Base metals ended on a mixed note on Monday with an air of caution pervading the complex at the start of a fresh month, and prices not fully responding to potential upside drivers such as a tumbling dollar, firmer equities and a stream of positive US data.
Bullish US economic data arrested a mid-afternoon drift - the September ISM Manufacturing PMI data came in at 55.7 - above the expected 53.1 and building on the previous month’s reading of 52.6 - while home sales data jumped to 6.1 percent from anticipated growth of 0.2 percent. Construction spending and ISM manufacturing price data also came in better than expected at 0.8 percent and 65 respectively.
The trend in copper prices continues to remain up. Any significant price weakness in copper will be seen as a buying opportunity as copper’s fundamentals are well supported by ongoing supply restraints
On the macroeconomic front, the Dollar Index weakened after the release of US economic data which came in better than the forecasts. The data provided evidence that the world economies are recovering and this spurred risk appetite in the financial markets, leading to demand for higher-yielding and riskier investment assets.
Manufacturing in the US expanded in October at the fastest pace in more than three years, indicating that the factories will be the main driver of expansion in the coming months. Another economic data that helped to boost risk appetite was pending home sales which jumped 6.1% in September.
Fundamental prospects in the case of base metals could turn brighter as US reports positive economic growth. This is expected to provide upside to base metals in the near-term. Also, an improving economic scenario in the world’s largest economy could translate in to better demand prospects from the Western World. Supply issues in the case of Copper could continue to drive copper prices higher.
On the macroeconomic front, the US is expected to announce economic data on factory orders and total vehicle sales. The data is expected to come on the positive side and may further boost risk appetite in the financial markets, leading to higher equities and a weaker dollar index.
Copper
Copper prices are sideways with immediate support for MCX November contract seen at Rs.303.90. Further below, crucial support is seen at 300.90 levels.
Whereas resistance is seen at Rs.309.75 levels & further upwards at Rs. 312.60 levels.
Zinc
Zinc prices are sideways with immediate support seen at Rs.100.90 levels for MCX October contract whereas crucial support is seen at Rs.99.95 level. Short-term resistance is seen at Rs.103.00 whereas major resistance is seen at Rs 104.05 levels.
Courtesy: Angel Commodities
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