With China returning to work on Monday the metals markets had been full of Eastern promise at the end of last week, though yesterday's LME performance was underwhelming in the end. While gold climbed to fresh 9-month highs, the base complex toiled sideways in their now-normal broad ranges. Aluminium remained hemmed between technical and options-related buying at the lower end and producer selling at the upper. Prices couldn't sustain an early excursion above 2900, though as values slipped back to the 2870s support was plentiful. Locals said they were watching a large options exposure in March $3000 calls, while fund watchers noted dribs and drabs of fresh allocations coming through for the end/start of Feb/Mar.
Nearby spreads were little-changed, while the dominant long remained at 80-90% in the LME's WC warrant banding report. Forward sellers borrowed fresh 3-month sales out to 2009, with rates mostly tightening by $2.00-$3.00/mth, though H2 2008 actually slipped by $1.50/mth.
On Tuesday morning LME Select notched a brief opening high in Asia at 2899, though from there on it was all downhill during the premarket. At time of writing the market had fallen back to 2840, with a falling dollar failing to counter an inventory rise of 12,500t while in the background a sharp pullback in the world's stock markets helped to dampen (bullish) sentiment. As at last night, Cliff Green Consultancy suggested that the medium term technical outlook had 'improved', with a 'secondary basing pattern' believed to be in place, they said. While immediate resistance above 2900 was visible, prices were capable of heading towards 3050 initially, and “even 3300/3320 in the coming weeks”, the report concluded. Last at 2845, turnover approaching a respectable 2,800 lots so far.
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