Gold prices weaker, safe-haven demand wanes
Gold, silver and platinum prices are little changed this morning, Friday June 16, with spot gold prices off 0.1% at $1,252.98 per oz. Palladium prices are up 0.4%, suggesting their recent price correction has started to run into some dip-buying. This comes after a down day for gold, silver and platinum on Thursday, where prices closed down an average of 1.2%, while palladium prices rebounded 0.9%.
Base metals on the London Metal Exchange are up across the board this morning, as they were yesterday morning. Prices are up by an average of 0.3%, with zinc leading the rebound with a 0.8% gain to $2,534 per tonne, nickel prices are up 0.5% and tin prices are up 0.4%, while the rest are up around 0.1% with copper at $5,681 per tonne. Volume has been average with 6,196 lots traded as of 06:34 BST.
This morning’s gains come after a generally stronger day on Thursday when prices closed up an average of 0.6%, but gains were concentrated in zinc, lead and tin prices, which closed with average gains of 1.3%, while copper and nickel prices closed up 0.1% and aluminium prices closed down 0.2%. Aluminium prices appear to have taken over from lead as the metal struggling the most to come out of its drift lower.
In Shanghai this morning, copper prices are off 0.1% on the Shanghai Futures Exchange (SHFE) at 45,620 yuan per tonne ($6,694 per tonne), but the rest are firmer by an average of 0.7%, led by a 1.5% increase in lead prices. Spot copper prices in Changjiang are up 0.1% at 45,550-45,650 yuan per tonne and the LME/Shanghai copper arb ratio has firmed to 8.04.
In other metals in China, September iron ore prices on the Dalian Commodity Exchange are up 0.7% at 426 yuan per tonne, while on the SHFE, steel rebar prices continue to rebound, they are up 1% while gold and silver prices are down either side of 1.4%.
In international markets, spot Brent crude oil prices are up 0.4% at $46.95 per barrel and the yield on the US ten-year treasuries has edged higher to 2.17%.
Equities ended Thursday lower with the Euro Stoxx 50 closing down 0.6%, while the Dow closed off marginally at 21,359.80. In Asia this morning, markets are generally firmer; the Nikkei is up 0.6%, the Hang Seng is up 0.3%, the ASX200 is 0.1% higher while the CSI 300 is down 0.2% and the Kospi is off 0.1%.
The dollar index at 97.54 is working higher suggesting the markets are starting to side with the US Federal Reserve’s stance rather than be overly influenced by the recent weak consumer price index out of the USA. As the dollar turns higher, the euro is retreating at 1.1142, as is the yen at 111.16, while sterling is edging higher at 1.2769 and the Australian dollar is firm at 0.7590.
The yuan at 6.8144 is weakening again and the other emerging market currencies we follow are for the most part weaker too, suggesting a general reaction to the firmer dollar and the Fed’s stance.
The economic agenda is busy today. Japan kept its monetary policy and interest rate unchanged, at minus 0.1%, while the Bank of Japan’s press conference is still to come. EU passenger car registrations climbed 7.6% in May, reversing April’s 6.6% fall – in the first five months registrations are up a healthy 5.3%. Later there is data on Italy’s trade balance, EU CPI, the Bank of England’s quarterly bulletin, with US data including building permits, housing starts, preliminary University of Michigan consumer sentiment and inflationary expectations and labour market conditions. In addition, US Federal Open Market Committee member Robert Kaplan is speaking – see table below for more details.
Within quiet trading conditions, base metals prices are for the most part edging higher, the exceptions are aluminium that is lingering around recent lows and copper that is struggling to get any follow through buying after Thursday’s attempted rebound. We have noted of late that bouts of buying tend not to attract much follow through buying so we wait to see if today is any different, although with the dollar firmer that may be expecting too much. Conversely, we wait to see if aluminium can hold up above nearby support levels. In the absence of more bullish news flow, this current sideways to lower direction in metals prices may continue. Based on fundamental outlook we remain mildly bullish for the medium to longer term, i.e. we are not bearish per se, but are having to wait longer than expected for an upturn.
Precious metals prices are, for the most part, retreating as markets consolidate as the need for safe-havens has eased. Palladium is in a different boat; in recent days prices have corrected after the runaway rally, but the recent dip in prices does seem to be attracting some dip-buying. Until geopolitical, or political tensions rise again, gold prices may remain on a back footing.
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