 6:45pm | UK | BOE Gov Carney Speaks | |||
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воскресенье, 18 февраля 2018 г.
пятница, 16 февраля 2018 г.
четверг, 15 февраля 2018 г.
среда, 14 февраля 2018 г.
Metals morning view: Precious metal prices firmer ahead of lunar new year
Precious metals prices are firmer this morning with gains averaging 0.3%. Spot gold prices are up by 0.2% at $1,333.95 per oz. This follows gains of 0.7% yesterday.
They are mapping out a similar path to the base metals i.e. they have rebounded off last week’s lows but are now consolidating. Given the yen is seeing some safe-haven demand may well help underpin/drive gold prices too.
Base metals on the London Metal Exchange are for the most part consolidating this morning, Wednesday February 14. Nickel prices are the most energetic with a 0.7% gain to $13,520 per tonne, the others are ranged between down 0.2% and up 0.3%, with copper prices unchanged at $7,017 per tonne.
Volume has been below average, with 7,611 lots traded as of 07.19 am London time.
This follows a second day of strength, with prices closing up by an average of 1.8% on Tuesday.
On the Shanghai Futures Exchange, the base metals are up by an average of 2%, with aluminium prices bucking the trend with a 1.8% fall. LME aluminium prices managed to shake off the 166,225 tonnes of stock inflow yesterday, but it appears to have weighed on aluminium sentiment in China. Copper prices are up 1.6% at 52,710 yuan ($8,313) per tonne, while spot copper prices in Changjiang are up by 1.0% at 51,990-52,150 yuan per tonne and the LME/Shanghai copper arbitrage ratio has eased to 7.51, down from 7.54 on Tuesday.
In other metals in China, iron ore prices are up by 2.6% at 539.50 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are up by 0.3%, gold prices are up by 0.9% and silver prices are up by 0.4%.
In wider markets, spot Brent crude oil prices are rebounding, up by 0.13% at $62.63 per barrel, while the yield on US 10-year treasuries is easier at 2.83%, as is the German 10-year bund yield at 0.73%.
Equities in Asia are mixed today: the Kospi is up 1.11%, the CSI 300 is up 0.80%, and the Hang Seng is up 1.71%, while the ASX 200 is down 0.25% and the Nikkei is down 0.43%. The latter is under pressure as the yen surges. This follows a mixed performance in western markets on Tuesday, where in the United States the Dow Jones closed up by 0.16% at 24,640.45, and in Europe where the Euro Stoxx 50 closed down by 0.81% at 3,340.93.
The dollar index is edging lower again, it was recently quoted at 89.59, the low being 88.43 on January 25 and the recent high being 90.57 on February 9. The euro (1.2365) is working higher, as are sterling (1.3895) and the Australian dollar (0.7872), while the yen (107.44) reached 106.84 earlier today, which was the highest since November 14. The yuan at 6.3420 is slightly weaker, while most of the other emerging currencies we follow are mixed.
The economic calendar shows China’s foreign direct investment only grew 0.3%, but this follows two months of extra strong gains of 7.9% and 9.8%, which were well above average for 2017. German fourth quarter GDP was up 0.6%, weaker than the 0.8% seen in the third quarter, and CPI dropped 0.7%, but it has a history of being negative in January. Later there is data out on Italian and EU GDP, EU industrial production with US data including CPI, retail sales, business inventories and crude oil inventories. In addition, Germany’s Bundesbank president Jens Weidmann is speaking.
After two days of rebounds LME prices are consolidating. While it does look as though the shake-out from last week may have run its course driven by dip buying, the strength of the yen suggests a pick-up in haven buying so there may still be further bouts of weakness in the broader markets that could weigh on sentiment in the metals. In addition, traders may be nervous about thinner market volumes during China’s Lunar New Year holiday that starts on Thursday and runs until February 21. We still think underlying sentiment is bullish – we should get an update on how bullish it is by seeing how much follow-through buying there is. But, it may take until after the Lunar New Year holidays before bullishness returns.
| Overnight Performance | ||||
| GMT | 07:19 | +/- | +/- % | Lots |
| Cu | 7,017 | 0.0 | 0.0% | 2,531 |
| Al | 2,135 | -5.0 | -0.2% | 1,847 |
| Ni | 13,520 | 95.0 | 0.7% | 1,486 |
| Zn | 3,465 | -4.0 | -0.1% | 1,258 |
| Pb | 2,559 | 8.0 | 0.3% | 475 |
| Sn | 21,585 | 10.0 | 0.0% | 14 |
| Average BM | 0.1% | 7,611 | ||
| Gold | 1,333.95 | 2.25 | 0.2% | |
| Silver | 16.62 | 0.01 | 0.1% | |
| Platinum | 977.90 | 4.90 | 0.5% | |
| Palladium | 989.00 | 3.00 | 0.3% | |
| Average PM | 0.3% | |||
| SHFE Prices 07:19 GMT | RMB | Change | % Change |
| Cu | 52,710 | 830 | 1.6% |
| AL | 14,130 | – 255 | -1.8% |
| Zn | 26,640 | 605 | 2.3% |
| Pb | 19,330 | 355 | 1.9% |
| Ni | 103,000 | 2,680 | 2.7% |
| Sn | 148,770 | 1,920 | 1.3% |
| Average change (base metals) | 1.3% | ||
| Rebar | 3,929.00 | 11.00 | 0.3% |
| Au | 276.05 | 2.55 | 0.9% |
| Ag | 3,716.00 | 13.00 | 0.4% |
| Iron Ore (DCE) May’18 | 539.5 | 13.5 | 2.6% |
| Economic calendar | |||||
| GMT | Country | Data | Actual | Expected | Previous |
| 3:28am | China | Foreign Direct Investment ytd/y | 0.3% | 7.9% | |
| 7:00am | Germany | German Prelim GDP q/q | 0.6% | 0.6% | 0.8% |
| 7:00am | Germany | German Final CPI m/m | -0.7% | -0.7% | -0.7% |
| 8:00am | Germany | German Buba President Weidmann Speaks | |||
| 9:00am | Italian | Italian Prelim GDP q/q | 0.4% | 0.4% | |
| 10:00am | EU | Flash GDP q/q | 0.6% | 0.6% | |
| 10:00am | EU | Industrial Production m/m | 0.1% | 1.0% | |
| 1:30pm | US | CPI m/m | 0.3% | 0.1% | |
| 1:30pm | US | Core CPI m/m | 0.2% | 0.3% | |
| 1:30pm | US | Core Retail Sales m/m | 0.5% | 0.4% | |
| 1:30pm | US | Retail Sales m/m | 0.2% | 0.4% | |
| 2:30pm | UK | CB Leading Index m/m | -0.2% | ||
| 3:00pm | US | Business Inventories m/m | 0.3% | 0.4% | |
| 3:30pm | US | Crude Oil Inventories | 2.8M | 1.9M | |
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вторник, 13 февраля 2018 г.
Metal morning view: Precious metals prices are firmer as base metals recover
The precious metals are firmer this morning with gains averaging 0.2%, with spot gold prices up by 0.2% at $1,325.63 per oz. This follows gains of 0.8% yesterday.
Precious metals sold off in line with the other metals but dip buying is already being seen. The shake-out in broader markets may encourage some investors to diversify their portfolios further, which could support gold.
Base metals on the London Metal Exchange are recovering again this morning, Tuesday February 13, with prices up by an average of 0.7%. Copper ($6,924 per tonne) and nickel lead the way with gains of 0.9%, while lead is the laggard with a 0.3% increase.
Volume has been average with 8,757 lots traded as of 07.07 am London time, although half of that has been in copper.
This follows gains on Monday for all the base metals with the exception of lead that closed down by 0.8%, while the others closed with gains averaging 0.8%.
The precious metals are also firmer this morning with gains averaging 0.2%, with spot gold prices up by 0.2% at $1,325.63 per oz. This follows gains of 0.8% yesterday.
On the Shanghai Futures Exchange, the base metals are for the most part firmer, with lead prices bucking the trend with a 0.4% fall, while the rest are up by an average of 1.1%. Nickel is out in front with a 1.9% gain, followed by copper (+1.7%) at 52,240 yuan ($8,266) per tonne. Spot copper prices in Changjiang are up by 0.7% at 51,400-51,700 yuan per tonne and the LME/Shanghai copper arbitrage ratio stands at 7.54, unchanged from Monday. The fact copper future prices are up by more than spot prices, suggests the rally has continued since the spot price was established.
In other metals in China, iron ore prices are up by 1.3% at 529 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are up by 0.6%, gold prices are up by 0.7% and silver prices are up by 1.1%.
In wider markets, spot Brent crude oil prices are rebounding, up by 0.52% at $62.96 per barrel, while the yield on US 10-year treasuries remains firm at 2.85%, as is the German 10-year bund yield at 0.75%.
Equities in Asia are for the most part stronger today: Kospi (+0.41%), CSI 300 (+1.17%), Hang Seng (+1.36%), ASX 200 (0.6%), while the Nikkei that was closed on Monday is off by 0.65% this morning. This follows rebounds in western markets on Monday, where in the United States the Dow Jones closed up by 1.70% at 24,601.27, and in Europe where the Euro Stoxx 50 closed up by 1.27% at 3,368.25.
The dollar index is edging lower again, it was recently quoted at 89.95, the low being 88.43 on January 25. The euro (1.2316) is working higher, sterling (1.2277) is weaker, the Australian dollar (0.7855) is consolidating and the yen (107.91) continues to strengthen. The yuan at 6.3375 is weaker, while the other emerging currencies we follow are consolidating.
The economic calendar shows data on Japanese machine tool orders, which came in slightly stronger than previously, data out later includes French private payrolls, UK consumer price index (CPI), producer price index (PPI), retail price index (RPI) and house price index (HPI) and the US small business index. In addition, US Federal Open Market Committee member Loretta Mester is speaking.
With a second day of gains getting underway in the base metals and with equities rebounding too, it does look as though the shake-out from last week may have run its course driven by dip buying. That said, further bouts of selling could emerge into the rebound, so we would expect some choppy trading for a while, especially with the Lunar New Year starting on Thursday and running until February 21. Underlying sentiment seems to be bullish, we should get an update on how bullish it is by seeing how much follow-through buying there is.
Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.
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понедельник, 12 февраля 2018 г.
Metals morning view: Precious metal prices firmer after broad-based weaknesses
The precious metals are also firmer this morning after experiencing broad-based weakness last week – prices are up by an average of 0.9%, led by a 1.3% rise in palladium prices, with gold prices up the least with a 0.6% rise to $1,323.56 per oz.
Precious metals sold off in line with the other metals and markets highlighting risk–off, if weakness continues to be seen in other markets then there may well be some rotation out of equities and bonds into gold as a haven.
Base metals prices on the London Metal Exchange seem to have found buying interest this morning, Monday February 12, with all of the base metals, except lead (-0.3%), showing gains averaging 1%. The three-month copper price leads the way with a 1.8% rally to $6,870 per tonne – this after a low last Friday of $6,733 per tonne.
Volume has been high with 12,015 lots traded as of 07:09 am London time – the question now being whether last week’s risk-off sentiment has run its course. At the lows on Friday, the base metals prices were down from their recent highs by an average of 7.2%, ranged between a 9.2% fall in nickel prices and a 4.6% fall in tin prices.
On the Shanghai Futures Exchange, the base metals are mixed this morning – at the extremes, aluminium prices are up by 1.8% and tin prices are down by 1.3%, copper, lead and nickel prices are little changed and zinc prices are off by 0.7%. Copper prices are at 51,760 yuan ($8,222) per tonne, while spot copper prices in Changjiang are down by 0.2% at 51,130-51,290 yuan per tonne and the LME/Shanghai copper arbitrage ratio stands at 7.54, down slightly from 7.53 on Friday.
In other metals in China, iron ore prices are down by 0.9% at 523 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are up by 0.2%, while gold prices are unchanged and silver prices are down by 0.1%.
In wider markets, spot Brent crude oil prices are rebounding, up by 1.27% at $63.37 per barrel, while the yield on US 10-year treasuries is strong at 2.87%, as is the German 10-year bund yield at 0.78%.
Equities in Asia are for the most part rebounding today: Nikkei (closed), Kospi (+0.90%), CSI 300 (+1.29%), Hang Seng (+0.64%), although the ASX 200 is down 0.30%. This follows a mixed performance in western markets on Friday, where in the United States the Dow Jones closed up by 1.38% at 24,190.90, and in Europe where the Euro Stoxx 50 closed down by 1.52% at 3,325.99.
The dollar index is consolidating after last week’s rebound, it was recently quoted at 90.18, the low being 88.43 on January 25. The euro and sterling are weaker at 1.2277 and 1.3846 respectively, while the yen (108.61) is consolidating after recent strength and the Australian dollar (0.7817) is consolidating after two weeks of weakness. The yuan at 6.3119 is also off recent highs, while the other emerging currencies we follow are consolidating after recent weakness.
The economic agenda is light today with data on the US Federal budget balance – in addition, Bank of England Monetary Policy Committee members Gertjan Vlieghe and Ian McCafferty are speaking.
All eyes are on whether the global sell-off last week has run its course and with the Lunar New Year also getting underway this week, trading is likely to remain nervous and choppy. Underlying sentiment seems to be bullish but having had a shake-out last week, overhead resistance is likely to be even stronger now while the market adjusts to the increased volatility. We should get an update on how bullish sentiment is by seeing how well the dips are supported and the level of follow through buying.
Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.
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воскресенье, 11 февраля 2018 г.
пятница, 9 февраля 2018 г.
Metals morning view: Precious metals prices remain subdued this morning
Precious metals prices remain subdued this morning, with gold (-0.2%) and platinum (-0.1%), and silver (flat) falling to capture haven bids in spite of the rise in risk aversion. Palladium (+0.3%) is the only precious metal showing a gain. We attribute the lack of upward pressure across the precious metals to the significant increase in US real rates, with the 10-year US Treasury Inflation-Protected Securities yield (proxy for US real rates) – at 0.76% – marking its highest level since December 2015. Although the rise in US real rates is driven primarily by a rise in nominal yields (rather than a fall in inflation expectations), this environment is not conducive to stronger precious metals pricing.
Precious metals could come under downward pressure in the immediate term should US real rates continue to grind higher. Given the Federal Reserve’s conviction that the recent bout of volatility is unlikely to last, investors revise more aggressively the present Federal Reserve tightening cycle. This is likely to exert upward pressure on the dollar and US rates, which in turn would be negative for the complex, especially gold.
Base metals traded on the London Metal Exchange are experiencing downward pressure this morning, Friday February 9, with the complex posting an average loss of 0.7% amid healthy volumes. Nickel (-1.6%) has been hit the worst, while copper (-0.2%) appears to be the most resilient.
The downward pressure across the industrial metals is driven by a deterioration in risk sentiment in Asia, evident in equity losses – the Shanghai Composite Index (~-4%) is down the most since February 2016 and the Nikkei 225 (~-2%) is at its lowest since October 2017. The worsening risk aversion in Asia is the result of negative spillover effects from the renewed surge in market fears in Thursday’s trading session in the Western world where the Cboe Volatility Index moved back up above 30, signaling that market participants remain on the cautious side, that is, reluctant to buy the dips with conviction.
This “risk-off” sentiment has induced broad-based deleveraging across the industrial metals, even though the recent data suggests that:
• Inflation dynamics in China are healthy (consumer inflation data released earlier this morning was in line with consensus)
• China’s demand for metal was robust in January (e.g. China’s refined copper imports in January were up by 17% year on year)
On the Shanghai Futures Exchange, the base metals are also experiencing broad-based weakness, showing an average loss of 1.2%, with nickel (-2.1%) the weakest and aluminium (-0.4%) the most resilient. The resilience of aluminium looks surprising following the recent China’s trade data, showing that exports rose by a stronger than expected 14.5% year on year in January. Copper prices in Changjiang are down by 0.6% at 51,170-51,450 yuan ($8,098-8,143) per tonne and the LME/Shanghai copper arbitrage ratio stands at 7.53, down slightly from 7.54 yesterday.
On the macro front, US Federal Reserve speakers continued to downplay the sudden surge in risk aversion earlier this month, inclined to leave unchanged their policy rate outlook. The economic calendar is quite light today, with investors likely to focus on industrial production numbers in Europe.
Base metals are likely to enjoy renewed strength after the recent wave of selling pressure. The present risk-off environment is unlikely to persist for too long considering that macro data releases continue to show improving global growth momentum. On the micro front, most base metals prices enjoy stronger supply/demand dynamics, evident in the fall in visible inventories for all base metals (excluding copper) since the start of the year. The “buying on the dips” mentality should therefore prevail.
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четверг, 8 февраля 2018 г.
Precious metals prices could come under downward pressure in the immediate term
The precious metals complex is little changed this morning, posting an average loss of 0.1%, after a drop of 1.3% on Wednesday. In spite of wild swings in the CBOE Volatility Index (proxy for risk aversion), the complex has failed to capture meaningful haven bids, principally because investors seem to view the recent market turbulence as transient and as such, do not feel the need to revise their asset allocations. Precious metals demand is also undermined by dollar strength and higher US real rates, the two key macro variables of the complex. Given the prompt return to “normality”, palladium could perform the best thanks to its stronger sensitivity to cyclical assets.
Precious metals could come under downward pressure in the immediate term should the worst be over. It seems that investors are inclined to buy the dips as far as risky assets are concerned. This should dampen further haven demand but what will matter the most is the fluctuations of the dollar and US real rates. In this context, palladium could turn out to perform the best in light of its higher sensitivity to risk assets.
Base metals traded on the London Metal Exchange are little changed this morning, Thursday February 8, with copper (+0.5%) and zinc (+0.5%) the only metals in positive territory, while the rest are under slight downward pressure.
Volume remains healthy, however, with 18,941 lots traded as of 07.16 am London time.
The base metals complex seems to be undermined by a more pronounced appreciation in the dollar – the dollar index (at 90.37 at the time of writing) is now up for the fifth day in a row, compared with a recent low of 88.55 earlier in February.
Of note, the dollar is strengthening substantially against the yuan this morning, with the dollar yuan rate up 0.88, the largest daily increase since August 12, 2015 (when the yuan shifted to a free floating exchange rate system). The notable depreciation in the yuan is likely to deteriorate further arbitrage opportunities, thereby dampening domestic demand for metals.
This morning’s weakness in the base metals comes after a weak trading session on Wednesday, with the complex posting an average loss of 1.8%, dragged lower by copper (-2.9%), lead (-2.8%) and zinc (-2.5%), which probably reflected negative spillovers from the stronger dollar and the weaker oil price, notwithstanding a decline in global risk aversion.
On the Shanghai Futures Exchange, the base metals are experiencing more pronounced downward pressure, showing an average loss of 1.1%, with copper (-1.8%) the worst performer and aluminium (+0.3%) the only metal posting a gain. The underperformance of SHFE prices versus LME prices is mainly driven by the foreign exchange channel, in our view. Copper prices in Changjiang are down by 2.2% at 51,510-51,690 yuan ($8,219-8,247) per tonne and the LME/Shanghai copper arbitrage ratio is at 7.54, up from 7.39 yesterday.
On the macro front, it was interesting to note yesterday that US Federal Reserve speakers did not take the recent market turbulence too seriously and therefore left their rate policy outlook unchanged. Earlier this morning, China and Germany offered their trade balances for January and December, respectively – China’s trade surplus came out much weaker than expected due to a surge in imports (resulting in yuan weakness) while German’s trade surplus was in line with market consensus. Later today, investors will pay attention to German Bundesbank President Jens Weidmann’s speech and scrutinize US unemployment claims.
We think the current macro environment is conducive for higher base metals prices. In consequence, the recent wave of fresh selling should prove temporary and lead to some short-covering. Most base metals enjoy robust micro dynamics. On this basis, we tend to prefer zinc and tin in so far as signs of tightening in present fundamentals are more visible, namely available stocks continue to fall at a fast pace while their forward curve is backwardated.
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