METALS MORNING VIEW 17/12: Metals prices mixed but most look vulnerable

The three-month base metals prices on the London Metal Exchange were for the most part little changed this morning, Monday December 17. The exception was zinc, the price of which was up by 1.3% at $2,565 per tonne. The three-month copper price was down by $1.50 per tonne at $6,139 per tonne.

Volume across the complex has been above average with 6,271 lots traded as at 7.53am London time.

The precious metals were for the most part firmer this morning with silver, platinum and palladium prices up by an average of 0.4%, while gold was little changed at $1,238.69 per oz.

In China this morning, the base metals prices on the Shanghai Futures Exchange were broadly firmer, the exception was January lead contract which was down by 0.2%. The May nickel and February zinc contracts led on the upside with gains of 1.9% and 1.5% respectively. The January copper contract was up by 0.2% at 49,230 yuan ($7,127) per tonne.

In wider markets, spot Brent crude oil prices were little changed at $60.31 per barrel. The yield on US 10-year treasuries has stopped rising and was recently quoted at 2.8865%, but the yields on the US 2-year and 5-year treasuries remain slightly inverted at 2.7299% and 2.7275% respectively. The German 10-year bund yield was also weaker at 0.2530%.

Asian equity markets were mainly firmer on Monday: the Nikkei (0.62%), the Kospi (0.08%), the ASX 200 (1.00%), the CSI 300 (-0.15%) and the Hang Seng (0.02%).

This morning’s performance follows a weaker performance in western markets last Friday; in the United States, the Dow Jones Industrial Average closed down by 2.02% at 24,100.51, while in Europe, the Euro Stoxx 50 was down by 0.63% at 3,092.60.

The dollar index remains firm and was recently quoted at 97.39. The other major currencies we follow remain weak: the euro (1.1316), the Australian dollar (0.7176), the yen (113.41) and sterling (1.2588).

The yuan is holding up above recent lows and was recently quoted at 6.8997. The emerging currencies we follow were mixed, but generally were little changed.

On the economic agenda on Monday there is data on the Italian and Eurozone trade balances, EU consumer price index (CPI) and UK Confederation of British Industry (CBI) industrial order expectations, while US releases include the Empire State manufacturing index, National Association of Home Builders housing market index and Treasury International Capital (TIC) long-term purchases.

Tin is looking the strongest of the base metals and even battered nickel has found some support in recent days, while the rest of the complex looks rangebound and vulnerable. We said last week there may be a race on between whether the trade dispute is resolved before the global economic data deteriorates to the extent that it also becomes a negative factor too – a factor that become more apparent after the release of weak Chinese data last Friday.

Gold’s rebound has run out of steam although last Friday’s dip did run into buying. Platinum prices are weak and look vulnerable, while silver is holding up better than platinum, but is still rangebound. Palladium is in a league of its own with prices holding just below last week’s record highs and with dips finding good support.

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Shanghai Futures Exchange, base metals prices, precious metals prices

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