Outlook for metals brightening: Capital Economics

Quotes from Capital Economics:

- Metals prices have shown some of the largest gains in the past week, benefitting from some better news on the global economy including stronger manufacturing PMI surveys in China and the eurozone. Gold prices have been stable despite fading fears of an imminent Greek exit from the single currency and signs that the Fed is ready to raise US interest rates in June. At the other extreme, natural gas prices have reversed their weather-related bounce from the previous week. Oil prices have diverged again, with Brent strengthening and WTI weakening - the latter depressed by record US stocks of crude.

- Looking ahead, US payroll data on Friday should confirm the robustness of the recovery in the labour market and reinforce expectations of summer tightening by the Fed. However, as long as any US interest rate hikes are gradual and balanced by stronger economic growth, we do not see them as a major problem for commodity markets. In the meantime, meetings of the Bank of England and the ECB, both on Thursday, should underline the prospects of an extended period of ultra-loose monetary policy in Europe.

- In emerging markets, India's budget at the weekend (Saturday 28th) is likely to include a cut in the import duty on gold, providing a small boost to sentiment.