Recently, the LMEX base metal index rose to new levels, touching its highest level since mid-November 2015. The rise in the index was due to strengthening of physical demand and expectations for China's January metal imports to rise amid global negative sentiments. Weakness in the USD also added up for the price to rise, with financial investors anticipating for the same.

According to the LME, investors have increased their net long positions in all metals except from nickel to multi-month highs in the past couple of weeks.

"Markets in China will be closed next week for the New Year's festivities. We expect this to bring a certain degree of calm to the metal markets which have recently been very heavily influenced by the rumours and reports from China," says Commerzebank in a research note.