The outcome of the US election and the hopes around the new vaccine sparked renewed optimism amongst most investors. Most base metals prices strengthened further as over the past month, base metals price rose by 5% on average. But still, the road ahead in prices will be bumpy, according to Casper Burgering, Industrial Metals Economist at ABN Amro.
See: Gold to end the uptrend on a break of critical $1,800 support – ABN Amro
“We think that macroeconomic trends in China will remain a key driver in base metals markets sentiment. As long as Chinese economic trends and business activity remain positive, a risk-on attitude can be expected from investors.”
“The rising numbers of coronavirus cases in the US and Europe remains worrisome and the increase in the number of lockdowns across the world will hit economies. Uncertainty over the ultimate economic impact remains therefore high. This will also have an impact on sentiment in base metals markets, which will be accompanied by increased price volatility.”
“China’s economic recovery will continue to strengthen and broaden. This means that metals demand from China will remain robust. Going forward, this will keep a solid floor under most base metals markets.”
“Prices will find support the trend in the dollar. A weaker dollar during 2021 makes metals cheaper for non-dollar holders and supports prices.”