MORNING VIEW: Base metals prices, broader markets remain upbeat

The base metals were mixed this morning, Monday November 23, but the underlying trends remain bullish following recent fresh highs in most of the metals.

  • US dollar index remains weak, helping to underpin metal prices

Base metals

The three-month base metals prices on the London Metal Exchange were mixed, with zinc and lead weaker by 0.2% and 0.6% at $2,795 per tonne and $2,017 per tonne respectively, while the rest were unchanged to firmer, with copper $7,261 per tonne unchanged and aluminium ($1,994.50 per tonne), nickel ($16,235 per tonne) and tin ($18,800 per tonne) up by an average of 0.4%.

The most-traded base metals contracts on the Shanghai Futures Exchange were mainly up, the exception again being January tin that was down by 0.2%, while the rest were up by an average of 1.5% – led by a 2.4% rise in February nickel, but with strong gains in January lead (+2.2%) and January copper that was up by 1.8% at 54,050 yuan ($8,223) per tonne.

Precious metals

Spot gold prices were up by 0.2% at $1,875.05 per oz, while the rest of the precious metals were up by an average of 0.7%.

Wider markets
The yield on US 10-year treasuries has edged lower, it was recently quoted at 0.82% – this after 0.83% at a similar time on Friday.

Asia-Pacific equities were stronger this morning: the ASX 200 (+0.34), the Nikkei (closed), the Kospi (+1.92%), the CSI (+1.24%) and the Hang Seng (+0.01%).

The US dollar index remains in low ground and was recently quoted at 92.25, this after 92.21 at a similar time on Friday – support is seen between 92.13 and 91.73.

While the dollar is weak, the other major currencies were holding up in high ground: the euro (1.1874), the Australian dollar (0.7310) and the yen (103.75), with sterling (1.3319) edging higher.

Key data
The markets need to be braced for some likely weak news because purchasing managers index (PMI) data for manufacturing and services are scheduled for release across Europe and the United States today.

In addition, leading index data for China is scheduled to be released and UK Monetary Policy Committee member Andy Haldane is scheduled to speak.

Today’s key themes and views

The base metals remain upbeat and that seems to reflect the combination of high hopes that vaccines will mean a return to normal will start to be seen in the second half of next year and the infrastructure spending that is underway/has been promised. Our concern remains that prices may have run ahead of the fundamentals and be vulnerable to a correction.

Gold has once again found support in the $1,850s-per-oz area, helped by the weaker dollar, but the yellow metal remains vulnerable.

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