Metal prices were mostly firmer on both the London Metals Exchange and the Shanghai Futures Exchange on Monday August 17, the exception was the SHFE September aluminium contract that was down by 0.3% while the rest of the metals on both exchanges were up by an average of 1.1%.
* United States/China trade talks over the weekend were postponed.
* Japan’s preliminary gross domestic product fell by 7.8% in the second quarter.
Base metals
The London Metal Exchange three-month base metals prices were stronger this morning, led by a 1.3% rise in zinc to $2,401.50 per tonne, while copper was up by 0.7% at $6,407.50 per tonne.
SHFE October nickel led on the upside with prices up by 1.8%, while September copper was up by 1.3% at 50,520 yuan ($7,282) per tonne.
Precious metals
Gold prices were up by 0.2% at $1,948.55 per oz this morning, with silver, platinum and palladium making even stronger gains with prices up by 2%, 1.3% and 2.9% respectively.
Wider markets
The US 10-year treasuries yield was at 0.69% this morning. The firmer yield than of late suggests a risk-on sentiment, we'll wait if the yield can hold above its recent 0.5-0.6% range that now appears to be a base.
Asian-Pacific equities were mixed this morning: the CSI 300 (+2.24%), the Hang Seng (+0.89%), the ASX 200 (-0.81%), the Nikkei (-0.83%) and the Kospi (-1.23%).
Currencies
The dollar index weakened again this morning and was recently quoted at 92.93, despite the stronger treasury yields. The recent low in the index was 92.49 from August 6.
Conversely, the other main currencies were firmer: the euro (1.1864), the Australian dollar (0.7183), the yen (106.50) and sterling (1.3107).
Key data
Other key data already out this morning and not mentioned above included Japan’s GDP prices, which rose 1.5%, and revised industrial production, which was up by 1.9%.
Data out later in the US includes the Empire State manufacturing index, the housing market index from the National Association of Home Builders and treasury international capital (TIC) data on long-term purchases.
Today’s key themes and views
Base metals have generally been consolidating in high ground of late although they have at times looked choppy, this morning they are looking well placed to push higher, with zinc actually extending its gains to $2,426 per tonne, surpassing the August 7 high at $2,421 per tonne. This highlights that there has been good underlying buying interest into dips.
Although we thought there may have been room for deeper pullbacks, these have not materialized. Overall, we remain bullish in the medium term given the amount of money that has been pumped into the financial system and into infrastructure projects.
We remain overall bullish on gold. The sharp spike lower on Tuesday and Wednesday last week attracted dip-buying and while there may well be more choppiness in the short term, overall we expect the bull market to continue given all the uncertainty and liquidity in the financial system.
William AdamsFastmarkets