• Brent crude oil price pulls back to $81 per barrel from Wednesday’s high at $83.48 per barrel.
  • Russia offers to increase natural gas supply to Europe.

Base metals

All of the LME base metals showed gains this morning that averaged 0.3%, ranged between tin being up by 0.1% at $35,300 per tonne and the 0.4% rise in copper ($9,123 per tonne). With China still on holiday volumes were light with 1,309 lots traded as of 6.18am London time, compared with a more normal amount of around 6,000 lots at a similar time of day.

Precious metals
Spot gold was down by 0.3% at $1,757.07 per oz this morning, silver was down by 0.4% at $22.52 per oz and platinum was down by 0.7% at $982 per oz, while palladium bucked the trend with a 0.6% gain to $1,908.40 per oz.

Wider markets

The yield on US 10-year treasuries has eased back to 1.54%, compared with 1.57% at a similar time on Wednesday.

Asia-Pacific equities were firmer on Thursday morning: the Nikkei (+0.73%), the ASX 200 (+0.7%), the Hang Seng (+2.44%) and the Kospi (+1.62%). We wait to see what, if any, developments there have been with Chinese property giant Evergrande when the country returns from holiday on Friday.

Currencies
The US Dollar Index was consolidating around the 94.27 level this morning, compared with 94.10 at a similar time on Wednesday – the range over recent days being 93.67-94.51. This is the highest range the dollar has held in about a year.

The other major currencies were mixed: sterling (1.3579) and the Australian dollar (0.7276) were consolidating, the euro (1.1552) remains weak, and the Japanese yen (111.48) was slightly firmer.

Key data
Key data already out on Thursday, showed Japan’s leading indicators dropped to 101.8% in August, from 104.1% in July, and German industrial production fell by 4% month on month in August, after a 1.3% rise in July.

Other key data out later includes Italian retail sales and US data on Challenger job cuts, initial jobless claims, natural gas storage and consumer credit.

In addition, Federal Open Market Committee (FOMC) member John Williams is scheduled to speak.

Thursday’s key themes and views

Despite some macro headwinds over China’s property debt, the semiconductor shortage, global inflation, shipping delays and high shipping costs, the metals remain quite buoyant overall, in that dips keep being bought into and for the most part metal prices are managing to range-trade in high ground.
The exceptions being nickel and lead where prices have pulled back by 12.7% and 11.3% respectively, from their highs.

Gold seems stuck in sideways mode with the prospects of higher bond yields capping the upside, because they increase the opportunity cost of holding gold, while those fearing inflation, or increased market turmoil, provide support.