Price rises tail off as analysts mull reasons for market rally

摘要

Metal prices were slightly lower than a week earlier. The immediate cause was a bout of long liquidation - the selling of long positions - probably combined with profit taking, inspired by concerns about the prospects for the global economy, as the US continued to publish poor economic indicators. The more interesting question was what had been driving the rally seen in commodities since the autumn of last year. Was it demand from newly emerged economies such as China and India, or was it speculative demand from investors? The answer was probably both. There has been plenty of evidence of demand from the latter, but if the recent rises were just the result of investors outbidding each other, the bubble would burst sooner or later. The next question was whether or not the new economies could generate enough internal demand to want to keep buying raw materials even if the US and other mature economies slowed down or went into recession. And no one really knows the answer to that yet.