The base metals complex traded higher on the LME on Wednesday mainly on the back of dollar weakness and news which indicates that China has entered the market and that buying of the metals have provided support for prices.
However, rising concerns over the global economic recovery coupled with weak global market sentiments capped further gains in base metal yesterday.
Zinc
Zinc was the top gainer of the day as the metal surged more than 1.5 percent on the LME as well as on the MCX. On a w-o-w basis, zinc inventories declined around 1 percent to 874,475 tonnes on Wednesday on the LME warehouse.
On a month-to-date basis, the metal inventories witnessed a sharp fall of almost 2 percent from the level of 889,325 tonnes on 29th July 2011. This along with dollar weakness acted as a positive factor for zinc prices.
Copper
Following zinc, copper gained 1.2 percent on the LME and around 1.3 percent on the MCX to be the second best performer on Wednesday. China’s buying of the metal has led drawdown in copper inventories which supported prices in yesterday’s trading session.
Outlook
We expect base metals to trade lower today mainly on the back of escalating concerns over global economic recovery which would lead to rise in risk aversion in the global markets.
Courtesy: Angel Commodities
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