A weaker US dollar and stronger Chinese economic data boosted metals prices last month. Aluminium was the only exception. (See Chart.) In most cases, industrial metals prices are now more aligned with fundamentals. But, slower growth in China in the second half of the year, coupled with abundant stocks, should see prices drop back from here. Meanwhile, fading expectations for US rate hikes and a relatively dovish statement by the Fed in July buoyed the price of gold. That said, we think that markets are being excessively dovish and that the Fed will raise interest rates one more time this year.
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