The base metals were all smiling again on Thursday. Copper was down until just before the New York open, then took off, peaking north of $2.31 near noon, before sliding a bit to finish at $2.2996/lb., up nearly 4½ cents.

Nickel was like a yo-yo all day, but with an upward bias, ending at $7.0292/lb., up 9 2/3 cents. Zinc pushed steadily higher from the late pre-dawn hours on, closing at $0.7267/lb., up more than a penny and a half. Aluminum had a good day, adding a penny and a third, to $0.7448/lb., while lead filled out the plus column, tacking on a penny and a half, to $0.7761/lb.

Copper led the industrial metals higher as analysts saw more budding economic optimism, along with strong momentum among the technical indicators.

On the economic front, “Whenever any kind of good data comes out, people like to think that they are seeing some ‘green shoots’ for the economy,” said Gijsbert Groenewegen, a Gold Arrow Capital Management partner in New York. “The idea of the better growth has made people buy copper.”

However, Copper’s 64% gain this year may be “unsustainable” as prices have “gotten ahead of demand,” Groenewegen said. “People are just looking at these numbers through rosy glasses and not seeing that even though they are slightly better, things are still weak … People are oblivious to what’s really happening in the underlying economy.”

And over on the technical side, “When we took out [Wednesday’s] high ($2.3020 a lb), that was significant and we saw more upside interest in the market once that occurred,” said Larry Young, of Infinity Futures in Chicago.

But, Young added, “Keep in mind we have the end of the second quarter coming up next week and have had a really good quarter in terms of the metals, so I wouldn’t be surprised to see prices sell off maybe by tomorrow or early next week as some funds book profits.”

RBC Capital Markets takes a look at the tea leaves and sees mush, writing that, “Closed arbitrage windows between the Shanghai and London Metal Exchange markets, the summer slowdown and speculation that China’s SRB may be looking to sell copper continue to muddy the short-term picture.”

But on the stockpile front, copper inventories monitored by the LME declined another 3,450 metric tons yesterday, to 271,600 tons, the lowest level since mid-November.

Source: Base Metals Climb Again