Metals Chart Book

Metals Chart Book

Strong month for metals not a sign of things to come

May was a strong month for the prices of most metals, but we suspect that this may be as good as it gets. After all, if we’re right in expecting economic growth in China to slow in the second half of this year, the prices of most industrial metals are likely to end the year lower. Meanwhile, the recent rise in the gold price has been far larger than is implied by the fall in real yields, and we think that the gold price will come under renewed downward pressure in the months ahead as real yields start to creep higher.

3 June 2021

Metals Chart Book

The outlook for metals darkens

Aside from the temporary blockade of the Suez Canal, March was a relatively uneventful month for industrial metals prices. Nevertheless, we still expect prices to fall this year as mine supply rebounds, particularly in Latin America, at a time of slower growth in demand in China. Meanwhile, we have revised down our end-2021 gold price forecast to $1,600 per ounce as we now expect US real yields to rise further.

9 April 2021

Metals Chart Book

Rally in industrial metals unlikely to last

Most metals prices advanced in February, with the exception of gold and silver. However, we suspect that the current prices of industrial metals look overextended, especially given the recent run of China PMIs. Accordingly, we think that downside risks to prices are mounting.

3 March 2021
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Metals Chart Book

Risk appetite to support base metals prices for now

The prices of industrial metals continued to surge in December, capping off a strong 2020. However, we expect that prices will fall this year as growth in China’s demand slows on the back of the gradual withdrawal of fiscal stimulus and tighter lending restrictions on construction firms. Meanwhile, precious metals prices rose last month as the US dollar depreciated.

Metals Chart Book

Metals on a tear, for now

Industrial metals prices rallied in November. While we expect demand growth to stay strong in the months ahead, on the back of robust economic activity in China, we think that it will slow in 2021 as the Chinese government gradually withdraws fiscal support. Meanwhile, the gold price declined as safe-haven demand waned. That said, we still think that real yields in the US will fall a touch in the year ahead, which should provide a small lift to the gold price.

Metals Chart Book

Staying cautiously positive on metals

Industrial metals prices fell in September on the back of the appreciation in the US dollar and fears that the re-tightening of virus containment measures in Europe and elsewhere will dampen demand growth. However, we think that infrastructure-intensive fiscal spending in China will boost metals demand and prices over the next year, although the risks to our forecasts are probably now more to the downside. Precious metals prices also declined. That said, we expect US real yields to fall in the coming months, as the Fed adopts average inflation targeting, and that prices will recoup some of their losses.

5 October 2020

Metals Chart Book

Metals prices on a roll

Industrial metals rallied strongly in August on the back of encouraging economic data out of China and some depreciation of the US dollar. By contrast, the price of gold eased back, after hitting an all-time high early in the month. However, the gold price could push higher again in the coming months as we expect more downward pressure on US real yields. We also forecast further gains for industrial metals prices premised on our above-consensus outlook for China’s economy and the metals-intensive nature of the Chinese government’s policy stimulus. What’s more, we suspect that prices will remain supported in 2021 as the impact of China’s stimulus continues to be felt and the broader global economy gradually recovers. That said, we think that the big boost to prices is probably behind us now.

4 September 2020

Metals Chart Book

A brighter backdrop ahead for industrial metals

June was another good month for industrial metals. The prices of base metals made further gains, although those used in steel alloys (e.g. zinc and nickel) performed less well as wet weather in Southern China disrupted construction projects, leading to a temporary decline in steel demand. Nevertheless, we have become more positive on the outlook for industrial metals prices, owing primarily to our more upbeat forecasts for economic growth in China. By contrast, we think that the investment-led rallies in the prices of most precious metals look increasingly stretched, which is why we retain our forecast that precious metals prices will generally end the year lower.

3 July 2020
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