Metals Wait on US Durable Goods Release

This morning metals are trading down by 0.3 to 0.89 percent at the London Metal Exchange.

Asian equities retreated in early trade following Wall Street as predicted that any bull-run or optimism is presently short lived. Riskier assets including base metals remained strong during the week as triggers from Central banks and global leaders indicated loosening policies however, investor’s hopes faded after the German Finance minister commented on Greece and indicated that more time may end up in increased bailout fund and further weakened the upbeat sentiments.

Today, the Greek Prime Minister is scheduled to visit the German Chancellor and hopes may remain high regarding the same. However, Germany’s Merkel may remain under obligation before the troika report and may disappoint market sentiments.

The marquee event in Europe today will be the UK government’s spending and trade numbers and are likely to remain subdued and may highlight that all of Europe is drowning under recession. However, later today the US durable goods release is likely to increase after improved consumption and higher drawdown of wholesale inventories.

Therefore base metals are likely to open on a weaker note and may continue the downtrend during the day.  Prices may witness slight recovery in the late evening due to better durable goods.

Markets are presently expecting some solid trigger from the EU Leaders and central banks.

Globally gold prices rose to their highest levels in more than 3-months, shaking off months of lethargic movements after minutes from the latest US Federal Reserve meeting fuelled hopes for the swift launch of more bond buying. Gold holdings  of SPDR gold trust, the largest ETF backed by the precious metal, increased to 1,286.5 tons, as on August 23. Silver holdings of iShares silver trust, the largest ETF backed by the metal, increased to 9,820.81 tons, as on August 23.

A Fed official on Thursday said the US economic outlook had brightened since the central bank’s last policy meeting on July 31-August 1, playing down odds of imminent bond buying – This comment was made by James Bullard of the St Louis Fed, an alternative member of the FOMC.

Sources said Spain is negotiating with euro zone partners over conditions for aid to bring down its borrowing costs, though the country has not made a final decision to request a bailout, which is expected to rattle the markets

The ICE dollar index, which measures US dollar against a basket of six other major currencies, fell to 81.368 from 81.475.

Copper rose more than 1% to a one-month peak, supported by a strong euro and renewed hope that US, Chinese and European officials will unleash more stimulus measures to revive their economies that will boost demand for metals.

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