Aluminium settled down -1.8% at 109.20 as the US dollar index dramatically rebounded for a third straight trading day, supported by hawkish comments by the US Federal Reserve officials. Last Friday, two hawkish Fed officials Plosser and Lacker and Fed chairman Bernanke endorsed the decision to scale back the Fed's QE stimulus program in December's interest rate meeting and affirmed the current recovery in US economy. Besides, Plosser argued that the US would confront high inflation risks if US banks lent out their USD 2.4 trillion of excess reserve too soon, while Lacker expected inflation to rise back to 2% in coming one to two years. The inflation worries left them inclined to taper off the US Fed's QE monetary policy earlier, sending the US dollar index up around 4%. In China, the December PMI in non-manufacturing sectors dropped to 54.6, a fresh four-month low. Enterprises thus had lower expectations towards Chinese economic prospect, further indicating that Chinese economy, the second largest in the world, lost steam at the end of 2013. Bernanke said the U. S. economy should continue to improve in
2014, but reiterated that monetary policy will remain "highly accommodative" for as long as needed. However, the broadly stronger U. S. dollar held gold's gains in check. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was last up 0.40% to 81.04. Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies. Now Aluminium is getting support at 108.5 and below same could see a test of 107.7 level, And resistance is now likely to be seen at 110.6, a move above could see prices testing 111.9.

Trading Ideas:

Aluminium trading range for the day is 107.7-111.9.

Aluminium ended lower weighed down by downbeat Chinese manufacturing PMI and a stronger US dollar.

Two Fed officials and Fed Chairman expressed their support for Fed's QE stimulus program in December's interest rate meeting and affirmed the US recovery.

Aluminium weekly stocks at Shanghai exchange came up by 5006 tonnes