Written Commentary
Base Metals
Copper: Copper prices moved higher following the release of stronger-than-expected industrial output data in China. Benchmark three-month copper on the London Metal Exchange was up 0.1% at $10,610 per ton, while US futures were up 0.7% to $5.004 a pound. Industrial output in China grew 6.5% on an annualized basis in September, beating expectations of 5.0% growth despite GDP growing at its slowest pace in a year during the third-quarter. Markets are also closely watching this week’s meeting between top Chinese Communist Party officials, where they will review a proposed five-year plan for the country.
Mining disruptions also prove support for copper, although recent disruptions have been largely priced in.
Zinc: Zinc rose 0.4% to $2,944.
Aluminum: Aluminum fell 0.5% to $2,765 a ton.
Tin: Tin shed 0.4% to $34,900.
Lead: Lead climbed 0.5% to $1,980.
Nickel: Nickel slipped 0.1% to $15,110.
Precious Metals
Gold: Gold prices are sharply higher, with December contracts up nearly 3.0% as investors closely watch trade talks between the US and China this week following last week’s flare in tensions. Expectations of interest rate cuts out of the Fed have continued to provide support for gold’s rally, while the government shutdown in the US has drawn investors to increase demand for the safe haven. The economic calendar this week will be relatively light in the US, with PMI data on services and manufacturing activity out Friday alongside September’s CPI inflation data. Markets are nearly priced in for a rate cut from the Fed next week and for another 25 bps cut in December. Regarding Friday’s PMI data, markets will look to clues on the labor market, given the absence of official US data and remarks from Fed officials that the Fed’s focus is more on employment, than inflation.
Continued strong central bank purchasing of gold is likely to provide a floor for gold prices, while retail demand from gold-backed ETFs will also lend support.
Silver: Silver futures are up over 2% following a strong wave of profit-taking in the previous session. Large flows of silver from the US and China to London are helping ease a liquidity squeeze in London.
Platinum: Platinum futures are up 1.20% to $1,639.
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