Zinc prices lead the retreat with a 2.1% fall to $2,690 per tonne, followed by a 1.6% fall in lead prices and a 1.2% fall in copper prices to $5,775 per tonne. Nickel and aluminium prices are down 0.7% and 0.5%, respectively. This morning's weakness follows on from Monday’s weakness when prices closed down an average of 1.2%.

Precious metals prices are up an average of 0.8% this morning, led by a 1% rise in spot platinum, silver prices are up 0.9%, gold prices at $1,211.80 per oz are up 0.7% and palladium prices are up 0.4%. On Monday, the precious metals closed mixed with gold prices ending the day up 0.5% at $1,203.15 per oz, while silver and platinum prices were off slightly and palladium prices were down 0.7%. The more industrial precious metals seem to have been held back by weakness in the base metals.

In Shanghai this morning, the metals are down across the board, reflecting Monday's weakness on the LME as well as the follow on weakness seen this morning. On average, prices are down 2.5%, led by a 3.9% drop in zinc prices, lead prices are down 3.1%, tin prices are down 2.7%, copper prices are down 2.4% at 46,750 yuan per tonne, nickel prices are down 2.3% and aluminium is off 0.8%. Spot copper prices in Changjiang are down 1.5% at 47,100-47,300 yuan per tonne, the spread between the spot and the March futures is at an equivalent of $80 per tonne backwardation, while the LME/Shanghai copper arb ratio is at 8.1.

In other metals in China, May iron ore futures on the Dalian Commodity Exchange are down 2.5%, on the Shanghai Futures Exchange, steel rebar prices are down 1.7%, while gold prices are up 0.8% and silver prices are up 0.2%. In international markets, spot Brent crude oil prices are down 0.3% at $55.51 per barrel.

Generally it looks like some risk-off is emerging in the base metals ahead of today's insight into the UK Prime Minister's update on Brexit and Friday's US presidential inauguration and precious metals are seeing some further haven buying ahead of these events.

Equities ran out of steam on Monday, with the Euro Stoxx 50 closing down 0.9% and the Dow closed little changed at 19,885.73. In Asia this morning, equities are mixed with the Nikkei off 1.5%, the Hang Seng is up 0.5%, the CSI 300 is up 0.2%, the ASX 200 is down 0.9% and the Kospi is up 0.4%.

In FX, the dollar index continues to look weaker at 101.07, there seems to be some squaring up ahead of the inauguration, the euro is firmer at 1.0652, the sterling at 1.2107 is having an uptick today within its downward trend, the yen at 113.45 is rebounding, as is the Australian dollar at 0.7515. In emerging market (EM) currencies, the yuan is strengthening again, it was recently quoted at 6.8366, up from December's low of 6.9633, and most of the other EM currencies we follow are consolidating with a slightly firmer trend.

On the economic agenda today, Japan's revised industrial production came in unchanged at 1.5%, later there is data on France's government budget balance, Italy's trade balance, there is a raft of UK price data, ZEW data out of Germany and the EU and the Empire State manufacturing index. UK Prime Minister Theresa May is speaking on Brexit, which could turn out to be a market moving event, while in the US Treasury Secretary Jack Lew and US Federal Open Market Committee member Lael Brainard are speaking.

Consolidation seems to be underway across the base metals and given the strong gains in most of them since the start of the year and ahead of some key political events we are not surprised prices are consolidating. The key now will be how well supported the dips are. Generally since the US election, market sentiment has been bullish for metals and equities, we cannot help but feel the bullishness may be somewhat wishful thinking and may not have solid foundations. We should get a reality check after the inauguration, but ahead of that is today's Brexit speech by UK Prime Minister Theresa May which could also rock the boat, especially the UK and European boats. As such, we would be braced for a pick-up in volatility between now and the end of the week, which could well lead into next week too, especially with the Chinese Lunar New Year starting towards the end of next week.

Gold prices are climbing in a robust fashion – we see this as a result of a pick-up in haven buying ahead of these key political events that are now upon us.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.