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Daily Base Metals Report

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US stocks picked up today despite below-expectation labour performance. US unemployment benefits have unexpectedly increased, and initial jobless claims jumped to 1.1m in the week ending August 15. The Fed Minutes released last night signalled moderate optimism about the growth in the economy in the second half of 2020. The virus continues to spread in Europe, as Germany recorded 1,000 new cases and Spain reported the highest number of infections since April. In the recently-released July Government Council meeting, the ECB expressed uncertainty around the economic outlook and showed reluctance to implement another round of monetary stimulus measures. China expects talks with the US to review the progress on their preliminary trade deal soon.

The sentiment on the LME was weaker today amid growth fears, along with US-China trade talks. Copper prices fell from a two-year high, but remained well supported above $6,580/t and closed at $6,601.50/t. Zinc was particularly weak as protracted selling pressure triggered a close at $2,489/t. Aluminium was well bid in the first half of the day; however, failed above $1,800/t and closed at $1,789.50/t; the cash to 3-month spread widened into -$37.00/t. Nickel was range-bound, testing the resistance level of $14,800/t and closing at $14,647/t. Lead was lower on the day, closing at $1,995/t.

Oil futures continued to fall today on sluggish US labour data, with WTI and Brent down at $42.42/bl and $44.75/bl respectively. Gold and silver prices were marginally higher today, at $1,946.76/oz and $27.16/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.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

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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.