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Set for a pullback?
At this stage in the rally, metals might seem ripe for consolidation, according to Hill, who remains upbeat on the sector's prospects.
"We see a compelling case for higher metals earnings into 2007 and multiples expansion along the way," he said.
Earlier, Merrill Lynch increased price targets for base metals, arguing that a structural shift in the cost base of producers has raised the minimum price needed to justify new project approval.
While conceding that a "large" percentage of these increases in operating cost increases are cyclical in nature, Merrill analyst Daniel Fairclough said that he estimates about 25% of the increased costs are structural, such as for energy and labor, and "will prove difficult to remove in the long term."
Merrill's lifting long-term forecasts for copper prices by 20%, aluminum prices by 15% and nickel prices by 23%.
"Consecutive closes above $600 will certainly do wonders for the outlook for gold, and consecutive closes above $13 in May silver would keep that market on track as well -- in spite of its severe