Metals hold onto yesterday’s strong gains

Base metals are mixed this morning, February 1, ranging between a 0.4% rise in three-month aluminium prices and a 0.2% decline in zinc prices, with copper off 0.1% at $5,974 per tonne – although volume remains light with 1,465 lots traded as of 06:38 GMT.

This general consolidation follows yesterday’s strong performance when the complex closed with gains averaging 1.7%, with zinc prices rising 3.1% to $2,867 per tonne, nickel prices up 2.4% and copper prices up 2.2% at $5,980 per tonne, having earlier set a high at $5,998.50 per tonne.

Copper and zinc prices cleared immediate overhead resistance, while nickel prices extended their rebound after recent weakness.

The precious metals are consolidating at lower levels this morning, down an average of 0.3% after a strong performance yesterday that saw prices climb an average of 1.7%, led by a 2.6% rally in spot palladium prices. Silver prices climbed 2.3%, gold prices closed up 1.2% at $1,211.45 per oz and platinum prices closed up 0.7%. This morning gold prices are off 0.3% at $1,207.80 per oz.

Concerns over the unpredictable nature of President Donald Trump seem to have driven gold prices higher, while they had little impact on base metals prices that remain focused on the prospects for better growth.

While the base metals do not seem perturbed by President Trump’s actions, equities were. The Euro Stoxx 50 closed down 1% yesterday, January 31, and the Dow closed off 0.5%. This morning the situation is mixed: the Nikkei is up 0.6%, the Hang Seng has opened after the Chinese New Year holiday with a 0.6% fall, while the ASX 200 and Kospi are both up 0.6%.

The dollar index is consolidating, but doing so below the 100 level, being recently quoted at 99.76. The euro is firm at 1.0784, while sterling, the yen and aussie are consolidating at 1.2552, 113.25 and 0.7571, respectively. Emerging market currencies are for the most part treading water, although the Indian rupee is firmer.

The economic agenda is particularly busy and important today, with manufacturing PMI data out across Asia, Europe and the US, combined with the start of US jobs data, US construction data, vehicle sales and the FOMC rate decision and statement. Manufacturing PMI out of Japan and China both dipped 0.1 point, while non-manufacturing data in China climbed 0.1 points – see table below for more details.

The base metals continue to look well placed to extend gains with copper and zinc overcoming recent resistance levels, while rebounds in the other base metals are underway, with even tin seeing gains. Given prices are holding up without China being that involved bodes well – if prices continue to hold up then Chinese market participants may have some catching up to do when they return from holidays.

The rebound in gold prices suggests the recent four-day dip was just a pause in the up-trend, but prices will need to move above the $1,220.20 per oz high from January 23 to signal that. Silver prices have already moved above their mid-January high at $17.33 per oz and have triggered a potential inverse head and shoulder pattern, while platinum prices are strong but have yet to overcome the January 24 high. With the dollar trending lower, the precious metals may well be able to extend gains, especially if geopolitical concerns remain elevated.

Overnight Performance
GMT 06:38 +/- +/- % Lots
Cu 5974 -6 -0.1% 431
Al 1827 6.5 0.4% 506
Ni 9995 30 0.3% 146
Zn 2860 -7 -0.2% 278
Pb 2364 3 0.1% 92
Sn 19895 15 0.1% 12
Average 0.1%         1,465
Gold 1207.76 -3.69 -0.3%  
Silver 17.451 -0.089 -0.5%
Platinum 993.7 0.7 0.1%
Palladium 752.8 -3.2 -0.4%
Average PM -0.3%
Economic Agenda
GMT Country Data Actual Expected Previous
12:01am UK BRC Shop Price Index y/y -0.017 -0.014
12:30am Japan Final Manufacturing PMI 52.7 52.8 52.8
1:00am China Manufacturing PMI 51.3 51.2 51.4
1:00am China Non-Manufacturing PMI 54.6 54.5
 7:00am UK Nationwide HPI m/m 0 0.008
8:15am Spain Spanish Manufacturing PMI 55.1 55.3
8:45am Italy Italian Manufacturing PMI 53.3 53.2
8:50am France French Final Manufacturing PMI 53.4 53.4
8:55am Germany German Final Manufacturing PMI 56.5 56.5
9:00am EU Final Manufacturing PMI 55.1 55.1
9:30am UK Manufacturing PMI 55.9 56.1
Tentative EU EU Economic Forecasts
1:15pm US ADP Non-Farm Employment Change 165K 153K
2:45pm US Final Manufacturing PMI 55.1 55.1
3:00pm US ISM Manufacturing PMI 55 54.7
3:00pm US Construction Spending m/m 0.002 0.009
3:00pm US ISM Manufacturing Prices 66 65.5
3:30pm US Crude Oil Inventories 2.6M 2.8M
All Day US Total Vehicle Sales 17.9M 18.4M
7:00pm US FOMC Statement
7:00pm US Federal Funds Rate <0.75% <0.75%