MORNING VIEW: Base metals prices firmer in light volume; gold consolidates

Markets were mainly firmer this morning, Friday June 26, with the base metals up across the board and most Asian-Pacific equities indices showing gains, while gold prices were consolidating - all of which suggesting a slight risk-on sentiment.

  • Pre-market major European equity index futures were up by around 0.7%, following gains in the United States on Thursday.
  • Global trade dropped by 12.1% in April, compared with March, according to the Netherlands Bureau for Economic Policy Analysis.

Base metals

Three-month base metals prices on the London Metal Exchange were up by an average of 0.3%, led by a 0.8% gain in nickel ($12,575 per tonne), with copper up by 0.1% at $5,940 per tonne. But with Chinese markets closed in observance of the Dragon Boat Festival, volume was light with 1,425 lots traded as of 6.31 am London time.

Precious metals
Spot gold prices were down by 0.3% this morning at $1,759.70 per oz, with silver off 0.2% at $17.71 per oz, while platinum and palladium were firmer by 0.2% at $805.90 per oz and 0.6% at $1,851.90 per oz respectively.

Wider markets
The yield on US 10-year treasuries is holding in low ground at 0.67% this morning, unchanged from a similar time on Thursday, which compares with 0.72% at a similar time on Wednesday - this has been the lowest it has been for a while now.

Asian-Pacific equities were mainly stronger this morning: the Nikkei (+1.13%), the ASX 200 (+1.49%) and the Kospi (+1.11%), but the Hang Seng (-0.78%) was weaker and the CSI 300 was closed.

The US dollar index is stronger this morning; it was recently quoted at 97.42, this after 97.25 at a similar time on Thursday. Overall, the dollar seems to be consolidating after the fall from the 100 level seen over the March-May period.

With the dollar firmer, the other major currencies, including the yen, were either flat or weaker this morning: the euro (1.1211), the Australian dollar (0.6883), sterling (1.2415) and the yen (107.08).

Key data
Friday’s economic agenda includes data on the European Union’s money supply and private loans as well as US data on personal income and spending, personal consumption expenditures (PCE) price index and revised University of Michigan consumer sentiment and inflation expectations.

The Bank of England will also release its quarterly bulletin.

Today’s key themes and views
Some good US data on durable goods orders on Thursday lifted sentiment and that has helped underpin the broader markets, while the metals are being underpinned on growing concerns over supply disruptions while Covid-19 spreads across some producing countries. Codelco’s Chuquicamata division has suspended some refinery operations to help prevent the spread of the virus. While more countries relax lockdown measures for economic reasons, further disruption to supply and logistics are likely.

Gold prices are consolidating after resuming their upward trend this week - overall we expect dips to be well supported. The steady climb in gold suggests investors are increasing their exposure to it as insurance in case the stronger run in other asset classes falters.

William Adams


William Adams

June 26, 2020

08:40 GMT