w: www.basemetals.com | e: info@basemetals.com | t: +44 (0) 1799 516956
Metals set new highs as the new month brings in fresh buying

02/02/06

After starting on a weaker note on Wednesday, the metals swung higher and continued their charge, with copper, aluminium, zinc and tin setting fresh highs. Economic data was mixed, construction spending for December was stronger than expected, while pending home sales fell 3% and the ISM manufacturing index came in worse than expected, but in the end it seems as the funds were once again in the driving seat. Perhaps the start of a new month has brought with it a fresh inflow of funds to be invested. Copper initially tested support around $4800 again, but failure to break through triggered short-covering which helped propel price to fresh highs. Probes to the downside seem to be becoming a more regular feature in the market, which may or may not start to unnerve some of the longs. This seems to have happened in oil, with crude futures falling 3.9% into the close on Wednesday. This could opened the door to some profit-taking across the index funds.

Looking further ahead, Phelps Dodge announced that they thought the market would be roughly balanced this year, although further supply disruptions could keep the market in deficit. If this is so, then it seems highly likely that producers will step up their hedging to take advantage of the opportunities that these high prices provide. With forecast prices being ever raised and actual prices moving further away from what seems a sustainable level, you have to wonder when the elastic band will snap. When it does it may bring with it a new understanding of the term ‘fast markets’. However, until that time, the path of least resistance remains to the upside.

The dollar resumed its rebound on Wednesday with the index moving back up towards the 89.60 level, which if broken may mean the earlier bout of weakness seen in mid-January was a false move lower. In turn this could weigh on the metals. Gold start to react to the stronger dollar on Wednesday, but ran into the usual scale down buying, but the buying may back off if the dollar manages to break higher. Data out on Thursday includes: Monster employment index, Challenger job-cut report, ECB announcement, US jobless claims (expected 295,000 after 283,000 last week), productivity (expected 1.7%) and costs (expected 2.8%) and the EIA natural gas report.

- ends -

For further information please contact:

William Adams
Metals analyst, BaseMetals.com
press@basemetals.com
http://www.basemetals.com

BaseMetals.com
12 Rose and Crown Walk
Saffron Walden
Essex CB10 1JH
UK

T: +44 (0) 1799 516 956
F: +44 (0) 1799 516 941

 Live base metals price charts available at www.basemetals.com/freecharts/
BaseMetals.com Disclaimer and Privacy Policy

BaseMetals.com has taken every precaution to provide the most accurate information possible. However it is provided without warranty or claim of reliablity.

PLEASE READ THIS DOCUMENT CAREFULLY BEFORE ACCESSING OR USING THE SITE. BY ACCESSING OR USING THE SITE, YOU AGREE TO BE BOUND BY THE TERMS AND CONDITIONS SET FORTH BELOW. IF YOU DO NOT WISH TO BE BOUND BY THESE TERMS AND CONDITIONS, YOU MAY NOT ACCESS OR USE THE SITE. BASEMETALS.COM MAY MODIFY THIS AGREEMENT FROM TIME TO TIME, AND SUCH MODIFICATIONS SHALL BE EFFECTIVE IMMEDIATELY UPON POSTING OF THE MODIFIED AGREEMENT ON THE SITE. YOU AGREE TO REVIEW THE AGREEMENT PERIODICALLY TO BE AWARE OF SUCH MODIFICATIONS AND YOUR CONTINUED ACCESS OR USE OF THE SITE SHALL BE DEEMED YOUR CONCLUSIVE ACCEPTANCE OF THE MODIFIED AGREEMENT.

It is accepted by the site visitor on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. The information and data were obtained from sources believed to be reliable, but we do not guarantee its accuracy.

YOU MAY NOT MODIFY, COPY, REPRODUCE, REPUBLISH, UPLOAD, POST, TRANSMIT, OR DISTRIBUTE, IN ANY MANNER, THE MATERIAL ON THE SITE, INCLUDING TEXT, GRAPHICS, CODE AND/OR SOFTWARE. You may print and download portions of material from the different areas of the Site solely for your own non-commercial use provided that you agree not to change or delete any copyright or proprietary notices from the materials. You agree to grant to BaseMetals.com a non-exclusive, royalty-free, worldwide, perpetual license, with the right to sub-license, to reproduce, distribute, transmit, create derivative works of, publicly display and publicly perform any materials and other information (including, without limitation, ideas contained therein for new or improved products and services) you submit to any public areas of the Site (such as bulletin boards, forums and newsgroups) or by e-mail to BaseMetals.com by all means and in any media now known or hereafter developed. You also grant to BaseMetals.com the right to use your name in connection with the submitted materials and other information as well as in connection with all advertising, marketing and promotional material related thereto. You agree that you shall have no recourse against BaseMetals.com for any alleged or actual infringement or misappropriation of any proprietary right in your communications to BaseMetals.com.

YOU ASSUME TOTAL RESPONSIBILITY AND RISK FOR YOUR USE OF THE SITE AND THE INTERNET. BASEMETALS.COM PROVIDES THE SITE AND RELATED INFORMATION "AS IS" AND DOES NOT MAKE ANY EXPRESS OR IMPLIED WARRANTIES, REPRESENTATIONS OR ENDORSEMENTS WHATSOEVER (INCLUDING WITHOUT LIMITATION WARRANTIES OF TITLE OR NONINFRINGEMENT, OR THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) WITH REGARD TO THE SERVICE, ANY MERCHANDISE INFORMATION OR SERVICE PROVIDED THROUGH THE SERVICE OR ON THE INTERNET GENERALLY, AND BASEMETALS.COM SHALL NOT BE LIABLE FOR ANY COST OR DAMAGE ARISING EITHER DIRECTLY OR INDIRECTLY FROM ANY SUCH TRANSACTION. IT IS SOLELY YOUR RESPONSIBILITY TO EVALUATE THE ACCURACY, COMPLETENESS AND USEFULNESS OF ALL OPINIONS, ADVICE, SERVICES, MERCHANDISE AND OTHER INFORMATION PROVIDED THROUGH THE SERVICE OR ON THE INTERNET GENERALLY. BASEMETALS.COM DOES NOT WARRANT THAT THE SERVICE WILL BE UNINTERRUPTED OR ERROR-FREE OR THAT DEFECTS IN THE SERVICE WILL BE CORRECTED.

IN NO EVENT WILL BASEMETALS.COM BE LIABLE FOR (I) ANY INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES (INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR LOSS OF PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR INFORMATION, AND THE LIKE) ARISING OUT OF THE USE OF OR INABILITY TO USE THE SERVICE, OR ANY INFORMATION, OR TRANSACTIONS PROVIDED ON THE SERVICE, OR DOWNLOADED FROM THE SERVICE, OR ANY DELAY OF SUCH INFORMATION OR SERVICE. EVEN IF BASEMETALS.COM OR ITS AUTHORIZED REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR (II) ANY CLAIM ATTRIBUTABLE TO ERRORS, OMISSIONS, OR OTHER INACCURACIES IN THE SERVICE AND/OR MATERIALS OR INFORMATION DOWNLOADED THROUGH THE SERVICE.

BaseMetals.com makes no representations whatsoever about any other web site which you may access through this one or which may link to this Site. When you access a non-BaseMetals.com Web site, please understand that it is independent from BaseMetals.com, and that BaseMetals.com has no control over the content on that Web site. In addition, a link to a BaseMetals.com Web site does not mean that BaseMetals.com endorses or accepts any responsibility for the content, or the use, of such Web site.

You agree to indemnify, defend and hold harmless BaseMetals.com, its officers, directors, employees, agents, licensors, suppliers and any third party information providers to the Service from and against all losses, expenses, damages and costs, including reasonable attorneys' fees, resulting from any violation of this Agreement (including negligent or wrongful conduct) by you or any other person accessing the Service.

contain projections or other forward-looking statements regarding future events or the future financial performance of BaseMetals.com Limited. We wish to caution you that these statements are only predictions and that the actual events or results may differ materially.

This agreement shall be construed according according to the laws of the United Kingdom.

© 2005 BaseMetals.com

BaseMetals.com is a trading name of TheBullionDesk Limited