• Gold prices are rebounding after Wednesday’s 3.3% sell-off.
  • US equities retreated on Wednesday after the Federal Reserve minutes highlighted concerns about the US recovery.

Base metals
The three-month base metals prices on the LME were for the most part weaker this morning, the exception was nickel that was up by 0.3% at $14,680 per tonne. Copper led on the downside with a 1.1% fall to $6,617 per tonne and zinc was off the least with a 0.1% fall to $2,491.50 per tonne.

The most-traded base metals contracts on the Shanghai Futures Exchange were mixed, with November nickel, October tin and September lead all weaker, while the rest were up. September copper was up by 0.4% at 52,190 yuan ($7,542) per tonne.

Precious metals
Spot precious metals prices were up across the board this morning by an average of 0.8%, with gold up by 0.5% at $1,949.88 per oz from Wednesday’s close of $1,939.45 per oz. Wednesday’s low was $1,924.70 per oz, this after the initial sell-off low of $1,864.25 per oz on August 12.

Wider markets
The yield on US 10-year treasuries was at 0.66% this morning, this compared with 0.65% at a similar time on Wednesday. The yield is still holding above the recent base that was established between 0.5% and 0.6%.

Asian-Pacific equities were weaker this morning: the CSI 300 (-1.41%), the Hang Seng (-1.79%), the ASX 200 (-0.77%), the Nikkei (-1%) and the Kospi (-3.66%).

Currencies
The dollar index rebounded strongly on Wednesday and was recently quoted at 93.06, the low on Monday being 92.12. The rebound was triggered after the Federal Reserve’s minutes did not hint at being more dovish in the coming months, which triggered short-covering in the dollar.

Conversely, the other main currencies were weaker this morning: the euro (1.1840), the Australian dollar (0.7169), the yen (106.11) and sterling (1.3066).

Key data
Economic data already out on Thursday showed Germany’s producer price index climbed by 0.2% month on month in July, up from being flat in June.

Data out later includes the United Kingdom’s industrial order expectations from the Confederation of British Industry and US data on the Philly Fed manufacturing index, initial jobless claims, leading indicators and natural gas storage.

Also the European Central Bank’s monetary policy meetings accounts will be released.

Today’s key themes and views
The base metals are consolidating after the recent show of strength, production disruptions and restocking by China are underpinning the upward trends. The current economic climate may not justify these price levels at the moment, but the trends are strong.

Gold suffered another sharp sell-off on Wednesday, but the dip held well above the previous low. The increased volatility does highlight there is profit-taking around and given the strong gains since March, there may be considerable profits to be taken, but overall given all the uncertainty, we expect gold’s bull market has further to run.