USA IP, Houses, Yields & Gold

Comments of particular interest are noted with ‘*’.  

Matau’s Comments:

  • Market activity continues to refocus from sentiment to fundamentals. 
  • Base metal markets continue to tightening further. (pinch points & prices.
  • A brutal cold snap in the northern hemisphere continues, notably this week affecting oil output in Texas.
  • For this week also … Aside from China, industrial demand is increasing (recovering slowly) in key nations (USA, Japan & Europe), as well as in the emerging economies. 
    • Industry is recovering, and its outlook is tempering gold outlook somewhat.   
      • However there remain abundant gold price triggers:  geopolitical (China trade, Iran, Venezuela); fiscal (equity markets, bond yields); National stimulus policies (USA, Europe, other)..
    • This week we review Real interest rates and yields, and touch on relationships with gold price and AUDUSD.
  • Covid-19 is far from peaking, as more is learned about emerging mutating strains, and is still disrupting transport and commercial businesses.
    • Markets are placing inordinate belief that vaccines will solve things (it appears many expect life to return to ‘normal’}, however epidemiologists maintain that while an important tool, vaccines are but one of the tools (hygiene, distancing / isolation, contact tracing) that are already in use, and have successfully contained epidemics, before the advent of specific vaccines.

SUMMARY  

Copper  Cu prices highest since 2011.  Inventories are low.  Mixed views on outlook.   

Cobalt  Increased EV adoption rate is driving the increasing demand for lithium, nickel and cobalt,.  

Nickel  Ni prices highest since Sept 2014.  Outlook based on EV uptake.  Tesla plant coming to India.

Zinc & Lead  Teck’s Red Dog mine Zn output fell in 2020, on restrictions on water handling.  

Tin  Sn exchange inventories critically low, now.  Deficit forecast for 2023.  The market is not waiting.  

Aluminium  USA needs to revisit and revamp its aluminium tariffs.  Nothing has really been achieved with them.

Gold  Gold has lost some investor interest, yet there are several factors that may boost it.  

Platinum & Palladium  Platinum price is breaking upward in contrast to other precious metals.

Oil  The deep freeze in southern USA (notably in Texas) has curtailed production. 

Coal  Markets were quiet during China’s New Year holidays and are re-emerging now. 

Iron Ore  Iron ore prices just off the highest price since Sept 2011.  Activity is picking up again post Lunar NY

Shipping  Rates for Capes & Panamax both increased this week, despite Lunar New Year holidays.

General 

USA – Treasury Yields:  Still low out to 3 yr terms.  Relationship with gold prices real & nominal.

USA – Industrial Production:  remains mildly negative, though a market improvement on April 2020.

USA – New Housing Starts:  Growth is back into negative rates.  Could be a bit bumpy ahead.