Base Metals May Rise Going Into Year’s End
SOURCE:[Kitco News] – Base metals prices may rise going into the year’s end, even as the macroeconomic outlook is cloudy.
Copper’s rally on Monday on hopes that the U.S. might avert the “fiscal cliff” – the pending tax hikes and spending cuts that go into effect Jan. 1 if not reversed – might be a sign of further gains to come, market watchers said.
After falling much of October, base metals prices could be bottoming out, said Michael Turek, senior director on Newedge’s New York metals desk.
“I’m not a rampant bull; I’m not beating up anyone to buy base metals, but I’m favorably disposed to them,” he said, adding that the current price action bodes well for gains.
“They’ve absorbed a lot of (negative news),” he said.
The possibility of the fiscal cliff being resolved is a positive sign for those looking for higher prices. Plus, he pointed out, the new political regime in China could mean more capital investment. “We’ve seen signs in the last few days of raw material buying out of China,” he said.
Markets have been caught up in worries about a slowdown in the Chinese economy for the past several months, and there could be signs that the slowdown in growth might be ending.
Bill O’Neill, principal of LOGIC Advisors, said he expects base metals as a whole to begin rising going into next year.
“I like copper. We see really the potential for a solid performance next year. It had been reacting to slightly higher LME (London Metal Exchange) and Shanghai (Futures Exchange) stocks, but the overall pattern of demand is starting to improve,” he said.
Both O’Neill and Turek said base metals may also benefit if Shinzo Abe, head of Japan’s Liberal Democratic Party, the opposition party, wins next month’s parliamentary election. Abe has fueled speculation that more monetary easing may be on tap if his party is successful in the elections.
“There could be accommodation by the BOJ (Bank of Japan) now that Shinzo Abe might become prime minister. The European Central Bank may do more easing. Dr. Bernanke sure is not backing away from accommodating,” O’Neill said, referring to Federal Reserve Chairman Ben Bernanke and the Fed’s third round of quantitative easing.
Going into 2013, Stephen Briggs, senior metals strategist at BNP Paribas, said central bank action and expectations of greater demand growth should support base metals, even as Europe’s economy struggles. The firm forecasts global base metals demand growth will rise 5-6% in 2013.
Post from: Gold News from Gold Editor
Base Metals May Rise Going Into Year’s End
2012-11-21 20:06:55
Source: http://www.goldeditor.com/base-metals-may-rise-going-into-years-end/
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