Lead – Will expect to outperform in near future

Lead prices turned positive as softer-than-expected U.S. inflation data spurred bets on an early rate-hike pause by the Federal Reserve. Further, better than expected trade data of China also supported recent gains.

According to data from the Bureau of Labor Statistics on Wednesday. The consumer price index for the month dipped to 5.0% from 6.0% in February on an annual basis. Economists had projected that the reading would fall to 5.2%. It was the smallest 12-month increase since the period ending in May 2021. Yet still higher than the Fed’s 2% target.

Today, China posted a better-than-expected trade surplus in March. Aided largely by an unexpected rebound in exports on an improvement in overseas demand. While imports also contracted less than expected.

The reading, which saw exports break a four-month declining spree, comes amid some improvement in offshore demand for Chinese goods. But a bigger recovery is still expected to remain limited, amid worsening economic conditions across the globe.

Still, the improvement in exports saw China’s trade balance fall less than expected to a surplus of $88.19 billion in March. From a record high of $116.88 billion in February. The reading was much higher than expectations of $39.20 billion.

Chinese imports also fell a less than expected 1.4% in March from the prior year.Compared to expectations for a drop of 5%, and February’s decline of 10.2%.

The better-than-expected trade data points to some improving prospects for the Chinese economy. As it reemerges from three years of anti-COVID disruptions. The manufacturing sector, which is a bellwether for the broader economy, is likely to benefit from improvement in offshore demand.

Increased government spending, to shore up the economy, is also expected to help support growth in the coming months. After the government vowed to shore up domestic spending in the wake of a COVID-induced slowdown, which may increase demand for the base metals also.

Technical View

Since the start of 2023, lead prices have been trading in a downward trend. Prices lost almost 3% from the January peak of 193 and made 179.50 in the last week. Now prices have stalled their falling trend, and recovered 1.41% on a weekly basis.

On the weekly chart, prices consolidating in between the range of 185-180.00 and forming a pennant pattern on the chart which is creating a probability for bullish momentum in near future.

Further, RSI 14 and 9 SMA is treading on the verge of bullish crossover.

However, it would need to break above 183.90 levels in order to test 186.00-190.00 next resistance.  Alternatively, price may retreat towards consolidation support at 180.00-178 again.

Further, a weakness in the dollar index amid bets on an early rate-hike pause by the Federal Reserve. And favorable trade data from China may support metal prices in the near future. 

However,  overall global jitters still persist which may hold some volatility.