Aluminium settled up 2.7% at 121.90 was poised for a sixth monthly advance, the longest rally in a decade, on speculation of growing demand from improving economies in China and the U. S., the two biggest consumers of industrial metals. Aluminium prices were also likely supported by the news that EU governments had agreed upon trade and investment restriction upon Russia that mark a major escalation of sanctions against the nation.

The fresh sanctions initially pressured the risk-related base metals lower, but Russia is one of the world's largest producers of aluminium, and the move underscored risks to supply of the metal from the nation. An official gauge of China's factory output due tomorrow is forecast to show the highest reading this year at 51.4, up from 51 in June. Support also seen after the update that Aluminium's Global demand will exceed supply by 579,000 tons this year, swinging into a deficit after seven years of surplus, Goldman Sachs Group Inc. said in a report on July 23. Most metals within the complex took support from US Commerce Department data released during the session which showed the world's largest economy's gross domestic product, advanced at a seasonally adjusted annual rate of 4.0 per cent in the second quarter.

This beat economist forecast of 3.0 per cent growth. The numbers stoked hopes that a recovering US economy would continue to show robust demand for industrial materials such as the base metals, use in a range of sectors such as construction and manufacturing. Technically market is under short covering as market has witnessed drop in open interest by -19.55% to settled at 3542, now prices getting support at 119.4 and below same could see a test of 116.9 level, and resistance is now likely to be seen at 123.2, a move above could see prices testing 124.5.

Trading Ideas:

Aluminium trading range for the day is 116.9-124.5.

Aluminium gains aided by positive news that euro zone's economic sentiment rose unexpectedly to 102.2 and US GDP expanded at a 4% annualized rate in Q2

Aluminium also supported by the news that EU governments had agreed upon trade and investment restriction upon Russia.

Aluminium daily stocks at Shanghai exchange came down by 999 tonnes.