Commodity Trading Tips for Aluminium by KediaCommodity

Ajay Kumar Kedia 29 July 2013

Aluminium yesterday settled up 0.19% at 104.20 after US Consumer Confidence Index jumped to a 6-year high at 85.1 in July, but this failed to give a great boost to investor sentiment. This is because the IMF urged greater clarity from the US Federal Reserve over its QE3 exit stance. A lack of Fed clarity will lead to a spike in borrowing costs that could jeopardize US and global economic recovery. Slowing Chinese economy also triggered worries over sagging demand from the world's top metal consumer, weighing commodity prices down. LME aluminum retreated and closed at USD 1,798.5/mt, down USD 25.5/mt or 1.40%. Positions decreased 954 lots to 737,359 lots. LME aluminum inventories increased 19,150 mt to 5,483,175 mt. Aluminum prices will drop on bearish sentiment due to concerns over China's economy and since investment banks lowered their expectations of US economic growth, and since Morgan Stanley exited spot trading market. Base metals prices were affected by concerns over China's demand. The list of outdated capacity elimination in 19 industries was released, and the market was concerned slower Chinese economic growth and sliding manufacturing will reduce demand for base metals. Besides, investment banks are selling spot base metals, and JP Morgan announced last Friday it would seek for strategic substitute for spot commodity business, including selling and quitting spot commodity business, or implement strategic cooperation with those business, which pushed down base metals prices. Technically market is under short covering as market has witnessed drop in open interest by -1.62% to settled at 4425 while prices up 0.2 rupee, now Aluminium is getting support at 104 and below same could see a test of 103.8 level, And resistance is now likely to be seen at 104.4, a move above could see prices testing 104.6.