Copper may advance early next week on the positive US economic data, which, many feel, would improve global demand for the metal used by the housing and automobile sectors. However, the red metal may see a steep correction during the later part of the week on profit booking by institutional investors.
“Technically, the metal has the potential to reach $4,200 per tonne from the current level of $4,000 on bargain hunting by funds, supported by a spurt in the global economic index. But profit booking may hamper the sentiment to bring down the current recovery in copper prices,” said Navneet Damani, a base metals analyst at Anand Rathi. The metal had hit a record of $8,940 on July 2 on the benchmark London Metal Exchange (LME).
On the MCX, copper for near-month delivery may face resistance at Rs 212 per kg from the current level of Rs 205. But it is likely to fall in tune with international markets later to settle at Rs 201.
| RISE IN THE RED METAL |
| * In February, durable goods sales in the US rose unexpectedly, while home sales advanced from a record low |
| * Many believe that the positive US economic data will translate into an improvement in global demand for copper, which is used by the housing and automobile sectors |
| * The metal has already gained 19% in March on speculation that government spending in the US and China may raise demand |
According to the latest weekly report by the commodity broking firm Angel Broking, since the prices could not close beyond the strong resistance at Rs 209, a correction may be expected around its initial support of Rs 200 and then towards its strong support level of Rs 194.6. It may find resistance at Rs 208-210 and a strong resistance around Rs 213-215.
Meanwhile, the red metal has gained 19 per cent this month on the speculation that government spending in China and the US, the world’s two biggest metal users, may help in recovery, resulting in a rise in the demand for copper. On Friday, however, copper futures for May delivery fell 2.2 per cent to settle at $1.836 a pound on the Comex division of the New York Mercantile Exchange.
Though the metal is currently trading around its five-month high. A report by Geojit Comtrade attributed the price rise to a slightly higher reading in the US business confidence followed by a better-than-expected housing and consumer durables data. A fall in inventory level monitored by the Shanghai and LME warehouses has also put pressure on the sentiment.
In February, durable goods orders in the US rose unexpectedly, while home sales in the world’s largest economy advanced from a record low. Copper is an indicator of the state of the world economy and sets the pace for other industrial metals because an average of 181 kg is used in homes and 2.3 kg in manufacturing a car.
Among other LME-traded metals during the week, aluminum slumped 2.74 per cent to $1,423 per tonne, while nickel plunged 4.82 per cent to $9,655 per tonne. In contrast, zinc found good support from galvanised steel manufacturers to rise 3.28 per cent to $1,312 per tonne.
