Base metals on MCX surged on Thursday tracking London Metal Exchange prices, which gained led by the dollar’s weakness against the euro, encouraging Euro zone gross domestic product data, and news of likely supply disruption in nickel, analysts said.
The greenback weakened following the US Federal Reserve’s decision to keep key interest rates unchanged, they said. Dollar has an inverse relationship with base metals.
“Comments by Federal Reserve that recession in the world’s largest economy is nearing an end, also lent firm support to the complex on Thursday,” said Riti Singh, analyst at Ventura Commodities. Also, Euro zone gross domestic product data for April-June shrank less than expected, analysts said.
Fund buying interest on supply concerns after Vale Inco shut its Thompson and Manitoba nickel mines in Canada for scheduled maintenance, also helped global nickel prices on Thursday.Vale Inco is the world’s second largest producer of nickel.
“Supply concerns in world nickel market due to closure of mines led to the price rise in the grey metal on Thursday,” said a Mumbai-based analyst.
On MCX, aluminium touched first upper price limit of 4 per cent, while nickel touched 6 per cent upper price limit. Copper moved up nearly 3 per cent along with zinc and lead. Tin, however, has witnessed no trade so far.
At 5.45 pm, MCX August copper contract was at Rs 307.75 a kg, up 2.70 per cent from close Wednesday. Later on Thursday, this contract is expected to find support at Rs 303.60 a kg and face resistance at Rs 312, said Prabhu.
Regarding impact of rupee against dollar on domestic metal prices, most analysts said global factors were too strong for rupee to have an impact on local prices, while some were of the view that metal prices could have gained further, had rupee not been so strong on Thursday. Rupee has an inverse relationship with base metals.
“If rupee is very volatile only then do we see it impacting the domestic metal prices or else mostly global factors play a much significant role in setting price trend in the local market,” said Singh.
