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Daily Base Metals Report

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European shares were mixed as Spain declared a state of emergency in Madrid in order to control the rising new cases of COVID-19. Italy's 10-year bond yield fell to a record low of 0.724%. In the UK, new local furlough schemes have been introduced to support jobs in coronavirus hotspots. The UK GDP grew by 2.1% m/m in August, below market expectations and down from 6.4% in July. The yuan strengthened against the dollar as the Caixin service PMI picked up to 54.8, the fifth consecutive month of expansion. The dollar softened into 93.099, and the yield on the 10yr US Treasuries strengthened up to 0.7870%.

LME base metals extended gains today, led by nickel and aluminium, which gained 3.94% and 2.60% on the day respectively. Copper prices edged higher to the resistance level of $6,780/t before closing below at $6,763/t. SHFE copper, however, was down on the day, closing at CNY51,430/mt. Aluminium was well bid, edging up to the $1,860/t level, to close just below the day's highs at $1,841.50/t. Nickel gained the most ground, testing the resistance at $15,250/t and closed at $15,221/; the cash to 3-month spread tightened into -$38.00/t backwardation. Zinc and lead prices were both higher today, testing the $2,440/t and $1,820/t, and closing at $2,434/t and $1,808.50/t respectively.

Oil futures continued to strengthen, as fears surrounding the disruption caused by Hurricane Delta are rising. At the time of writing, WTI and Brent trade at $41.25/bl and $43.41/bl respectively. Precious metals were on the front foot, with gold and silver edging up to $1,922.98/oz and $24.77/oz.

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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.

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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.