Metals tackle overhead resistance

Bullion2

 

London 23/01/2013 – The base and precious metals closed with average gains of 0.8 percent yesterday with tin the only metal to close down on the day, but given the metal had started to look overbought in recent days that was not so surprising. Lead, zinc, copper and aluminum closed up with gains of more than one percent, while tin was off 0.9 percent Palladium led the precious metals higher with a 1.4 percent rise to $724 Yesterday’s data was mixed with good ZEW economic sentiment data, but disappointing US data with existing home sales and Richmond manufacturing index coming in weaker than expected.

 

Overnight the metals have trod water with copper off $19 at $8,119.50, lead and zinc up around $10 at $2,346 and $2,073, while the precious metals are off an average of 0.2 percent, skewed by a 0.7 percent drop in platinum to $1,684.85. Gold is last at $1,692, having been as high as around $1,695.25 overnight.

Data out so far shows Chinese leading indicators climbed 0.4 percent, against gains of 1.1 percent previously.

In Shanghai the April contracts are up an average of 0.2 percent, zinc leads the gains with a 0.6 percent climb to Rmb 15,545, lead is up 0.2 percent at Rmb 15,365, copper is up 0.1 percent at Rmb 58,590 and aluminum is off 0.1 percent at Rmb 15,255. Interestingly zinc prices in Shanghai are 1.2 percent higher than lead, while on the LME they are 11.6 percent below lead.

Spot copper in Changjiang is unchanged at Rmb 57,850-58,050, so remains in contango while theLME/Shanghai arb has widened with the ratio at 7.22.

Equities in Europe and the US were mixed yesterday with the Euro Stoxx 50 dropping 0.4 percent and the Dow up 0.5 percent and the tone is Asia is mixed today with the Nikkei off 2.1 percent, Hong Kong is off 0.1 percent, the MSCI Asia Apex is off 0.3 percent, while China’s CSI 300 is up 0.4 percent. The weakness in Japan is no doubt linked directly to the rebound in the yen.

Currencies – the yen is at 88.02, after a low of  90.21, the euro is at 1.3300, the pound is weak at 1.5830, the aussie is little changed at 1.0545, as are the yuan at 6.2200 and the dollar index at 79.88. Cable might well have a volatile day as UK Prime Minister is set to spell out his plans for the UK within Europe in a speech scheduled for around 8am GMT.

Economic agenda sees considerable UK data out on the employment situation, there are the BoE meeting minutes, EU consumer confidence and US consumer confidence – see table attached for more details.

Our outlook remains unchanged we are quietly bullish for the metals in the short to medium term as we feel there is room for optimism that the recoveries in the US and China will strengthen and globally the end of destocking is likely to boost apparent demand. That said, the advances made since late October and early November might have already discounted this and it may need a resolution to the debt ceiling issues before confidence builds again.

Most of the base and precious metals are well placed to tackle overhead resistance and if these levels are overcome then we would look for another up leg to rechallenge the high ground seen in December, or September/early October.   So far only palladium and tin have cleared these levels.

 

Metals Overnight Performance
GMT 7:07 AM +/- +/- % Lots
Cu 8119.5 -19 -0.2% 2671
Al 2074.25 3.25 0.2% 1258
Ni 17486 -6 0.0% 131
Zn 2073 9.5 0.5% 1184
Pb 2346 9.25 0.4% 313
Sn 24850 0 0.0% 23
Steel 340 0 0.0% Total lots
Average (BM ex-Steel) 0.1% 5580
Gold 1691.98 -0.42 0.0%
Silver 32.14 -0.04 -0.1%
Platinum 1684.84 -11.16 -0.7%
Palladium 724.6 0.6 0.1%
Average PM -0.2%

 

Economic Agenda
GMT Country Data ACTUAL Expected Previous
2:00am
China CB Leading Index m/m 0.4% 1.1%
5:00am Japan BOJ Monthly Report
Day 1 WEF Annual Meetings
 9:30am UK Claimant Count Change 0.4K -3.0K
 9:30am UK MPC Meeting Minutes 0-0-9 0-0-9
 9:30am UK Unemployment Rate 7.8% 7.8%
 9:30am UK Average Earnings Index 3m/y 1.6% 1.8%
2:00pm US HPI m/m 0.7% 0.5%
3:00pm EU Consumer Confidence -26 -27
11:50pm Japan Trade Balance -0.71T -0.87T 

 

 

By WAdams at fastmarkets.com

Read more at: http://www.fastmarkets.com/metal-news/open230113

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