On Wednesday it was bullion that took off, yesterday it was the base metals, especially copper and nickel that both climbed around 2.2 percent. Some bullish forecasts for metal prices over the next 12 months seem to have revved up fund interest. This added more fuel to the relief rally that started just before the Greek austerity vote last week. Good ADP non-farm employment data yesterday also helped drive prices higher, which in the end closed up an average of 1.6 percent. Between 27th June, the day before the Greek relief rally got going and yesterday’s highs the metals have climbed by an average of 7 percent, led by a 10 percent rise in tin and a 9 percent rise in copper. Today we will see whether the US employment report supports the better data of late. Overnight the metals have trod water; copper and zinc have pulled back 0.3 percent to $9,723 and $2,400 respectively, while on average prices are down just 0.1 percent. Volumes have been light at 3,856 lots – see table on right for more details. The dollar has pulled back from yesterday’s stronger tone, the dollar index is last at 74.94, the euro is at 1.4355, the aussie is at 1.0780, sterling is at 1.5955 and the yen is weaker at 81.27. Gold and silver are firm at $1,532 and $36.48. Equities – the Dow closed up 0.7 percent yesterday and the firmer tone has flowed through into Asia where the Nikkei and Hang Seng are both up 0.8 percent, China’s CSI is unchanged and the broader MSCI Asia Apex is up 0.7 percent. Interestingly the Nikkei reached a post- earthquake high today, which seems to tie in with the feeling that Japan will now become a bullish factor for the markets as reconstruction starts to gather pace. In Shanghai the September contracts followed the LME higher with a 0.9 percent gain – the same percentage gain as the same four metals on the LME saw yesterday. Copper was up 1.7 percent at Rmb 72,150, zinc climbed 0.8 percent at Rmb 18,275, lead was up 0.6 percent at Rmb 17,410 and aluminium was 0.4 percent stronger at Rmb 17,465. Spot copper in Changjiang climbed 0.8 percent to Rmb 71,800-71,980 so remains in a contango and the LME/Shanghai copper arb went further into negative territory to around $250/tonne. Data out today shows Japan’s economy watchers index climbed to 49.6 from 36, German trade balance increase, later we get UK input and output PPI, Italian industrial production, but the focus will be the US employment report, see table on right for more details. The rally across the metals continues and with copper and tin prices running up above the down trend lines that started in April/May to join the strong rebounds in lead and zinc, it does look as though sentiment has turned bullish, especially amongst the funds. It is difficult to justify these moves on the fundamentals and therefore difficult to chase prices higher from these levels. However, we would now expect pull backs to run into good support. We would still look for jobbing opportunities on the downside into corrections, but bases are now probably in place and therefore dips are likely to provide buying opportunities.

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