Prospects of higher inflation following the approval of a $1.9 trillion U.S. stimulus bill boosted sentiment across the precious complex on Monday, with platinum leading in gains for the group firming by 3.4% as President Joe Biden signed the $1.9 trillion stimulus bill into law last week. Some investors view precious metals particularly gold as a hedge against higher inflation that could follow stimulus measures, but higher Treasury yields could dull some of the appeal of the metals.
Sentiment across the base metals sector was boosted by better than expected economic data in China. Key data already out on Monday showed strong year-on-year recovery growth in China’s industrial production, retail sales and fixed asset investment. The market is also wary that the extra stimulus in the economy will be inflationary and with this in mind, the markets may be volatile ahead of Wednesday’s Federal Open Market Committee meeting, announcements and press conference. Aluminium closed at a price of $2,184.50 per tonne with improved demand and tight availability of the light metal edging its price upward.