Base metal prices extended gains on the LME on Tuesday mainly on the back of sharp decline in the US Dollar Index (DX).
Metal prices rebounded mainly in the evening session after remaining under pressure in the afternoon trade yesterday. The DX depreciated around 0.8% yesterday to close at 78.93 towards the end of the session.
US HPI index increased at a slow pace by 3.2% in July from a year earlier. The consumer confidence index declined to 48.5 in September from the previous figure of 53.2 in August.
US Richmond manufacturing index fell to negative figure of -2 in September from the previous figure of 11 in August. Markets had expected the index to decline to 6 for this month. Economic data from China today indicated that that manufacturing index increased to 52.9 in September from 51.9 in the previous month.
Increasing manufacturing activity from the world’s largest consumer raises hopes of demand for metals.
Copper prices gained more than 1% on the LME to close at $7990/tonne on Tuesday. On the MCX platform, the red metal prices gained around by 0.8% to close at Rs.361.20/kg yesterday.
Falling inventory levels of the metal acted as a supportive factor for copper prices to rise yesterday. The red metal inventories on the LME declined for second consecutive day, falling by 2,850 tonnes to reach at 375,275 tonnes yesterday.
Cancelled warrants- the metal booked for removal from the LME warehouse decreased by 975 tonnes.
Nickel prices gained around 1% to close at $23170/tonne on Tuesday. On the MCX, nickel prices gained around 0.2%, after touching an intra-day high of Rs.1047/kg yesterday.
Nickel inventories continued to increase for fifth consecutive day. It climbed by 1,176 tonnes reach 122,208 tonnes on the LME yesterday.
OUTLOOK
There is no major economic data to be released from the US today. However, a host of economic data is expected to be released towards the end of the week which will influence the base metal prices.
The latest positive manufacturing data from China will support base metal prices to gain as the Asian tiger is the major driver of base metal prices. Moreover, weakness in the DX is also expected to prevail providing further support to the base metal prices to travel northwards.
Copper
Copper prices will trade with a positive bias today with immediate support for MCX November contract seen at Rs.358.00 Further below; crucial support is seen at 355.00 levels.
Whereas resistance is seen at Rs. 363.00 levels & further upwards at Rs. 365.00 levels.
Zinc
Zinc prices will also trade with a positive bias today with immediate support seen at Rs.97.40 level for MCX September contract whereas crucial support is seen at Rs.96.00 level.
Short-term resistance is seen at Rs.99.40 whereas major resistance is seen at Rs 100.00 levels.
