Base metals are gaining after the continuous fall till the mid of this month. Changing economic condition at US and China create large impacts on these metal prices. To understand the factors responsible behind this volatility we need to study the events results and their importance .Following are the events that can have minor to major impact on base metals prices.
First let look at major events that can make metal prices highly volatile. Here we will only focus on events of China and US as they are the largest metal consumers respectively.
Events of Manufacturing PMI, Economic Sentiments, Consumer Confidence, Industrial Production, and Trade Balance are having major impacts on the base metals. Nowadays FOMC meeting is very important as Fed is expected to take tapering related decision soon that can negatively affect metal prices. As ECB has cut interest rate depreciated euro pushed metal prices upside. Any announcement from ECB will also become crucial now.
Now let take a look at those events having less impact on base metals prices.
Empire State Manufacturing Index, NAHB Housing Market Index, Business Inventories, Factory Orders, Durable Goods Orders, Total Vehicle Sales. These are the events having less impact on base metals.
Now what changes in these events results can bring high and normal volatility in the market? Whenever the result is near to the expectation there will not be significant movement in the market but as market may discount or appreciate the expected change in advance. But when the actual result is significantly high or low the market will move accordingly.
Except these events other factor that can change the base metals prices are demand and supply. Whenever the demand for withdrawal increases at LME or SHFE the commodities gain in the market and vice versa.