The uncertainty over the US-China tariff deal and global growth worries are also proving to be negative for the lead prices.
Precious metal complex reversed its gains last week as the investors rushed towards safe haven assets like bonds and US currency.
Precious metal prices lost almost more than 1 percent on account of rising dollar leading to sell-off in the dollar priced commodities.
Base metal prices traded mixed Copper, Nickel and Aluminum held on to its gains while Lead and Zinc prices fell by 2 percent.
Investors were disappointed with the indecisive and delay in the outcome from US-China trade meeting. However, another round of talks between the two nations is expected to begin this week.
Major dramatic price moves are happening in the energy complex with both Crude oil and Natural gas prices moving lower by 5 percent last week.
Crude oil prices were surrounded by dark clouds on uncertainty over growth outlook which sidelined the OPEC production cuts. Natural gas prices were pushed lower on forecasts of warmer weather in US and lower-than-expected storage withdrawals despite last week's frigid weather.
Lead prices started the year on a strong foot by rising more than 11 percent in January on account of optimism over US-China trade deal. The lead demand is more dependent on the performance of the automobile sector.
With the declining auto sales in the United States and China, we believe the lead demand to remain subdued in the coming months.
As per the ILZSG, the global lead market is forecasted to remain in surplus in 2019 on account of increasing mine production and falling demand in China. Last week's huge decline in LME Lead cancelled warrants raised over-supply concerns in the market.
Going forward, we expect Lead prices to witness selling pressure on fears over demand growth and higher supply creating a surplus scenario in Lead market. Also the uncertainty over the US-China tariff deal and global growth worries are proving to be negative for the lead prices.
Overall, we expect LME Lead prices to trade lower towards $1,950 per tonne during the next quarter 2019. Currently LME Lead prices are trading at $2,100 per tonne.
The author is Commodity Analyst at Narnolia Financial Advisors Ltd.
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