Domestic metal futures slip

Domestic metal futures slipped on Monday following a massive liquidation on the London Metal Exchange (LME), led by copper and zinc.

In recent times, metals have been climbing sharply, with many of them trading at all-time highs. The correction may continue for a day or two, in the wake of depreciation in the dollar and weakness in the indices of the emerging and European markets.

At 7:45 pm on Monday, MCX Copper August traded at Rs 377.90 a kilogram compared with the previous close of Rs 389.15, MCX Aluminium May at Rs 139 a kg against Rs 146.95, Zinc May at Rs 161.70 a kg against Rs 172.85 and Lead June at Rs 59.50 a kg against Rs 61.15.

MCX gold June traded at Rs 10,336 per 10 grams compared with Rs 10,648, a fall of Rs 248. Silver June was at Rs 20,780 a kg against Rs 22,107.

The fall was in step with a significant correction in the prices of metals on the LME, where copper saw the biggest fall since October 2004 after seeing a 93 per cent rise so far this year.

Zinc posted the largest intra-day fall since 1997, erasing about 90 per cent seen so far this year. The LME copper three-month contract saw a 9 per cent fall of $760 to $7,700 a tonne. The Zinc three-month contract fell $450 to $3,210 a tonne, a drop of about 12 per cent.

"The global scenario of rising interest rates, especially in the US, Japan and Europe, is indicating towards a liquidity crunch. This allowed funds, holding on to metals, book profits," said Si Kannan, senior analyst with Sharekhan Commodities.

Tarun Sisodia, head of equities with Anand Rathi Securities, said, "The weakness in the Indian indices has been going on for the last three days and may continue for another day or so as the US Federal Reserve hiked interest rates."