Written Commentary
BASE METALS
Copper: Copper prices on the LME eased as LME inventories continued to climb. Benchmark three-month copper on the LME was down 0.7% at $13,888, while COMEX prices fell 0.3% to $6.46. LME stocks data showed an additional 17,000 tons of inflows on Tuesday, alongside 18,650 tons of reverse cancellations. Available LME stocks are up 75% over the past week to just under 159,000 tons. The premium of the of the cash contract over the three-month forward has fallen to $170, from $270 on Tuesday and $545 to start the week. Chinese factory output and fixed asset investment has also eased some near-term bullishness on copper prices, though those factors are likely only near-term hurdles. China’s factory output grew 4.5% in July from a year earlier, below expectations, while fixed-asset investment contracted 6.7% in the January-July period.
Zinc: Zinc shed 1.2% to $3,650.
Aluminum: Aluminum slipped 0.3% to $3,211.
Tin: Tin edged down 0.1% to $54,750.
Lead: Lead lost 0.8% to $1,871.
Nickel: Nickel climbed 0.7% to $16,875.
PRECIOUS METALS
Gold: December gold contracts are sharply higher as yields and the dollar moved lower overnight, as markets await today’s Fed minutes. Rates could continue to dominate price action assuming whether or not today’s Fed minutes validate or challenge the current view that a September rate hike is unlikely. Still, the risk backdrop is little changed with oil and yields still elevated and a US-Iran deal unlikely in the near term, keeping risk premium and inflationary worries elevated. Traders have pushed back expectations of a September rate hike, though the recent inflation data did reveal that underlying inflationary pressures are remaining firm. As such, and given the lack of forward guidance from the Fed, a September rate hike remains firmly on the table. For many, the reports continue to make the case for the Fed to hold on rates, which will leave further upside in precious metals contingent upon whether or not upcoming data can leave that narrative intact and if oil prices can retreat.
Silver: September contracts are up 1.8% to $65.19.
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