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Daily Base Metals Report

Weaker-Than-Expected Inflation Decline in Europe Weighs on USD

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Authors
Daria Efanova

Daria Efanova Head of Research

Viktoria Kuszak

Viktoria Kuszak Research Associate

Contact research Contact Industrial Commodities

Summary

  • Upward revisions in US and European manufacturing data signalled resilience in the sector.
  • Volatility in base metals is diminishing, as market participants have little risk appetite.
  • A weaker dollar supported gold’s recovery, while oil prices remained range-bound.

US stocks opened higher as investors digested the latest manufacturing PMI data. The final US reading was unexpectedly revised up to 52.7, marking its highest level since June 2022 and signalling ongoing resilience in the sector. In Europe, the UK’s manufacturing PMI (S&P Global) was revised slightly higher to 46.9, while the HCOB Eurozone Manufacturing PMI rose to 47.6, suggesting a marginal improvement in conditions. Meanwhile, Eurozone inflation softened less than expected, with February’s headline CPI easing to 2.4% YoY from 2.5% in January, while core inflation ticked down to 2.6% from 2.7%. The data reinforced expectations that the European Central Bank may delay rate cuts, as services inflation, although lower at 3.7%, remains well above the ECB’s 2% target. The euro gained on the prospect of a more hawkish stance from the ECB, while the dollar weakened against major currencies, including the pound. The dollar index fell below 106.6, while the 10-year US Treasury yield extended its downward move, dipping below 4.2%.

A weaker dollar helped to reverse some of last week’s softness today; however, it did little to indicate that the recent trend is likely to stop in the near term. Instead, this helped solidify the near-term support levels. In particular, aluminium stopped short of $2,600/t as copper held its nerve at $9,373/t. Even with ongoing geopolitical tensions, volatility in base metals is dwindling as market participants have little risk-on appetite, leaving no clear trend or pattern to trade on. Nickel is showing some tightness amid headlines from Indonesia, jumping higher but struggling to break the $16,000/t resistance level, prompting the metal to close at $15,893/t. Lead and zinc remained broadly unchanged. 

A weaker dollar supported gold, allowing it to rebound closer to $2,890/oz, while silver followed, jumping above $31.7/oz. Oil prices remained range-bound, with WTI at $69.5/bbl and Brent at $72.7/bbl at the time of writing.

Lme Metals Price And Volume 03032025

All price data is from 03.03.2025 as of 17:30

Disclaimer

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