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Daily Base Metals Report

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US stocks slipped today on continued concerns of a resurgence of a second wave of the virus, with European shares joining the slump. The data shows that initial jobless claims continue to decline, but a record 32.9m Americans remained on unemployment benefits in the third week of June. The labour market remains fragile, especially with climbing coronavirus cases in the country. The yield of 10y Treasuries fell, and the dollar strengthened. The Trump administration plans to finalise regulations barring the US government from purchasing goods or services from any company that uses products from Chinese companies like Huawei.

Metals on the LME traded higher today, except for aluminium and nickel, as moderate optimism prevailed. Copper was well supported, testing appetite at $6,350/t level and closing at $6,300/t. Zinc prices were firmer, as protracted buying pressure took prices higher through $2,150/t, closing near session’s high at $2,156/t. Zinc spread softened slightly into -$12.25/t. Aluminium prices were weaker today, drifting closer the $1,660/t resistance level, however, closing above at $1,664/t. Nickel lost the most ground, breaking below the key support level at $13,300/t and closing at $13,249/t. Lead was marginally stronger, closing at $1,838.5/t.

Oil futures tumbled, with WTI falling below $40/bl, as swelling inventories raised fresh concerns of oversupply. At the time of writing, WTI and Brent trade at $39.67/bl and $42.40/bl respectively. Gold and silver are down on the day, trading at $1,801.02/oz and $18.63/oz.


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COVID cases are rising across the globe as the delta variant spreads, this is causing some nervousness in financial markets, especially with the higher inflation rhetoric. Commodity prices have fallen since the Fed changed their tune inflation, the dollar has stabilised which has also been a headwind to prices. The summer months are traditionally quieter for metals demand which could prompt metals to consolidate. If the delta variant continues to spread, we may see higher levels of stimulus for longer. As things stand stimulus levels are set to be tapered and this could be brought forward if inflation remains high. We expect markets to remain volatile but on lower volume through the summer months.