At a time when gold prices are relentlessly moving up, the overall trend in base metals?which usually follows gold?as largely been a mixed bag. While nickel prices are heading southwards, copper, zinc, aluminum and steel are looking up and firm.

Experts feel that base metals are overvalued in terms of their prices basically driven by investment demand and would see downward correction in their prices after December. Of late, weak dollar has been the reason for pushing up their prices despite low demand from countries like China. ?Recovery in the base metals has been owing to stimulus packages and government spending. It has been a investment-driven demand. Ample liquidity in the system, low interest rates, possibility of inflation picking up in the coming months and weaker dollar have been a few reasons driving up the base metals prices,? said Praveen Singh, commodity analyst at Sharekhan.

Copper for instance has gained sharply since the beginning of this year on the backdrop of huge imports in China and has jumped 112% so far this year. However, due to slowdown in imports, prices are expected to be volatile.

Since September, copper stock prices have been rising on the LME mainly driven by expectation of pick up in demand from developed countries resulting into re-stocking.

?China imports fell last month and the country has enough surplus stock, implies it would not need any copper imports for at least a year. Also, the arbitrage of opportunity between LME and Shanghai prices which was pushing up the prices does not exist anymore. Despite weak fundamentals, the possibility of rise in copper prices cannot be ruled out and it might reach Rs 350 on MCX but sustainability seems bleak. Sooner or later copper can fall to Rs 280,? added Singh.

Unlike copper, zinc has been flat in terms of prices. Due to the rising demand from the galvanised steel sector this metal has gained interest and has touched Rs 115 level on the MCX. However, after December the prices are expected to come down to Rs 90 due to absence of desired recovery in economy and high-level inventory in the system.

?On the downside, risks remain in the form of a huge surplus in the case of zinc amid weak demand but it not be supported as zinc prices will also take cues from lead,? said Angel Broking in a report.

Interestingly, lead has performed the best in last one year and has risen from Rs 38 in 2008 to Rs 125 on the MCX this year owing to strong recovery in the auto sector and supporting demand from lead batteries. It is likely to fall on MCX after December. Its LME stock is on a six-year high and China has its stock piled up which makes the metal volatile on MCX.

Aluminum prices are receiving support from the market dynamics. ?Aluminum contracts have reached almost Rs 97 this year and can further go up to Rs 102-105 by the year end. Prices are firm due to good demand that is reflected in its calcite rage of 2.8-2.9%. Prices are supportive as more than 60% of metal is locked in the financial deals and would not be available till May 2010. Also, production cost may go up due to cost related issues in South Africa and China as it is highly power intensive produce,? said Dharmesh Bhatia, senior technical analyst, Kotak Commodity.

While the above base metals are fighting for their existence, nickel is plummeting and experts are bearish on the metal and are expecting it to touch the Rs 650/kg level. As demand from stainless steel sector accounts for more than two-thirds of nickel off take, a slump in consumption has lead to stock piling. ?Nickel restocking could rise due to increase due to stainless steel restocking. But these expectations have taken a back-seat as LME nickel inventories are rising. The speed at which western stainless steel producers start restocking would determine the prices in the coming months,? an Angel Broking report said.