The base metals pack rallied on the LME on Wednesday, especially in the US session. Metal prices posted strong gains yesterday despite the absence of Chinese markets, the driver of base metal prices.
Despite no major news yesterday, metal prices were mainly supported by the sharp weakness in the US Dollar Index (DX). The DX depreciated sharply by 0.8% on Wednesday, slipping below its psychological 80 mark. The index touched a six-month low of 79.56 against a basket of currencies yesterday.
US house price index dropped by 3.3% in July from a year earlier. Prices fell 0.5% in July following the previous fall of 1.2% in June. Markets expected the index to drop by 0.1% in July. Industrial orders in the Euro zone declined by 2.4% in July as against expectations of 1.2% decline.
Copper prices rallied, gaining around 2.3% on the LME to close at $7838/tonne on Wednesday. On the MCX platform, the red metal prices gained around 1.7% to close at Rs.358.55/kg. Copper inventories rose after five consecutive declines on the LME yesterday. The red metal inventories climbed by 2,075 tonnes to reach at 382,100 tonnes on Wednesday.
Nickel prices gained marginally by 0.2% to close at $22,680/tonne on Wednesday. Prices touched an intra-day high of $22,825/tonne on LME yesterday. On the MCX, nickel prices gained by 0.4%, touching an intra-day high of Rs.1036.70/kg. Nickel inventories jumped up by 714 tonnes reach 119,592 tonnes yesterday.
OUTLOOK
On the macroeconomic front, host of economic data is expected to be released from the US today which includes existing home sales, CB leading index and unemployment claims. Apart from that, economic data from Euro zone comprising of manufacturing data, Services PMI will also influence metal prices. Economic data from the Euro zone will be announced during 2.00 pm to 2.30 pm IST.
Base metal prices will take cues from the economic updates. However, the trend in the DX continues to remain down. This factor will be supportive for the base metal prices. Weakness in the currency makes the dollar-denominated base metal prices look attractive for holders of other currencies.
Copper
Copper prices will trade with a positive bias today with immediate support for MCX November contract seen at Rs.356.50 Further below; crucial support is seen at 353.80 levels.
Whereas resistance is seen at Rs. 361.30 levels & further upwards at Rs. 364.00 levels.
Zinc
Zinc prices will also trade with a positive bias today with immediate support seen at Rs.98.50 level for MCX September contract whereas crucial support is seen at Rs.97.60 level.
Short-term resistance is seen at Rs.100.00 whereas major resistance is seen at Rs 100.90 levels.
