Base metals and gold were higher as investors awaited U.S. inflation data for hints on the timing of potential interest-rate cuts and China’s trade data, which could offer more clarity on demand prospects.
“Metals prices are likely to struggle to make up ground unless this week’s U.S. inflation data comes in significantly lower and/or Chinese import data is much stronger than expected,” Commerzbank Research said.
Still, “the downside potential for prices is likely to be limited by expectations of interest rate cuts, which are likely to be reinforced by a weakening U.S. economy.”
Metals Demand
Investors are possibly too excited about the impact of the energy transition on metals demand , while underappreciating the impact from growth in India and Southeast Asia, Jefferies said.
“We agree that renewable energy infrastructure and EVs will contribute to global demand, but we would also argue that demand related to the urbanization and industrialization of India and Southeast Asia will be at least as important.”
Meanwhile, the biggest risk to miners this year is a potential U.S. recession, Jefferies said. “We have heard arguments as to why commodity prices might rise even if there is a recession, but we are very skeptical about this view. History is on our side on this.”