The precious and industrial metals market offer plenty of investment opportunities, with prices constantly fluctuating. Many external factors affect the value of gold and silver, while the same ones and others can impact upon industrial metals, including aluminium, zinc and more. The London Metal Exchange (LME) is the world’s largest non-ferrous metals exchange, with Sucden Financial, a ring dealing member offering base metal contracts. Understanding the current state of the metals markets and its future is essential for those looking to make positive investments.
China is a large investor in base metals, as they are used in a lot of the country’s manufacturing and production. During a recent two-day public holiday at the start of April., the likes of copper experienced a relatively quiet period. Yet when China returned to the market, the price of base metals was pushed up on the LME.
For example, nickel had been the weakest base metal in recent weeks, but with the return of Chinese investors it rebounded to above $10,000 early on. As a major player in both the base and precious metals markets, whatever action China takes is worth noting, as it can lead to big price changes.
Copper has been extremely strong in recent months. A crucial commodity that many sectors rely on, such as the energy, transport and other industries, the price of copper is monitored by many. It may not have the glamour of gold, silver and platinum, or be viewed as a safe haven investment, but it is just as important.
The price of copper increased by more than 10% during the last quarter of 2016, the first time in over five years it had done so. Factors such as strikes and supply issues in Peru and issues in Chile, the most important copper generating country, have helped boost its price. However, a growth in supply is expected, which would push down the price, yet wage negotiation issues in Chile could offset this predicted surplus, depending how they go.
Brexit had an initial effect on precious metals especially, as gold prices surged in the immediate aftermath of the unexpected result. This was due to its status as a safe investment. Since that immediate reaction, gold has remained at a good price.
With Article 50 triggered at the end of March, there is now more uncertainty in the global markets. For gold though, this is good news, as investors will continue to buy it up to counteract the fluctuations of other investments.
The Trump Effect
As arguably the most powerful nation in the world, the inauguration of Donald Trump as President of the USA also had an effect on metal prices. In the months after, his actions are still impacting the market. Recently, copper fell 0.7 pc in price at the end of March after Trump’s failure to push through healthcare reform, as previously promised. This fueled fears that he would be unable to implement further economic policies, resulting in the dip in value.
Stay on top of the current state of the metals market in order to make the most profitable investments in both precious and base metal commodities.