Metrics 'Encouraging' for Q1/18 Commercial Gold Production

A Macquarie Research report finds many leading indicator metrics promising for early-2018 commercial production at a Nevada gold mine.

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Major with Cohort of Mexican Mines Is On Track to Achieve 2017 Production Guidance

BMO Capital Markets reviewed this silver and gold miner's Q3/17 production results.

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METALS MORNING VIEW: Gold prices consolidate having fund support; eyes on ECB press conference

The base metals on the London Metal Exchange are up across the board by an average of 0.5% this morning, Thursday October 26. Aluminium leads the way with a 0.9% rally to $2,209.50 per tonne – the high so far has been $2,215, which means prices have surpassed the October 2012 peak of $2,212. Copper prices ($7,022 per tonne) and tin prices are up 0.2%, while the rest are up between 0.5% and 0.6%.

Volume has been slightly above average this morning with 7,930 lots traded as of 06:18 BST, with 4,141 lots of aluminium traded.

This follows a mixed performance on Wednesday that saw copper and nickel prices decline, while the rest closed up. Nickel prices are under pressure as reports out of the Philippines suggest a possible weakening on the government’s stance on open-pit mining.

Precious metals prices are up across the board this morning with gains ranging from a 0.1% gain in spot gold prices, recently at $1,280.42 per oz, to a 0.6% rise in palladium prices to $968 per oz. Silver and platinum prices are both up by 0.3%. On Wednesday, gold and platinum prices were up by 0.2%, silver prices were little changed and palladium prices were off by 0.2%.

Base metals prices on the Shanghai Futures Exchange (SHFE) are for the most part firmer today, led by a 1.5% gain in zinc prices and a 1.1% rise in aluminium prices. Tin prices are up by 0.5%, lead prices are up by 0.4% and copper prices are 0.1% firmer at 54,970 yuan ($8,276) per tonne, while nickel prices are bucking the trend with a 0.2% fall. Spot copper prices in Changjiang are down by 0.6% at 55,100-55,300 yuan per tonne and the London/Shanghai copper arbitrage ratio is weaker at 7.83, compared with 7.91 on Wednesday. The disparity in the spot and future’s copper prices, suggests copper prices have rallied since the physical prices was set earlier this morning.

The steel-orientated metals in China are weaker again this morning with iron ore prices dropping by 0.9% to 454 yuan per tonne on the Dalian Commodity Exchange, while steel rebar prices on the SHFE are off by 1.5%. Gold and silver prices on the SHFE are both up by 0.2%.

In international markets, spot Brent crude oil prices are slightly firmer, up by 0.06% at $58.38 per barrel. The yield on US ten-year treasuries is little changed at 2.41% and the German ten-year bund yield is slightly firmer at 0.48%.

Equities in Asia are generally positive with gains in the CSI 300 (0.5%), the ASX 200 (0.2%), the Nikkei (0.1%), but the Hang Seng and Kospi off by 0.4% and 0.3%, respectively. Western markets were weaker on Wednesday: in the USA, the Dow closed down by 0.48% at 23,329.46, while in Europe, the Euro Stoxx 50 closed down by 0.53% at 3,591.46.

The dollar index at 93.52 has once again turned back from pressing ahead with its rebound, so is back in consolidation mode, meaning the jury is still out as to whether this is a pause in the downward trend that has been in effect all year, or whether it is the start of a turning point for a move higher. We are still awaiting US president Donald Trump’s decision on who will be the next US Federal Reserve chair, so the dollar could see some short-lived volatility. The euro at 1.1830 is firmer within its consolidation pattern and as such is looking less toppy, but with the European Central Bank (ECB) rate decision and press conference today, it could move either way. Sterling is stronger this morning at 1.3267, the Australian dollar at 0.7709 is consolidating after four days of weakness and the yen is firmer at 113.46.

The Chinese yuan is consolidating after recent weakness, it was recently quoted at 6.6320; the South African rand is weaker at 14.1017, the rupee is firmer at 64.76, while the rest of the emerging currencies we follow are consolidating.

Today’s economic data includes Japan’s service producer price index (SPPI), which climbed 0.9% in September after a 0.8% gain in August and German GfK consumer climate which dipped to 10.7 this month, from 10.8 in September. Data out later includes Spanish unemployment, EU M3 money supply, EU private loans , UK CBI realised sales, the ECB interest rate decision and the ECB press conference. US data includes data on the goods trade balance, wholesale inventories, pending home sales and natural gas storage.

Copper prices are oscillating sideways either side of $7,000 per tonne and the rally seems to be pausing. Nickel prices are in the same boat, while lead, zinc and tin prices continue their rebounds off recent support levels and aluminium prices have pushed up to levels not seen for five years. Our view of late has been to remain quietly bullish, but expect trading to become choppier as prices are generally in high ground, so we should expect more bouts of scale-up selling along the way – this seems to be playing out, but with aluminium prices breaking higher, underlying sentiment still seems to be bullish.

Gold prices have fund underlying support, as have the other precious metals. We expect the precious metals to continue to be well supported, but for now, in the absence of any pick-up in geopolitical tensions, we do not see too much to be bullish about. That said, the euro may get more directional after the market hears what the ECB press conference has to say and that could influence gold prices.

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

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BULLION LATEST: Gold prices gain on weaker dollar, equity sell-off

The spot gold price rose during Asian morning trading on Thursday October 26 amid a weaker dollar and equity market sell-off, while market participants have turned their attention to the European Central Bank’s (ECB) monetary policy meeting later today.

The spot gold price was quoted at $1,280.20-1,280.50 per oz as of 05:08 BST, up $1.45 from the previous session’s close. Trade has ranged from $1,278.45-1,281.15 so far today.

• “The fall in equity markets helped turn around a sell-off in the gold market, as investors pushed back into safe-haven assets…The subsequent fall in the US dollar then helped improve investor demand for gold,” ANZ Research said on Thursday.
• After hitting a record high on Tuesday, the Dow Jones Industrial Average reversed part of its gains to close 0.48% or 112 points lower – its biggest one-day fall – at 23,329.46 on Wednesday following disappointing corporate earnings reports
• The ECB is set to announce its minimum bid rate later with a press conference by its president Mario Draghi to follow. Market observers are expecting an announcement on the tapering of quantitative easing.
• The ECB is likely to extend its bond buying program possibly by nine months and reduce the pace of monthly purchases to €20-30 billion ($24-35 billion) starting in January 2018, Credit Suisse said.
• “Above all, the market will look for hints on whether the scheme will remain open-ended and for any strengthening of the forward guidance on policy rates,” it added.

Silver, PGMs

• In the other precious metals, the spot silver price rose $0.045 to $16.98-17.02 per oz. Platinum increased $3 to $924-929 per oz and palladium gained $7 to $966-971 per oz.
• On the Shanghai Futures Exchange, gold for December delivery was recently at 275.50 yuan ($41.48) per gram, and the December silver was at 3,880 yuan per kg.

Currency moves and data releases

• The dollar index fell 0.11% to 93.53 as of 05:07 BST, the low of 93.5 during the day was the lowest since October 20. The index has eased after rising as high as 94.02 on Monday, the highest since October 6.
• In other commodities, the Brent crude oil spot price rose 0.05% to $58.37 per barrel as of 04:25 BST.
• In equities, the benchmark Shanghai Composite Index rose 0.46% to 3,412.45.
• In US data on Wednesday, new home sales hit 667,000 in September; house prices rose 0.7% in August, beating expected growth of 0.4%; while durable goods orders came in at 2.2% in September.
• In EU data, the German ifo business climate came in at 116.7 for October, up from 115.3 in the previous month.
• Economic data due later today includes US unemployment claims and pending home sales, while the ECB is set to announce its minimum bid rate later with a press conference by ECB president Mario Draghi to follow.

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LIVE FUTURES REPORT: Comex copper market consolidates in midweek trading

Comex gold prices inched down $1.70 or 0.1% in US morning trading on Wednesday October 25 to $1,276.60 per oz. Trade has ranged $1,272-1,280.40.

In the base metals space, Comex copper prices traded in negative territory, with market participants keeping prices fixed to a tight range following the conclusion of the Chinese Communist party meeting.

Copper for December settlement on the Comex division of the New York Mercantile Exchange declined 1.80 cents or 0.6% to $3.1800 per lb. The contract has traded within a worn-trough over the past week.

The conclusion of the 19th National Congress of the Communist Party of China ended with a surprise declaration that it would not nominate a successor to current president Xi Jinping.

President Jinping has amassed a historic level of power and his announcement that the “One Belt, One Road” project be mentioned in the constitution should keep metals prices elevated in the interim.

“This would also have medium- to long-term implications for the commodities and metals markets on which China’s economic growth has chiefly dictated prices for nearly two decades,” Commerzbank said in a daily note. “The project is likely to consume enormous quantities of metals.”

In the latest copper data, China imported 290,446 tonnes of refined copper in September, up 19.6% year on year.

China produced 774,000 tonnes of refined copper in September, marking the highest monthly production volume since December 2014. This was 6.8% higher on an annual comparison.

Currency moves and data releases 

• The dollar index was down 0.30% to 93.66. The index had risen as high as 94.02 on Monday, the highest since October 6.
• In other commodities, the Texas light sweet crude oil spot price fell 0.38% to $52.27 per barrel.
• In data on Tuesday, October flash manufacturing purchasing managers’ index (PMI) readings from the USA and Europe surprised on the upside. The number was at 54.5 in the USA, above the forecast of 53.3, while the print for Europe was at 58.6, above the expected 57.9.
• The US Richmond manufacturing index disappointed at 12, below the forecast of 17. In China, the CB leading index month over month in September increased 1%, down from 1.3% in August.
• In today’s data, US new home sales in September hit 667,000. HPI month-over-month in August bested expectations at 0.7% gain, while durable goods orders in September came in at 2.2%.

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METALS MORNING VIEW: Gold under pressure as dollar looks firmer, other precious metals follow

Base metals prices on the London Metal Exchange are for the most part weaker this morning, Wednesday October 25. Tin prices are the exception as they are unchanged, but they are also already relatively weak.

The rest of the complex is down by an average of 0.9%. Nickel prices lead with a 1.7% decline to $11,840 per tonne, followed by copper prices that are down by 1.4% at $6,944 per tonne, while zinc prices are 1% weaker, lead prices are off by 0.8% and aluminium prices are down by 0.4%.

Volume has been above average with 6,996 lots traded as of 06:50 BST.

This follows a general day of strength on Tuesday, when all bar lead closed higher. Lead prices were down by 1.1% at the close, while copper prices, which had been up by as much as 1.3% at the European open yesterday, gave back earlier gains to close up by 0.4%.

Precious metals prices are down across the board this morning with losses ranging from a 0.2% drop in spot gold prices, recently at $1,274.27 per oz, to a 0.4% fall in palladium prices to $960 per oz. Gold, silver and platinum prices were down by an average of 0.5% on Tuesday, while palladium prices climbed 0.8%.

Base metals prices on the Shanghai Futures Exchange (SHFE) are mixed with copper prices off by 0.5% at 55,020 yuan ($8,293) per tonne, lead prices down by 1.6%, and tin prices little changed, while the rest of the complex is stronger. Nickel prices lead on the upside with a 0.9% gain, followed by aluminium and zinc prices which are firmer by 0.3% and 0.1%, respectively. Spot copper prices in Changjiang are down by 1% at 55,410-55,610 yuan per tonne and the London/Shanghai copper arbitrage ratio is stronger at 7.91, compared with 7.84 on Tuesday, which shows LME copper prices have weakened more than SHFE prices.

The steel-orientated metals in China are weaker this morning with iron ore prices dropping by 1.6% to 452.50 yuan per tonne on the Dalian Commodity Exchange, while steel rebar prices on the SHFE are off by 0.7%. Gold and silver prices on the SHFE are down by 0.2% and 0.3%, respectively.

In international markets, spot Brent crude oil prices are down by 0.36% at $58.31 per barrel. The yield on US ten-year treasuries has firmed to 2.41% and the German ten-year bund yield is also stronger at 0.47%.

Equities in Asia are generally positive, but perhaps most noteworthy is the Nikkei which is off by 0.4%, breaking 16 consecutive days of gains. The Hang Seng is up by 0.4%, the CSI 300 and the Kospi are up by 0.2% and the ASX 200 is up by 0.1%. Western markets were firmer on Tuesday; in the USA, the Dow closed up by 0.72% at fresh record high of 23,441.76, while in Europe, the Euro Stoxx 50 closed up by 0.05% at 3,610.69.

The dollar index at 93.94 is well placed to work higher to challenge the top of the recent 92.75-94.27 range – the jury is still out as to whether this is a pause in the downward trend that has been in effect all year, or whether it is the start of a turning point for a move higher – the latter looks likely. If so then that could prove to be a headwind for the metals. That said, we are still awaiting US president Donald Trump’s decision on who will be the next US Federal Reserve chair, so the dollar could see some short-lived volatility. The euro at 1.1763 is consolidating and it is looking possibly toppy, but with the European Central Bank (ECB) rate decision and press conference tomorrow, it could move either way. Sterling is looking weaker at 1.3131, the Australian dollar at 0.7724 has broken lower and the yen at 113.83 is also looking weak. As such, all else being equal, the dollar looks bullish and the currencies are looking bearish – but much will depend on the ECB’s actions/outlook and Trump’s decision with regards to the Fed chair.

The Chinese yuan remains weak, it was recently quoted at 6.6409, and the other emerging currencies we follow are on a back footing – which also points to a firmer dollar.

Today’s economic data includes German Ifo business climate, UK gross domestic product (GDP), high street lending and index of services, while US data includes durables goods orders, house price index, new home sales and crude oil inventories. Tuesday’s flash manufacturing purchasing managers’ index data was bullish across most of Europe and in the USA.

Another show of strength in copper ran into selling and the same applied to the other base metals, which suggests scale-up selling – perhaps there is some profit-taking and book squaring ahead of next week’s LME Week. We would also watch developments affecting the dollar and currencies, we could be at a turning point for the dollar – if it does turn higher then that may well attract more profit-taking and producer selling. Our view of late has been to remain quietly bullish, but expect trading to become choppier as prices are generally in high ground, so we should expect more bouts of scale-up selling along the way – this seems to be playing out.

Gold prices are under pressure and the other precious metals are following its lead – again the firmer dollar and potential for more dollar strength, while the geopolitical scene is calm, are weighing on prices. Needless to say, North Korea also remains a potentially bullish factor.

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

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Q3/17 Mexican Silver Production Report Shines

A producer/explorer active in Mexico and Peru released third quarter production results that we in line with one analyst's expectations.

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