Summary
- With PMIs still expansionary but easing, markets are likely to remain range-bound and selective, reacting more to relative policy and growth divergence
- Base metals rallied once again; while we hold a moderately constructive view for copper and aluminium, today’s outsized moves in nickel and lead look more vulnerable to profit-taking.
- Precious metals remain momentum-led and well supported structurally, but elevated prices increase the risk of sharp, tactical pullbacks despite the broader bullish trend staying intact.
Macro
US equities opened higher, extending the constructive start to the year as markets continue to rotate away from headline risk and towards positioning and relative growth dynamics. Final December PMI readings were revised modestly lower across major economies, with the euro area at 52.4, the UK at 51.4 and the US at 52.5. While the revisions point to some loss of momentum at the margin, activity remains firmly in expansionary territory. We expect this to support a narrative of steady, but slower, growth into Q1 rather than a sharp downturn, keeping risk appetite broadly intact.
In FX, the dollar strengthened against both the euro and sterling, pushing the dollar index above 98.6. The move reflects ongoing policy and growth divergence rather than a shift into risk-off, and we expect the dollar to remain supported near-term unless US data deteriorate. Treasury markets remain range-bound, with the US 10-year yield fluctuating around 4.18%, reinforcing our view that rates are consolidating as investors wait for clearer signals on early-2026 growth and inflation trends.
Base Metals
Base metals rallied once again today, breaking towards new highs, with lead and nickel catching up to the broader complex and posting the strongest percentage moves on the day (+2.0% and +8.5%, respectively). Nickel breached the $18,000/t resistance level, trading at highs not seen since June 2024, while lead is seen hovering above $2,070/t by the end of the day.
Copper remains the key driver, with ongoing tariff-related uncertainty incentivising material flow towards COMEX, providing support for both LME and COMEX pricing. The metal continued to reach new records, testing the high of $13,380/t during today’s session. Aluminium followed suit, breaking above the $3,100/t mark decisively.
Moreover, moves in tandem with precious metals reinforce our view that systematic flow is shaping the direction of the trend. Looking ahead, we hold a moderately constructive bias for copper and aluminium, where the narrative remains supported by AI-driven demand expectations and tighter physical fundamentals. Meanwhile, the magnitude of today’s moves in nickel and lead looks more vulnerable to near-term profit-taking, given a weaker fundamental support.
Precious Metals
Precious metals continued to outperform. Gold pushed to fresh highs near $4,490/oz, while silver tested the $80/oz level, highlighting the persistence of momentum and allocation flows at the start of the year. While the broader structural story remains constructive, particularly for silver, we expect prices at these levels to be increasingly sensitive to profit-taking and shifts in liquidity, leaving scope for sharp but temporary pullbacks even as the medium-term trend remains supported.
Oil prices were little changed, with WTI around $58.3/bbl and Brent near $61.8/bbl. We expect crude to remain range-bound in the near term, with upside constrained by ample supply and demand uncertainty.
All price data is from 06.01.2026 as of 17:30