Metals consolidate, generally holding up well

Base
metals closed mixed on Friday with average losses of 0.8 percent, led
by a 3.4 percent sell-off in nickel, while copper was off 1.2 percent at
$4,922.50 and lead was down 0.9 percent. Aluminium was up 0.6 percent
and zinc was up 0.3 percent. Precious metals were weaker with average
losses of 1.1 percent, with gold prices closing down 0.8 percent at
$1,322.15.

This morning, the base metals are up 0.5 percent on average, led by a
1.1 percent rise in lead and a one percent rise in nickel, tin is
unchanged while the rest are up between 0.2 and 0.4 percent with copper
at $4,933. Volume has been average with 4,049 lots traded. Precious
metals remain under pressure with losses averaging 0.4 percent, with
gold prices at $1,318.

In Shanghai, lead prices are up 0.9 percent, while the rest of the
metals are down between 0.3 percent for zinc and 2.4 percent for nickel.
Spot copper is down 0.8 percent at Rmb 38,000-38,200, the backwardation
is at an equivalent of $18 per tonne, while the LME/Shanghai copper arb
ratio is 7.72 percent.

In other metals in China, iron ore prices are up 0.7 percent, steel
rebar is up 0.4 percent, while silver is down 0.9 percent and gold
prices are off 0.6 percent. Brent crude prices are off 0.5 percent, last
at $45.48.

Equities were firmer on Friday with the Euro Stoxx 50 up 0.1 percent
and the Dow closed up 0.3 percent. In Asia this morning the markets are
mixed with the Nikkei off 0.1 percent, the Hang Seng is off 0.2 percent,
the CSI 300 is up 0.1 percent, the ASX 200 is up 0.6 percent and the
Kospi is up 0.1 percent.

In FX, the dollar index is edging higher, last at 97.38, the euro is
weaker at 1.0970, as is sterling at 1.3125, the yen is consolidating,
last at 106.08, as is the aussie at 0.7481. In emerging markets, the
yuan is firmer than of late, last at 6.6788, while other EM currencies
are mixed, with the ringgit the main one showing weakness.

The economic agenda is light today with Japan’s trade balance, German
Ifo business climate and UK CBI industrial order expectations – see
table below for more details.

The base metals are for the most part seeing their upward trends
consolidate, with most holding up well, the exception seems to be
aluminium that has sold off more than the others. Copper saw further
fresh fund buying and short-covering on Comex last week, according to
CFTC data, so there may well be more room on the upside, although we
expect the market may now wait for next week’s Chinese PMI data before
getting directional again.

The precious metals are under pressure as gold prices absorb
profit-taking, although silver continues to see fund buying. Generally
gold prices are holding up well as they consolidate which suggests
sentiment remains robust. Expect dips to remain well supported.

- See more at:
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