• Signs of a stronger US recovery weighed heavily on gold and silver on Friday, which led to a chaotic start to trading this morning.
  • US 10-year treasury bond yields were at 1.3% this morning, having been below 1.2% most of last week.
Base metals
London Metal Exchange three-month base metal prices were mainly weaker this morning, with the complex down by an average of 0.4%, although aluminium ($2,583 per tonne) was little changed and lead ($2,290 per tonne) was bucking the trend with a 0.4% rise. At the other end of the spectrum, nickel was down 1.8% ($18,855 per tonne), while copper ($9,450 per tonne) and zinc ($2,985 per tonne) were both down by 0.2% and tin was down 0.4% ($34,590 per tonne).

A majority of the most-active base metals contracts on the Shanghai Futures Exchange were weaker on Monday morning and down by an average of 0.9%. The exception was September aluminium, which was up by 0.5%, while September nickel was down by 3.2% and September lead down by 1.7%. The other base metals were down by 0.2-0.5%, with September copper down 0.5% at 69,440 yuan ($10,719 ) per tonne.

Precious metals
Spot gold and silver prices have had a torrid time so far on Monday, with gold prices gapping lower in early trading, having opened at around $1,692 per oz before falling to around $1,686 and then zooming back to around $1,747 at the time of writing - although this was still down 0.9% from Friday’s close.

Spot silver, meanwhile opened at around $23.13 per oz and collapsed to $22.87 before catapulting back to $23.92 - although this was still down by 1.6% from Friday’s close. The run up in the dollar and US bond yields and concerns that the US Federal Reserve and other central banks may bring forward their tightening seems to have spooked investors. Platinum was off by 0.2% at $979.50 per oz and palladium was down by $0.50 per oz at $2,625.50 per oz.

Wider markets
Asia-Pacific equities were mixed on Monday: the Nikkei (closed), the ASX 200 (little changed), the Kospi (-0.3%), the Hang Seng (+0.32%) and the CSI 300 (+1.3%).

Currencies
The US Dollar Index started to rebound on August 4 and then accelerated higher on Friday. It was most recently at 92.75, up from a recent low of 91.78.

The major currencies were mainly weaker this morning on the back of the stronger dollar: sterling (1.3879), the Australian dollar (0.7355), the Japanese yen (110.15) and the euro (1.1763).

Key data
Economic data already out on Monday showed China’s consumer price index climb by 1% in July, after a 1.1% rise in June and the producer price index climb by 9% in July, compared with 8.8% in June.

Other key data out later includes the release of the Sentix investor confidence index for the European Union and the US jobs opening report.

In addition, US Federal Open Market Committee member Raphael Bostic and Thomas Barkin are scheduled to speak.

Monday’s key themes and views
The base metals are split with aluminium, zinc and tin weaker but generally holding up well, copper is drifting lower (we wait to see if it tests its support line that is at around $9,222 per tonne), while nickel and lead have sold off more aggressively in recent days. As we said last week, when markets hang up they become more vulnerable. We wait to see if this latest show of weakness gathers pace, or whether sentiment is still strong and dip buying will emerge. We expect the latter.

Gold and silver prices have seen extreme volatility this morning, although the market would have been thinner than usual with Japan on holiday.