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Daily Base Metals Report

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US stocks fell after the Fed suggested rates could rise by the end of 2022. US companies added fewer jobs than expected in July, an indication of persistent hurdles to the labour sector recovery. On the other hand, the US service industry expanded at a record pace of 64.1 in July, as new orders and employment improved. The dollar strengthened after initial weakness, and the 10yr US Treasury yield touched 1.13% before coming back to 1.2%. The BoE is expected to keep the interest rates and the bond-buying programme unchanged in today’s statement.

Metals on the LME closed lower yesterday apart from zinc, as weak equity data hit sentiment in the market. Aluminium prices softened and tested appetite around $2,562/t and closed at $2,566.50/t. Copper weakened marginally, breaching support at $9,500/t to close at $9,466/t. Lead and nickel prices also broke lower, closing at $2,380/t and $19,243/t, respectively. Zinc gained ground marginally, testing the resistance at $2,980/t and closed lower at $2,973.50/t; the cash to 3-month spread tightened to -$9.05/t.

Oil futures fell for the third straight day as the COVID-19 outbreak in China threatens demand outlook once again. WTI and Brent sold off to $68.50/bl and $70.75/bl. Precious metals continued the decline, only with gold edging higher to $1,811.45/oz, whereas silver fell to $25.41/oz.

For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.

All price data is from 04.08.2021 as of 17:30

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.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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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.