Base metals prices correct, gold prices turn higher

Base metals have continued to sell-off this morning December 19, with prices down an average of 0.7% led by a 1.7% drop in zinc prices, while the rest are off between 0.3% and 0.9%. Three month copper prices are off 0.9% at $5,587 per tonne. Volume has been average with 6,928 lots traded as of 06:43 GMT. Precious metals prices are split between bullion prices that are up an average of 0.4% with gold prices at $1,141.20 per oz, while the PGMs are off an average of 0.2%.

On Friday, December 16, the base metals closed down an average of 1.6%, led by a 3.6% fall in lead prices, zinc prices were off 2.5%, copper and aluminium prices were down 1.5%, nickel prices were down 0.7% and tin prices were unchanged. Precious metals were generally firmer on Friday, with gold and silver prices up 0.7%, platinum prices were up 2.8%, but palladium prices dropped 0.9%.

In Shanghai this morning, base metals prices are off 2.7% on average, led by a 6.4% drop in lead, the rest are off between 1% for nickel prices and 2.6% for zinc prices. February copper prices are down 1.5% at Rmb 45,920 per tonne. Spot copper prices in Changjiang are down 1.9% to Rmb 45,690-45,890 per tonne, the spread between spot and the February futures in in a small contango, equivalent to $4 per tonne, while the LME/Shanghai copper arb ratio is at 8.23.

In other metals in China, May iron ore futures on the Dalian Commodity Exchange are down 7.2%, on SHFE steel rebar prices are off 3.2%, gold prices are up 0.4% and silver prices are little changed. In international markets, spot Brent crude prices are up 0.2% at $55.40 per barrel.

Equities were mixed on Friday December 16, the Euro Stoxx 50 closed up 0.3% but the Dow closed little changed, but Asia is generally weaker with the Nikkei off 0.1%, the Hang Seng is off 0.7% the CSI 300 is down 0.5%, the Kospi is down 0.2%, while the ASX 200 is up 0.5%.

In FX, the dollar index is consolidating around 102.64, the euro is little changed at 1.0464, as are sterling at 1.2490 and the aussie at 0.7292, while the yen is firmer at 117.18. In emerging market currencies, the yuan is firmer at 6.9340 as are the rouble and rand are firmer, while the rest are little changed.

The economic agenda is light with German Ifo business climate, a Bundesbank monthly report and US flash services PMI – see table below for more details.

The metals are seeing following through weakness now, we said last week base metals prices were looking a bit toppy and that seems to have been the case. We would not be surprised to see prices pull back as profit-taking sets in ahead of the end of the year. We should get an update on how bullish underlying sentiment is by seeing how well supported the dips are.

Gold prices appear to have found a base, at least for now and some bargain hunting is emerging. Silver and platinum prices are following gold’s lead, while palladium prices continue to correct recent strength. With geopolitical tensions already being tested in the South China Sea, we would not be surprised to see some pick-up in demand for gold as investors look at all the uncertainty 2017 is likely to bring. 

 

Overnight Performance
GMT 06:43 +/- +/- % Lots
Cu 5587 -53 -0.9% 2612
Al 1710.5 -5.5 -0.3% 1456
Ni 11145 -35 -0.3% 1121
Zn 2687 -46.5 -1.7% 1358
Pb 2224 -14.5 -0.6% 358
Sn 21105 -95 -0.4% 23
  Average   -0.7%         6,928
Gold 1141.21 5.96 0.5%  
Silver 16.111 0.041 0.3%  
Platinum 920.9 -1.1 -0.1%  
Palladium 692.1 -1.9 -0.3%  
  Average PM   0.1%  

 

SHFE Prices 06:43 GMT RMB Change % Change
Cu 45920 -720 -1.5%
AL  12700 -280 -2.2%
Zn 22165 -580 -2.6%
Pb 18890 -1285 -6.4%
Ni 94680 -980 -1.0%
Sn 146070 -3690 -2.5%
Average change (base metals) 0   -2.7%
Rebar 3257 -106 -3.2%
Au 266.45 1.15 0.4%
Ag 4120 2 0.0%

 

Economic Agenda
GMT Country Data Actual Expected Previous
9:00am EUR
German Ifo Business Climate
  110.7 110.4
11:00am EUR
German Buba Monthly Report
     
2:45pm USD
Flash Services PMI
  55.2 54.6