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China-led rally is running out of road

Industrial metals prices have been among the biggest beneficiaries of the stimulus-fuelled recovery in China’s economy. But given how far prices have risen already, and that we think demand outside of China will remain lacklustre, an out-and-out bull run from here seems unlikely. Instead, we think that most industrial metal prices will rise only a little further over the next year, before starting to decline in 2022 as fiscal stimulus in China is pared back. Meanwhile, we continue to expect real yields in the US to trend lower, which should support the prices of precious metals, most notably gold.

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