• The US Dollar Index continues to trend lower

Base metals
LME three-month base metals prices were up by an average of 0.7% this morning, once again led by a 1.2% rise in copper that was recently trading at $9,436.50 per tonne. All the metals, with the exception of nickel, seem to be impatiently waiting to extend gains and the latest push lower in the dollar will be encouraging them forward too.

While the LME metals were firmer, the most-active base metals contracts on the SHFE were mixed with the June nickel and zinc contracts down by 0.8% and 0.3% respectively, while the rest of the metals were up by an average of 0.8%. The June copper and May lead contracts led on the upside with gains of 1.3%, with the former recently quoted at 69,580 yuan ($10,678) per tonne.

Precious metals
Spot gold prices were little changed at $1,771.99 per oz this morning, consolidating the gains seen at the end of last week. Spot silver ($25.93 per oz) was up by 0.5%, platinum ($1,209.60 per oz) was little changed and palladium (2,798.50 per oz) was down by 0.7%.

Wider markets
The yield on US 10-year treasuries has edged higher to 1.62% this morning, up from 1.56% at a similar time on Monday.

Asian-Pacific equities were mixed on Tuesday: the CSI 300 (+0.43%), the Hang Seng (+0.11%) and the Kospi (+0.56%) were stronger, while the ASX 200 (-0.8%) and the Nikkei (-2.09%) were weaker.


The US Dollar Index headed lower again on Monday and is weaker still this morning; it was recently at 90.97, after 91.57 at a similar time on Monday.

The other major currencies were stronger this morning: the euro (1.2059), the Australian dollar (0.7792), sterling (1.3993) and the yen (108.21).

Key data
The economic agenda is light today, data out already in Japan showed tertiary industrial activity rise by 0.3% month on month in February, after a 1% fall in January.

Later there is data on Germany’s producer prices (PPI) and the United Kingdom’s employment situation – see table below for more details.

Today’s key themes and views
Most of the LME metals are working higher but are encountering resistance while they approach former highs. Lead ($2,065 per tonne) still has some way to go to reach the February highs at $2,185 per tonne, but it is making progress. Nickel is the metal that is struggling to follow the others, with prices stuck in a sideways range around $4,000 per tonne below the highs it experienced in February. The Philippines’ latest move to lift a ban on new mines may be the latest piece of news holding nickel back.

With the exception of nickel, upward pressure seems to be building in the metals and while we still see potential downside risks on the back of credit tightening in China, or as a result of a broader-based equity correction, the path of least resistance in the metals seems to have once again swung higher.

Gold prices are consolidating after last week’s rebound and look well placed to extend gains too, but given the latest weakness in the dollar that got underway on Monday, it is somewhat surprising gold prices are still consolidating, but that may be due to the pick-up in US treasury yields.