Base metals have been have a good run up over the last couple of months, and rally looks to be getting exhausted and could head towards some consolidation soon than later.
There is a surge in daily number of cases in the US and that could keep the rally under check. Better than expected economic data in Europe and improving U.S. housing and business activity data boosted sentiment and let to a broad based buying across many risky assets.
Second wave of the pandemic is a risk that applies to all cyclical assets. Industrial metals will be no exception. If governments are forced to tighten lockdowns yet again, economic activity will be jolted.
Nevertheless, we draw comfort in not hearing any alarm bells yet. Copper prices have already rallied around 40% from lows hit in March 2020 and are close to levels of $6100, but to hold above the same there has to be some solid evidence that Chinese demand is going to hold up.