Last Updated : 18 March 2010 at 16:00 IST

Base metals under scanner before US economy data

SHARE THIS STORY

MUMBAI (Commodity Online): Base metals are expected to take a call from the economic data announcements from the US government today. The US authorities are expected to announce economic data on unemployment claims.

Over past several weeks, data releases from US have not been so encouraging and if the trend continues, it could dampen investor sentiments and affect the prices of the commodities.

Copper prices gained on the LME finishing the session at $7550. Constant decline in inventories since the past week is helping the copper prices to march upwards erasing the earlier losses. Inventories of the red metal declined by 2475 tonnes to reach 528,050 tonnes on the LME yesterday. Copper inventories were at its low since January 19 this year.

Nickel prices were also up yesterday touching a high of $22,370 on the LME. Nickel inventories declined marginally on the LME warehouse yesterday. The prices mainly took cues from the softer dollar and the positive sentiments in the markets. Moreover, the 8- month long strike at Sudbury in Canada is also underpinning the prices. Warehouse stocks of nickel touched 158,364 tonnes yesterday, the lowest since the end of December.

The base metal prices rallied after taking cues from the positive sentiments in the financial markets combined with the softer dollar in the initial part of the trade. The Fed’s decision to leave interest rates unchanged for a further period has led to the weakness in the low-yielding currency. The metal prices also received some support from the inventory data on the LME warehouse, which declined on a broader perspective.

Experts opined that metal prices would take cues from the economic data announcements from US later in the evening. Another concern for the metal prices is the change in interest rates in China. If the largest consumer of metals increases interest rates, it would lead to weaker demand, thus affecting the prices.

Copper prices could come under pressure as strength in the dollar coupled with macroeconomic worries could play on the downside for the metal.

For Indian bourses, Copper prices will trade with a sideways bias today with immediate support for MCX April contract seen at Rs.339.50 Further below, crucial support is seen at 336.00 levels.

Meanwhile, zinc prices will also trade with sideways bias with immediate support seen at Rs.104.90 level for MCX March contract whereas crucial support is seen at Rs.104.00 level.