Base Metal, Precious Metals and Industrial Metals React To Janet Yellen

Base Metal, Precious Metals and Industrial Metals React To Janet Yellen
Base Metal, Precious Metals and Industrial Metals React To Janet Yellen

Base metals continue to trade with a negative bias. Silver and copper have rebounded from recent lows this morning after taking major tumbles this week. Silver has added 356 points to trade at 20.789 well below its have range at $22.00 while copper rebounded adding 20 points to trade at 3.179 below its near term trading range at 3.25. Industrial metals have been steadily falling on worries from China and the possibility of tapering of asset purchases by the US FOMC in December.

Copper tumbled to its lowest level in 90 days after a Federal Reserve official raised the prospect of a retreat from monetary stimulus next month. Uncertainties about policy reforms in China and weak eurozone factory output also weighed on the metal. Copper prices fell on Wednesday as disappointment from the Chinese Communist Party meet and looming market surplus weighed on prices. Eurozone industrial production fell by 0.5% from growth of 1% in the previous month, which also hurt base metals prices. Base metals are expected to move down as investors are likely to remain cautious ahead of Yellen’s testimony and Eurozone GDP data today.

Copper on the London Metal Exchange closed down 2 percent at $6,980 a ton, after touching a low of $6,956, the weakest since Aug. 7. Copper extended losses from the previous session when it broke through its 100-day moving average of $7,118. The move lower sent the market crashing through the floor of a $7,000 to $7,420 range it had held since early August.

Gold saw a mini rally in the Asian session this morning gaining $15.50 as traders took advantage of the lower US dollar and cheap prices to buy up the shiny metal. Gold prices fell on Wednesday as gains in US equities dented gold’s safe haven appeal. However, a weaker dollar after the Fed Chairman nominee Janet Yellen supported Fed’s stimulus program and said that the economy and the labor market were performing far short of their potential while inflation remained low limited the downside in prices. Yellen is likely to testify before the Senate Banking Committee today. Gold prices are expected to remain in range today as investors are likely to remain cautious ahead of Yellen’s testimony which would give cues on the Fed’s future course of monetary policy.

The other factor pushing up gold is demand from China, where volumes on the Shanghai exchange were near a month’s high on Wednesday. A bearish factor could be paring of holdings in gold in exchange-traded funds. SPDR Trust, the world’s biggest gold exchange-traded funds, reported that the holdings fell to 865.71 tons.

After a fairly muted response at the beginning of the week, platinum prices were boosted by South African supply concerns before better-than-expected US economic data towards the end of the week acted to dampen prospects for platinum. Platinum has climbed $10.95 this morning to trade at 1443.70. A wage-related strike called by the National Union of Mineworkers (NUM) at Northam Platinum saw 7,000 workers down tools at the company’s Zondereinde operations over the weekend. Initially this seemed to have little impact as the platinum price started the week at $1455, lower than it had ended the previous week. Palladium gained $4.80 as auto sales were once again climbing in the US. Palladium proved more resilient, shrugging off news that US car and light-truck sales in October declined to the lowest annualized rate since April.

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