MORNING VIEW: Base metals prices find some dip-buying support after Wednesday's sell-off
Base metals prices on the London Metal Exchange were mainly stronger this morning, Thursday May 20, on dip buying, while those on the Shanghai Futures Exchange were down across the board in reaction to the 3.5% average loss on the LME on Wednesday.
China's rhetoric on its determination to wrestle inflationary pressures in commodities triggered weakness in the metals.Base metals
LME three-month base metals prices were mainly up this morning, the exception was tin that was down by 0.9% at $29,500 per tonne. Lead, zinc and aluminium were little changed, while copper was up by 0.7% at $10,141.50 per tonne and nickel was up by 0.5% at $17,435 per tonne.
The most-active SHFE base metals contracts were down by an average of 2.5%, led by a 3.7% fall in June nickel, June lead was down the least with a 0.4% fall, while July copper was down 2.6% at 73,220 yuan ($11,367) per tonne.
Precious metals
Precious metals were up across the board this morning led by a 1.3% rise in platinum ($1,201.50 per tonne). Palladium was up by 0.8% at $2,889.50 per tonne, silver ($27.75 per oz) was up by 0.4% and gold was up by 0.3% at $1,873.39 per oz.
Wider markets
The yield on US 10-year treasuries was recently quoted at 1.66%, up from 1.64% at a similar time on Tuesday.
Asia-Pacific equities were mixed on Thursday: the ASX 200 (+1.27%), the Nikkei (+0.19%) and the CSI 300 (+0.39%), while the Hang Seng (-0.45%) and the Kospi (-0.34%) were lower.
Currencies
The US Dollar Index found some haven buying on Wednesday with the Index rising to a high of 90.29, but this morning it was drifting and was recently at 90.04.
With the dollar drifting lower again the other major currencies were slightly firmer: the euro (1.2196), sterling (1.4133), the Australian dollar (0.7759) and the yen (109.06).
Key data
Thursday's key economic data includes the German producer price index, United Kingdom industrial order expectations and United States data on the Philly Fed Manufacturing Index, initial jobless claims and leading indicators.
In addition, Bank of England Monetary Policy Committee member Jon Cunliffe and European Central Bank president Christine Largarde are scheduled to speak.
Today's key themes and views
Last week the metals suffered some weakness that ended up being short-lived, but the rebound was also short-lived and followed by yesterday's strong pullback. Today, we see another bout of bargain hunting, but the markets are now looking more toppy than they have for some time. We have been saying despite the path of least resistance being upward, there is little room for complacency especially if China has its foot on the brake. The metals have had a very strong run over the past year so some meaningful pullback would not be surprising. We do, however, remain long-term bullish.
Gold's rally is extending, given there is a lot of stress in the system with overbought asset prices, inflationary fears and concern that the Federal Reserve may be falling behind the curve. Perhaps more investors are taking money off the table to put into havens, especially now that some weakness is starting to emerge in other asset classes. 
