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Daily Base Metals Report

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US stocks edged higher on positive market sentiment and hopes of a speedy vaccine rollout. The US business sentiment fell to a seven-month low in December amid strengthening lockdown measures across the country. Meanwhile, US job openings declined by less than expected in November, indicating a moderately healthy labour demand before the additional containment measures. The dollar weakened, and the 10yr US Treasury yield strengthened up to 1.1786%. The yuan strengthened into 6.4573 against the dollar, on the back of upbeat growth prospects. The pound was seen higher today on the hopes of postponing any potential interest rate changes to the end of the year.

LME metal prices were on the front foot today due to improved risk-on sentiment. Aluminium prices were well supported and tested resistance at $2,025/t and closed just off the highs at $2,019.50/t. SHFE aluminium was also higher on the day, closing at CNY14,920/mt. Nickel was well bid in the first half of the day, testing the resistance level of $17,700/t, before closing below at $17,668/t. Nickel cash to 3m spread tightened further to -$53.00/t. Copper closed higher on the day at $7,975.50/t. Zinc and tin consolidated, closing at $2,778/t and $20,925/t respectively. Lead gained the most ground, closing just below the key resistance level of $2,020/t at $2,021/t.

Oil futures advanced today to 10-month highs as a weaker dollar boosted the prices once more. At the time of writing, WTI and Brent trade at $52.97/bl and $56.44/bl. Precious metals were mostly higher, only with gold and silver down on the day – to $1,842.50/oz and $25.31/oz respectively.


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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.