According to Mining News Pro - On weekly reports we are trying to put an scoop on the metal market and find out what is happening in the global market.
Gold price slips with rising yields as traders weigh data, Fed hiking
Gold slipped with rising Treasury yields as traders weighed mixed US economic data and the Federal Reserve’s interest-rate hiking path.
Data Tuesday showed a bigger-than-expected drop in US home construction, while production at US factories increased in July for the first time in three months.
Bullion has taken a fresh leg down after rising for four weeks as the US currency renewed its ascent and bond yields remained elevated.
The price drop was “very contained” and the precious metal “arguably held up relatively well above $1,770 given the earlier renewed strength in the dollar which has since reversed,” said Nicky Shiels, head of metals strategy at MKS PAMP SA. “Overall, persistent US dollar strength and the climb up in US yields ensures rallies are capped.”
Worldwide holdings in bullion-backed exchange-traded funds have contracted for the past nine weeks, signaling reduced interest from the investor community.
Gold’s next move may hinge on the minutes from the Fed’s July meeting, which are scheduled for Wednesday and may offer clues on the size of the next rate hike. Ahead of their release, economist Nouriel Roubini warned that markets expecting a pivot and the Fed cutting rates in 2023 “sounds delusional.”
Spot gold declined 0.2% to $1,775.74 an ounce as of 5 p.m. in New York, after tumbling 1.3% on Monday. Bullion for December delivery slipped 0.5% to settle at $1,789.70 on the Comex. The Bloomberg Dollar Spot Index was little-changed after earlier rising as much as 0.3%. Spot silver declined, while platinum and palladium gained.
Zinc price hits two-month high as Nyrstar halts production
Zinc prices rose to their strongest in two months on Tuesday after production was suspended at Nyrstar’s Budel operations in the Netherlands.
Nyrstar said Budel will be put on care and maintenance from September 1 until further notice, as a response to external factors impacting the business.
Nyrstar did not specify the factors behind the decision, but a source close to the situation said electricity costs have increased by as much as 10 times while labor, freight, and other costs also have increased.
Budel’s nameplate capacity is [315ktpa] of zinc, but the smelter has been operating at reduced capacity since Q4 2021.
The company had already cut output by up to 50% at its three European zinc smelters while Glencore warned this month that “the current energy supply and price environment poses a significant threat.”
Benchmark zinc on the London Metal Exchange jumped 6.6% to $3,797.50 a tonne, the highest since June 9.
Industries from fertilizer to aluminum are being crippled by soaring energy costs as Russia squeezes gas flows to Europe following its invasion of Ukraine. On Tuesday, benchmark power prices surged to a fresh record as the worst energy crisis in decades looks set to persist well into next year.
“That theme is ongoing due to tightness in the electricity and power market in Europe,” said Xiao Fu, head of commodity market strategy at Bank of China International.
“Market inventories have fallen to very low levels and we would expect stocks to continue to fall in Europe.”
Low water levels on the Rhine were an added concern, she said.
Dutch gas for September hit the highest levels since March this week, boosted by hot weather in Europe.
“There will be a bit of capacity juggling going on,” said Tom Price, an analyst at Liberum Capital.
“If the EU needs their metal, they will probably have to import more semi-refined material or the metal itself.”
Citi upgraded its zinc price forecast for the next three months on Monday to $3,200/tonne from $2,800/tonne, saying it expected concern about an economic downturn would weigh on all base metals prices, but zinc would outperform.
“We project greater forecast cuts to European zinc smelter output as winter power shortages play out,” Citi said in a note.
Copper price falls on demand worries in China
The copper price fell on Monday as worries about demand in China surfaced due to weak economic data and a firmer dollar.
Copper for delivery in September fell 2% on the Comex market in New York, touching $3.59 per pound ($7,898 per tonne).
“Chinese data was disappointing, suggesting a bigger hit than expected from covid-19 restrictions,” a metals trader said, adding that a higher dollar had also triggered fund selling.
“But there is a positive – interest rate cuts from the PBOC (People’s Bank of China).”
China’s economy unexpectedly slowed in July, with growth in industrial output, fixed-asset investment, total social financing, and new yuan loans slowing.
Meanwhile, Chinese property developers sharply cut investment in July, while new construction starts suffered their biggest fall in nearly a decade.
However, China’s central bank unexpectedly cut key interest rates for the second time this year on Monday in an attempt to revive credit demand to support growth.