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Daily Base Metals Report

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US stocks fluctuated today, with S&P trading around an all-time high, as rising trade tensions between the US and China taking a toll on global market sentiment. A record amount of fiscal and monetary stimulus and continued hopes of a vaccine continue to drive markets further up. The dollar declined again to reach a two-year low of 92.342 today. The US home construction starts surged by the most since 2016 and applications to build picked up the most in nearly three decades, indicating a robust housing market. The number of coronavirus cases in the European countries continues to surge but some US states, primarily in Florida, show signs of easing.

Softer dollar underpinned prices on the LME today, urging all metals to close higher on the day. Aluminium prices traded up to $1,785/t, but resistance at this level triggered a close at $1,773.50/t. Copper gained the most, up 2.08%, as US home construction rose by more than forecast and LME inventories fell to the lowest level since 2007, prompting a close at $6,567.50/t. Copper cash to 3-months tightened today into $13.50/t backwardation. Lead prices also strengthened today; prices closed near the day’s high at $1,988/t. Nickel was supported again but found resistance at $14,800/t prompting a close at $14,675/t. Zinc traded higher to close at $2,458.50/t.

Oil futures remained range-bound today, with WTI and Brent edging to $42.75/bl and $45.39/bl respectively. Precious metals prices improved today amid escalating US-Sino trade tensions, with gold breaking the $2,000/oz resistance level. At the time of writing, gold and silver trade at $2,005.37/oz and $27.84/oz.

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

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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.