LONDON, Jun 28, 2010 (Dow Jones Commodities News via Comtex) --
Base metals closed higher Monday, but analysts predict prices could soften in the coming days as investors look to square their positions ahead of the half-year end.
The market has had a lack of direction from economic releases Monday and while it benefited from some short-covering, Calyon analyst Robin Bhar said the metals "struggled at the highs".
"This side of summer we are going to have some fairly slack demand," he said. "We are coming up to the end of the month, the end of a quarter, and the end of the first half of the year, so I think people will be looking to square their positions.
"Going forward, I think trading will be sideways at best, if not a slight drift down from here."
Standard Bank analyst Leon Westgate said base metals had managed to push on Monday in spite of a stronger dollar.
"Though, aside from copper, which has seen good two-way interest, volumes have been very disappointing," he said.
Westgate predicts, however, improved economic data in the week ahead could drive currently sidelined money back into the market.
"Although today was rather quiet as far as macroeconomic data is concerned, it is a busy week for data, building up to the U.S. Nonfarm payroll numbers on Friday," he said.
"After a recent slew of mixed/disappointing figures, a run of positive macroeconomic data--building on Friday's positive Michigan Confidence number--would likely be supportive for base metal prices and may help to encourage some of the money that has been sat on the sidelines back into the market."
June consumer confidence readings are due out Tuesday, followed by the June ADP employment report and June Chicago PMI Wednesday. May construction spending, the June ISM index and May pending home sales will be released Thursday, with the payroll numbers then due out Friday.