Resistance seen at 324 for MCX Copper
Commodity Online | September 22 2016
UPDATED 13:54:22 IST

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Copper on MCX settled down -0.51% at 322.70 retreated from the earlier gain's on profit-taking pulled the commodity from four-week highs ahead of a key U.S. Federal Reserve policy meeting later in the day. As expected the U.S. central bank kept interest rates unchanged at 0.25 percent to 0.50 percent, but could hint at a rate hike in December, which would strengthen the dollar and pressure metals.

A higher U.S. currency makes dollar-denominated commodities more expensive for non-U.S. firms, a relationship used by funds to generate buy and sell signals for industrial metals. But as indicators improve from the world's top metals user, China, it appears more likely that January marked a floor for prices, as the latest data points confirm that Chinese construction activity remains in a positive trend. In addition to the Chinese economic data released since last week, the improvement in China’s real estate market also supported copper prices. China is the world’s largest consumer of copper, and the country’s industrial production and real estate trends influence the price and demand trends of copper.

According to data reported by the International Copper Study Group (or ICSG) on Tuesday, September 20, there was a deficit of 306,000 metric tons of refined copper balance in the first six months of 2016. This is close to a seasonally adjusted deficit of 227,000 metric tons. Despite this supporting data, a weaker dollar, and supporting Chinese economic data, copper prices were weaker on September 21 amid profit taking. Now technically market is getting support at 321.8 and below same could see a test of 320.9 level, and resistance is now likely to be seen at 324, a move above could see prices testing 325.3.

Trading Ideas:
--Copper trading range for the day is 320.9-325.3.
--Copper retreated as profit-taking pulled prices from highs ahead of a key U.S. Federal Reserve policy meeting.
--China’s import of unwrought copper and copper alloy rose 1.5 percent year-on-year but fell 3.2 percent month-on-month to 300,000 tonnes in August
--All base metals were in deficit in January-July, with the copper market undersupplied by 151,000 tonnes, the World Bureau of Metal Statistics (WBMS) said.

Courtesy: Kedia Commodities