Metals consolidate, expect nervous trading ahead

LONDON (Aug 19)  The metals remained upbeat on Friday following on from the stronger run in bullion late Thursday, which also saw the dollar weaken. At the day’s highs on Friday base metals were up an average of 1.5 percent and precious metals were up one percent they went on to close up 1.2 percent on base and 0.5 percent on precious. Best performers were zinc and aluminium that closed up 1.9 percent, and lead that closed up 1.7 percent, while silver closed up 1.1 percent against an 0.8  percent rise in gold.

This morning the metals are slightly weaker with the base metals off an average of 0.4 percent, lead is down 0.7 percent at $2,232.75, tin and zinc are down 0.6 percent, while copper and aluminium are off 0.2 percent. Volume has been above average at 9,760 lots.

Precious metals are down 0.2 percent on average this morning palladium is down 0.7 percent at $754.50, silver is up 0.1 percent at $23.23, while gold and platinum are off 0.1 percent.

In Shanghai, the base metals are up an average of 0.5 percent, with lead up 1.1 percent at Rmb 14,955, zinc is up 0.5 percent at Rmb 15,180, aluminium is up 0.2 percent at Rmb 14,510 and copper is little changed at Rmb 52,890. Interestingly lead prices, long the laggard in Shanghai, have climbed above those of aluminium. Rebar dropped 0.4 percent to Rmb 3,691.

Spot copper in Changjiang is unchanged at Rmb 53,250-53,600, which puts the backwardation with the futures at an equivalent of some $116/tonne, while with the LME/Shanghai copper arb ratio 7.18 the arbitrage window is closed.

Bullion in Shanghai saw silver climb 4.1 percent to Rmb 4,720/kg, while gold was up 0.8 percent at Rmb 275.35/g.

Equities – on Friday equities were mixed with the Euro Stoxx 50 up 0.7 percent and the Dow was down 0.2 percent and the mixed tone has flowed through to Asia where the Nikkei is up 0.8 percent, the Hang Seng is little changed, the Kospi is down 0.1 percent and China’s CSI 300 is up 0.9 percent. In some other emerging markets, like Indonesia and India, markets are under pressure as they suffer capital flight. The Jakarta Stock Exchange is down 3.8 percent so far today.

Currencies – the dollar seems to have found some base support over the past week with the low on the dollar index on Friday at 81.18 holding above previous low at 80.86. The dollar index is last at 81.38. The euro is edging lower from recent high ground, it is last at 1.3317, sterling is at 1.5613, down from Friday’s high of 1.5657, the aussie is trying higher, last at 0.9196, while the yen is last at 97.72 and the yuan is weaker at 6.1227, after Friday’s record high of 6.1094.