Gold prices consolidate but hold up better than expected

FastMarkets

In precious metals this morning, Friday April 28, platinum and palladium prices lead the gains with prices up 0.6% and 0.4%, respectively, while gold prices are little changed at $1,264.80 per oz and silver prices are up 0.2% at $17.30 per oz.

There is generally a firmer tone in the base metals traded on the London Metal Exchange this morning, with three-month prices up an average of 0.3%, while tin is the only metal showing a loss.

The rest of the complex is up between 0.1% for copper prices that are at $5,720 per tonne and 1% for nickel prices at $9,440 per tonne. Volume remains light with 5,582 lots traded as of 06:28 BST.

Metals prices on the Shanghai Futures Exchange are for the most part higher this morning, the exception is aluminium, where prices are down 1.2%. Copper prices are little changed at 46,290 yuan per tonne, the rest are stronger with zinc prices up 0.5%, tin prices up 0.9%, lead prices up 1.1% and nickel prices up 1.9%.

Spot copper prices in Changjiang are slightly firmer at 46,150-46,300 yuan per tonne and the LME/Shanghai copper arb ratio is weaker, trading at around 8.09.

In other metals in China, September iron ore futures are up 4.3% on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are up 3.6% and gold and silver prices are little changed.

In international markets, spot Brent crude oil prices are up 0.5% at $52.31 per barrel and the yield on the US ten-year treasuries has eased to 2.29%.

The Euro Stoxx 50 closed down 0.4% on Thursday and Dow was little changed at 20,981.33. In Asia this morning, the markets are mainly weaker with the Nikkei and Hang Seng down 0.4%, the CSI 300 is off 0.8%, the Kospi is down 0.2% and the ASX 200 is little changed. End of month profit-taking combined with raised concerns over North Korea seem to be weighing on sentiment.

The dollar index at 99.21 has halted its slide and is getting some lift, although there is resistance at 99.33 and a gap up to 99.89. The euro at 1.0862 has given back some of its recent gains, the yen at 111.17 has pulled back from recent low of 111.78, the Australian dollar is consolidating in low ground around 0.7474, while the sterling creeps higher – it was recently quoted at 1.2906.

In emerging market (EM) currencies, the yuan is little changed at 6.8932, while most of the other EM currencies we follow are weaker, the exception being the ringgit. This suggests some potential pick-up in risk-off.

There is a mass of data out today, see table below for details. Japan’s industrial production was worse than expected, but retail sales and housing starts were better, French GDP came in at 0.3%, later there is GDP and CPI numbers out across much of Europe, with US data including GDP, Chicago PMI, University of Michigan consumer sentiment and inflation expectations, plus US Federal Open Market Committee (FOMC) members Lael Brainard and Patrick Harker are speaking.

Our stance of remaining quietly bullish for the base metals into the recent weakness, while we wait for the fundamentals to tighten up again, seems to be paying off as support levels have been found and prices are edging higher. There is not much bullishness around though and with volumes quite light it does not look as though the market is about to pick up momentum. As such, we see the market as fairly well balanced with a reasonable demand outlook, but a market that is generally still well supplied given the extra metal units that were sucked out of the woodwork with the run-up in prices between November and February.

Gold prices are on a back footing, but they are holding up quite well, which is probably a result of geopolitical concerns over North Korea and due to the dollar weakness. There are also some signs that physical demand in China and India is picking up again, weak demand in these major consuming countries has not helped gold’s fundamentals. Silver and platinum prices have not held up as well as gold, while palladium extended its high price on Thursday and pushed the envelope even further today with a high of $819 per oz.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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FastMarkets

Gold and the other precious metals are little changed this morning, Thursday April 27, with spot gold prices off 0.1% at $1,267.24 per oz. This follows on from Wednesday when gold and palladium prices were firmer, while silver and platinum prices were weaker.

The base metals traded on the London Metal Exchange are down across the board this morning, with three-month prices off an average of 0.3%.

Prices are down between 0.2% for tin and 0.5% for nickel, with copper prices down 0.4% at $5,709 per tonne. Volume has been light with 3,630 lots traded as of 06:30 BST.

This follows a generally stronger performance on Wednesday that saw gains average 0.8%, led by a 1.9% rebound in tin prices to $19,910 per tonne, while copper and aluminium prices gained 0.4%.

Metals prices on the Shanghai Futures Exchange are up an average of 0.3% this morning, led by a 1.7% rebound in tin prices, nickel prices remain weak with a 0.7% decline, aluminium prices are off 0.4%, lead and zinc prices are up either side of 0.6% and copper is little changed at 46,290 yuan per tonne.

Spot copper prices in Changjiang are off 0.1% at 46,130-46,280 yuan per tonne and the LME/Shanghai copper arb ratio was trading at around 8.11.

In other metals in China, September iron ore futures are down 1.1% on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are unchanged and gold and silver prices are little changed.

In international markets, spot Brent crude oil prices are up 0.2% at $51.58 per barrel and the yield on the US ten-year treasuries has eased to 2.31%.

Equities remained buoyant on Wednesday with the Euro Stoxx 50 and Dow only off by around 0.1%, after what has been a strong run higher. The US tax plan excited the markets for a while, but that faded by the close. In Asia this morning, the Nikkei is off 0.2%, the Hang Seng is up 0.1%, the CSI 300 is off 0.3% and the ASX 200 and Kospi are up 0.1%.

The dollar index at 98.93 remains vulnerable as it sits on a support line running under a series of lows dating back to December 2016. The euro at 1.0902 is consolidating recent strength, the yen at 111.23 and the Australian dollar at 0.7483 are consolidating recent weakness and the sterling has broken higher above resistance at 1.2860, it being recently quoted at 1.2869.

In emerging market (EM) currencies, the yuan is weaker at 6.8968, the rupee remains strong at 64.095, the ringgit is strengthening, the peso is reversing recent weakness, while the rest are consolidating.

The economic agenda is busy with an update on Japan’s monetary policy, later there is data on German GfK consumer climate, German and Spanish preliminary CPI, Spanish unemployment rate, UK realised sales, the EU monetary policy decision and press conference. US data includes durable goods orders, initial jobless claims, goods trade balance, wholesale inventories, pending home sales and natural gas storage – see table below for more details.

Most of the base metals appear to have found bases and are trying to rebound, all to varying levels of success. Aluminium prices are the closest to setting fresh highs with three-month prices recently trading at $1,963 per tonne, when the end-of-March high was at $1,981. Nickel, however, is the one metal still heading lower, with prices reaching $9,215 per tonne this morning. This weakness probably reflects the pick-up in China’s nickel ore/concentrate imports from Indonesia, which helped counter falling imports from the Philippines. On balance we remain mildly bullish for the base metals’ fundamentals but volume on the LME remains low so it may take a pick-up in volume before prices become more directional again.

Gold prices are on a back footing, but they are holding up better than we expected given how the market seems to be less concerned about the French election now. The weaker dollar, however, may be providing extra support. Silver and platinum are looking weaker, while palladium prices continue to hold up well. We would not be surprised to see gold prices weaken further, before resuming the overall up trend.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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Gold prices hold up relatively well, weaker dollar helping

FastMarkets

Gold and silver prices are little changed this morning with spot prices at $1,263.25 per oz and 17.57 per oz respectively, while the PGMs are firmer by an average of 0.4%. This follows a generally weaker performance yesterday when silver prices fell 1.7%, gold prices fell 1% and platinum prices fell 0.8%, while palladium bucked the trend with a 0.4% rise.

With the market expecting Emmanuel Macron to be the next French president, haven trades are losing their shine, hence bullion prices and the yen are on back footings and that may well remain the case until after the May 7 election – unless geopolitical tensions rise elsewhere.

The base metals traded on the London Metal Exchange are up across the board this morning, Wednesday April 26, with three-month prices up an average of 0.4% led by a 0.8% rise in zinc prices.

Copper prices are up 0.2% at $5,723 per tonne. Volume has, however, been low with 3,754 lots traded as of 06:38 BST. This firmer tone follows a mixed performance on Tuesday, when copper, aluminium and lead prices rose around 1.4%, zinc prices climbed 0.8%, but nickel and tin prices fell around 1%.

 

Metals prices on the Shanghai Futures Exchange are also up across the board, suggesting the wave of weakness that has hit that market in recent weeks may have passed. Prices across the base metals complex are up an average of 0.7% this morning, with lead prices up 1.3% and with zinc and copper prices up 1%, with the latter at 46,360 yuan per tonne.

Spot copper prices in Changjiang are up 0.2% at 46,160-46,310 yuan per tonne and the LME/Shanghai copper arb ratio was trading around 8.10.

In other metals in China, September iron ore futures are up 3.1% on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are up 2.3%, gold prices are down 0.4% and silver prices are off 0.5%.

In international markets, spot Brent crude oil prices are up 0.1% at $52.03 per barrel and the yield on the US ten-year treasuries has increased to 2.34%.

Equities remained buoyant yesterday with the Euro Stoxx 50 closing up 0.2%, it held on to all of its 4% gain from Monday and the Dax set a fresh all-time high. The Dow closed up 1.1% at 20,996.

The firmer tone has spread through Asia this morning, with the Nikkei up 1%, the ASX 200 is up 0.8%, the Hang Seng is up 0.7%, the Kospi is up 0.6% and the CSI 300 is up 0.3%.

The dollar index has broken below support setting a fresh low for the year at 98.69 yesterday. It was recently quoted at 98.75 – this may help underpin commodity prices. The euro at 1.0946 is pushing higher, sterling at 1.2835 is poised below resistance at 1.2860 – it looks well placed to break higher – while the aussie is weaker at 0.7513, as is the yen at 111.35.

In emerging market (EM) currencies, the yuan is flat at 6.8856, the rupee is strengthening, as is the ringgit, while the rest are either consolidating ,or slightly weaker.

The economic agenda is light today: Japan’s all industries activity climbed 0.7%, after a 0.4% fall previously and later today data on US crude oil inventories is released – see table below for more details.

The base metals are edging higher after recent weakness, nickel and tin seem the two metals struggling to get some lift and as such they remain the most vulnerable. Aluminium prices look the strongest as they have retreated the least in recent weeks, while the rest have pulled back quite far – the pullbacks could be consolidation after the strong gains seen in the fourth quarter last year and in the first part of this year, which is what we think is the case – although sentiment does not seem bullish so this stronger tone in recent days could be a feint move higher. On balance, we still remain friendly towards the base metals’ outlooks and are waiting to see if this upward move attracts more followers.

Gold prices have pulled back from the recent highs, but they are holding up relatively well, especially considering the weaker yen and rebound in sentiment as seen by the rebound in equity prices. The weaker dollar may well be helping to cushion any pullback. Silver and platinum are looking weaker, while palladium prices continue to hold up well.

Overnight Performance BST 06:38 +/- +/- % Lots Cu 5723 9 0.2% 1310 Al 1964 2 0.1% 356 Ni 9325 25 0.3% 1134 Zn 2626.5 21 0.8% 829 Pb 2180 11 0.5% 102 Sn 19610 75 0.4% 23 Average 0.4%       3,754 Gold 1263.24 -0.06 0.0%   Silver 17.57 -0.01 -0.1% Platinum 954.1 2.1 0.2% Palladium 801.5 4.5 0.6% Average PM 0.2%   SHFE Prices 06:39 BST RMB Change % Change Cu         46,360 480 1.0% AL         14,425 95 0.7% Zn         21,695 210 1.0% Pb         16,145 215 1.3% Ni         78,180 70 0.1% Sn       137,670 360 0.3% Average change (base metals)     0.7% Rebar           2,997 67 2.3% Iron ore              511 15.5 3.1% Au              283 -1.05 -0.4% Ag           4,127 -19 -0.5%   Economic Agenda BST Country Data Actual Expected Previous 5:30am Japan All Industries Activity m/m 0.7% 0.8% -0.4%  3:30pm US Crude Oil Inventories -1.1M -1.0M

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FastMarkets

Gold prices are weaker this morning, Monday April 24, on the back of the results of the first round of the French presidential election that has put Emmanuel Macron and Marine Le Pen in the run-off election on May 7. The result has led to some liquidation of haven trades. Spot gold prices are down 0.8% at $1,274.23 per oz, silver and palladium prices are down 0.4% and 0.2%, respectively, while palladium continues to buck the trend with a 1% rise to $799 per oz. This morning’s weakness in prices follows a general down day on Friday, when the precious metals closed down by an average of 0.6%.

Apart from three-month tin prices that are down 0.9% on the London Metal Exchange this morning, the rest of the metals’ prices are ranged between plus and minus 0.3%, with copper prices up 0.3% at $5,652 per tonne.

Volume remains average with 6,701 lots traded as of 06:40 BST. This follows a weaker session on Friday April 21, when the base metals complex closed down 0.9%, led by a 1.7% drop in zinc prices.

Sentiment in China remains largely weak with the base metals on the Shanghai Futures Exchange down an average of 1.1% this morning, the exception is copper that is up 0.2% at 45,880 yuan per tonne, while the rest are down between 0.5% for aluminium and 2.4% for tin. Spot copper prices in Changjiang are up 0.1% at 45,780-45,980 yuan per tonne and the LME/Shanghai copper arb ratio was around 8.11. Last week, the arb window was open at times, which suggests support for copper prices may not be too far away.

In other metals in China, September iron ore futures remain weak with prices down 1.4% on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are off 1.3%, gold prices are down 0.2% and silver prices are off 0.6%. In international markets, spot Brent crude oil prices are up 0.6% at $52.23 per barrel and the yield on the US ten-year treasuries has climbed to 2.32% as demand for haven bonds has eased.

Equities ended last week little changed to slightly weaker with the Euro Stoxx 50 little changed while the Dow closed down 0.2% at 20,547. In Asia this morning, China’s CSI 300 is off 1.4%, while the weaker yen has given the Nikkei a boost, it is up 1.5%, the Hang Seng is up 0.1%, the ASX 200 is up 0.2% and the Kospi is up 0.3%.

The French election result has led to some fast moves and gap-openings in the currencies with the euro gapping higher to 1.0867, the yen has fallen to 110.22, the dollar index is lower at 99.07, the Australian dollar is stronger at 0.7561 and the sterling is treading water at 1.2787. In emerging market (EM) currencies, the yuan is flat at 6.8857 and most of the other EM currencies we follow are looking stronger with the peso and rand gapping higher.

The economic agenda is light, with German Ifo business climate, a Bundesbank monthly report, UK CBI industrial order expectations, Chinese leading indicators and US Federal Open Market Committee member Neel Kashkari is speaking twice – see table below for more details.

The base metals started to find some strength towards the end of last week but the buyers did not appear to be in any particular hurry, but that may have been due to uncertainty ahead of the French election. Nickel, tin, zinc and lead remain on a back footing, while copper is holding up slightly better and aluminium is for now holding on to most of its gains. With the markets looking more risk-on this morning, we wait to see if that instils some confidence into the base metals – we would expect it to.

Gold prices gapped lower in early trading, which is not surprising and given the first round results in the French election we would expect prices to pull back further for a while, although we do not think it will derail the overall up trend in gold prices. We expect silver and platinum prices to follow gold’s lead, while palladium seems capable of trading its own fundamentals – that said, given we expect a slower auto market this year, we would not be overly bullish for prices at these elevated levels.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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Jack Chan's Weekly Gold and Silver Update: Trends Are Up

Technical analyst Jack Chan charts upward trends in the precious metals markets.

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Gold prices consolidate recent gains, expect increased volatility around the French election

FastMarkets

Gold and the rest of the precious metals prices are little changed this morning, Friday April 21, with spot gold prices at $1,280.13 per oz. This comes after a mixed performance on Thursday that saw spot gold prices climb 0.2%, silver prices drop 0.7%, while the PGMs were strong with platinum prices up 1.2% to $975 per oz and palladium prices rose 3.5% to $802 per oz.

Base metals prices have managed to generally build on the gains from Thursday with three-month London Metal Exchange prices up an average of 0.4%, this morning.

Lead prices lead the way with a 0.9% rise, while tin prices buck the trend with a 0.5% drop to $19,810 per tonne, while the rest are up between 0.3% for nickel and 0.8% for zinc. Copper prices are up 0.4% at $5,657 per tonne. Volume has been above average with 7,249 lots traded as of 06:42 BST

Sentiment in China has tended to be bearish in recent weeks, but today was an up day across the board with prices up an average of 1.2%, led by a 3% rally in zinc prices. Tin lagged behind with a 0.2% gain, while the rest were up between 0.6% for lead and 1.2% for aluminium. Copper was up 0.9% at 45,860 yuan per tonne. Spot copper prices in Changjiang are up 0.5% at 45,720-45,920 yuan per tonne and the LME/Shanghai copper arb ratio was trading around 8.11. We mentioned in Thursday’s report that there were some reports of some arb trading on Wednesday, so with prices rebounding today some bargain hunting may be materialising.

In other metals in China, September iron ore futures have rebounded strongly with gains of 7.3% on the Dalian Commodity Exchange, while on the Shanghai Futures Exchange, steel rebar prices are up 3.5%, gold prices are little changed and silver prices are off 0.8%. In international markets, spot Brent crude oil prices are little changed at $52.98 per barrel and the yield on the US ten-year treasuries is slightly firmer at 2.24%.

Equities also took on a firmer tone on Thursday with the Euro Stoxx 50 closing up 0.6% and the Dow closed up 0.9% at 20,578. Asia this morning has generally seen follow through buying, with the Nikkei up 1.1%, helped by a weaker yen, the Kospi is up 0.8%, the ASX 200 is up 0.7%, the Hang Seng is up 0.1%, while the CSI 300 bucks the trend with a 0.3% drop.

The dollar index at 99.81 is slightly firmer than this time on Thursday as US Treasury Secretary Steven Mnuchin breathed life back into US president Donald Trump’s reflation trade. This weighed on other currencies with the euro slipping to 1.0713, sterling’s rally has paused at 1.2809 and the yen has eased to 109.37, while firmer iron ore prices has given the Australian dollar, at 0.7534, some strength. In emerging market (EM) currencies, the yuan is flat at 6.8832 and most of the other EM currencies we follow are holding within recent ranges.

The economic agenda is busy today, Japan’s flash manufacturing PMI climbed to 52.8 from 52.4. Later there is PMI data out across Europe and the US, plus data on the EU current account, UK retail sales and US existing home sales. Speakers include UK Monetary Policy Committee member Michael Saunders and US Federal Open Market Committee member Neel Kashkari, it is also day one of an International Monetary Fund meeting. Although there is no flash Chinese PMI data out, the update on manufacturing in Europe and the US should provide further insight into how the global economy is doing.

Dip-buying appears to have emerged into the recent weakness in base metals prices, this fits in with our overall view to remain mildly bullish for the complex. What will be interesting now is to see if there is follow through buying and whether that starts to unnerve the shorts that have added to positions in recent weeks. Political uncertainty in the short term may keep potential buyers on hold.

Gold prices are consolidating recent gains as higher prices are unsurprisingly prompting some profit-taking, as at the end of the day Marine Le Pen is unlikely to be the next French president, but given the surprise over Brexit and the US election, there will be a lot of uncertainty and nervousness until the final vote is known. As such, we expect increased volatility in the days and weeks ahead, especially as other geopolitical events are running in parallel. Silver, platinum and palladium, are generally holding up well, although they too have seen some profit-taking. The strong rebound in palladium suggests strong underlying demand.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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Global Yields Worth Holding

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Gold prices consolidate as high prices attract profit-taking

FastMarkets

Gold and silver prices are little changed this morning, Thursday April 20, with spot gold prices at $1,279.60 per oz, although the PGMs are up an average of 0.4%, but this comes after a generally weaker day on Wednesday that saw the complex closed down an average of 0.6%. With gold prices already having run higher in recent weeks on the back of political and geopolitical uncertainty, we are not surprised that there is some profit-taking to be absorbed and the market is likely to remain volatile as we pass through the French presidential elections.

Base metals prices were weaker again this morning, with three-month prices on the London Metal Exchange down an average of 1% as of 06:38 BST, with zinc and lead prices off the most with losses of 1.6% and 1.5%, respectively, copper prices are off 0.7% at $5,557 per tonne, while aluminium prices are off the least with a 0.2% drop to $1,908.50 per tonne. Prices have since started to rebound.

Volume has been above average with 7,311 lots traded. This morning’s earlier weakness came after a generally stronger day on Wednesday that saw prices closed up an average of 1.1% – so the series of up down days with an overall downward bias continues.

Sentiment in China remains bearish as seen by the persistent retreat across the metals, both base and industrial. That said, not all base metals prices on the Shanghai Futures Exchange are weaker this morning, zinc and lead that have been some of the weaker metals are up 0.4% and 1.2%, respectively, which suggests a degree of bargain hunting. The rest of the metals are, however, continuing to show weakness with aluminium prices falling 1.2%, tin prices are down 0.7%, nickel prices are down 0.5% and copper prices are off 0.9% at 45,200 yuan per tonne. Spot copper prices in Changjiang are down 0.9% at 45,470-46,670 yuan per tonne and the LME/Shanghai copper arb ratio was trading around 8.11. There were reports of some arb trading on Wednesday, which is another early sign that some bargain hunting may be materialising.

In other metals in China, September iron ore futures have continued to fall, they are down 2.3% on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are down 1.4%, gold prices are off 0.2% and silver prices are down 0.4%. In international markets, spot Brent crude oil prices are little changed at $53.12 per barrel, although that is after a much weaker day on Wednesday and the yield on the US ten-year treasuries is weaker at 2.21%.

Equities were mixed on Wednesday with the Euro Stoxx 50 closing up 0.3%, but the Dow closed down 0.6% at 20,404. Asia this morning, however, is firmer with the Nikkei up 0.1%, the Hang Seng is up 0.4%, the CSI 300 and ASX 200 are up 0.2% and the Kospi is up 0.5%. Asian equities seem to be taking comfort from better Japanese trade data that showed a pick-up in imports and exports. Earlier in the month, China also reported better exports and imports, all of which bodes well for global growth.

The dollar index is at 99.69, it seems to be consolidating recent weakness, the low on Wednesday was 99.46. In line with this consolidation, other currencies are treading water too with the euro at 1.0727, the pound sterling at 1.2813, the Australian dollar at 0.7506 and the yen at 108.92. In emerging market (EM) currencies, the yuan is weaker at 6.8857and most of the other EM currencies we follow are on a back footing, especially the Mexican peso, while the South African rand is rebounding after the recent weakness.

On the economic calendar today there is data on German PPI, US Philly Fed manufacturing, initial jobless claims, leading indicators and Natural gas storage. There is also data on EU consumer confidence and two speeches from Bank of England governor Mark Carney and one from US Treasury Secretary Steven Mnuchin – see table below for more details.

The tone in the base metals is not bullish at present and we put that down to the market adjusting from being too bullish after the US election and earlier this year. The higher prices attracted hoarded metal out of the woodwork and that is having to be absorbed and while that is happening upward momentum has been lost. In turn, that has prompted stale long liquidation and some short selling. The degree to the weakness being seen is metal dependent with zinc, lead, nickel and tin, all falling further than copper and aluminium. We would say the bearishness is momentum based, while the underlying fundamentals remain bullish if anything. As such we would run with the weaker trend for now, but expect them to turn higher before too long, especially as better Chinese and Japanese trade data suggest the global economy is improving.

Gold prices have already rallied as geopolitical tensions are running higher, higher prices are not surprising prompting some profit-taking, as at the end of the day Marine Le Pen is unlikely to be the next French president, but given the surprised over Brexit and the US election, there will be a lot of uncertainty and nervousness until the final vote is known. As such, we expect increased volatility in the weeks ahead, especially as other geopolitical events are running in parallel. Silver, platinum and palladium, are generally holding up well, but weakness in other industrial metals seems to be weighing on sentiment to some extent.

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Gold prices hold up, expect increased volatility

FastMarkets

Gold prices are holding up well this morning, Wednesday  April 19, with spot prices little changed at $1,289 per oz, silver prices are off 0.4% at $18.21 per oz, while the PGMs are up around 0.5%. This follows a general day of weakness on Tuesday that saw gold and platinum prices little changed, while silver prices closed down 1.1% and palladium prices closed off 2.5%.

Bounces have been seen across the base metals prices on the London Metal Exchange this morning, with prices up an average of 0.6% as of 06:30 BST.

Volume has been above average with 10,328 lots traded, with more zinc traded, 3,427 lots, than copper, 3,385 lots. This comes after another day of weaker prices on Tuesday that saw prices close down an average of 2.6%, led by a 5.5% drop in lead prices, but also saw falls of around 3.8% in nickel and zinc prices. The decline in metal prices in recent weeks has tended to be interspersed with up days, so we would not read too much into today’s firmer tone just yet.

Base metals prices on the Shanghai Futures Exchange are down again this morning, with prices off an average of 2%, led by a 2.9% drop in zinc prices. Given the rebound in LME prices this morning, the weakness in SHFE implies prices are reacting to Tuesday’s weakness on the LME. June copper prices are off 0.8% at 45,920 yuan per tonne and spot copper prices in Changjiang are down 0.6% at 45,870-46,070 yuan per tonne and the LME/Shanghai copper arb ratio was trading around 8.13, meaning the arb window remains closed.

In other metals in China, September iron ore futures have continued to fall, they are down 1.5% on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are down 1%, gold prices are unchanged and silver prices are off 1.1%. In international markets, spot Brent crude oil prices are little changed at $54.75 per barrel and the yield on the US ten-year treasuries is weaker at 2.19%.

Equities were weaker on Tuesday with weaker commodity prices, including oil, and some poor earnings weighing on sentiment too. The Euro Stoxx 50 closed down 1.1% and the Dow closed off 0.6% at 20,523. The weaker tone has generally flowed through to Asia this morning, where the Hang Seng is off 0.6%, the CSI 300 is down 1.1%, the ASX 200 is off 0.5%, although the Nikkei is up 0.2%, helped by a pause in the yen’s run of strength.

The dollar index dropped to a low of 99.49 yesterday, it was weakened by falling inflation expectations on the back of weaker oil and commodity prices and as some disappointment seeped into sentiment about the US administration’s ability to push through with stimulative policy. Currencies firmed as a result, with the euro at 1.0717, the pound sterling climbed to 1.2824, it was bid higher on the back of the election announcement, but the Australian dollar weakened to 0.7523 and the yen at 108.67 is consolidating. In emerging market currencies, the yuan is firmer at 6.8777 and most of the other currencies we follow are consolidating.

The focus on the economic calendar today is likely to be EU CPI data, there is also data on the Italian and EU trade balances and in the USA there is data on the crude oil inventories and the Beige book – see table below for more details.

The short-to-medium term trends in most of the base metals remain downward with zinc, lead and nickel seeing steep declines and considerable chart damage, while copper’s trend is sideways-to-down, tin still seems to be consolidating after its December/February weakness, while aluminium’s trend remains strong. The loss of upside momentum in most of the metals since mid-February has increased the chance of stale long liquidation and downward trends will increase the risk of short selling too. Overall, we see these pullbacks as an adjustment to running ahead of the fundamentals since the US presidential election – we continue to expect the fundamentals to strengthen and therefore expect dips to attract bargain hunting.

Gold prices remain strong as geopolitical tensions are running high and are likely to remain so ahead of the French presidential election. After the first vote, we would expect increased volatility until the second vote. Silver prices are generally following gold’s lead, but the weakness in industrial metals seems to be weighing on prices too, palladium also seems to have run into overhead supply, while platinum prices are starting to look more supported and robust European vehicle registrations should provide support.

The post Gold prices hold up, expect increased volatility appeared first on The Bullion Desk.

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The Letter I Wrote George Soros About Gold

Gold is breaking out due to geopolitical concerns and continued conditions of negative real interest rates, says Lior Gantz, editor of Wealth Research Group.

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