Metals Market Perspective

Base metals have broken key support levels. Copper prices again failed to hold the important pivot point of Rs. 330 on MCX and $3.50 on Comex. Copper prices are expected to face huge selling pressure on any rise towards Rs. 335. Copper prices look bearish and next expected support might come at Rs. 300 on MCX.

Last time I had mentioned an Elliott wave in copper which is now clearly violated. This means we have entered a downward move in copper. On the physical demand front, the sentiment has suffered due to falling US demand and emerging weakness in the Euro Area housing markets. The demand from Asia is still strong and has supplemented any weakness in the western markets. We should be net sellers of copper on any rebound to Rs. 326 to Rs. 330 with a risk potential at Rs. 337. Prices may touch Rs. 310 and Rs. 300 level in next few weeks.

Aluminium prices have broken down. But the overall trend still remains upward. Aluminium has been hit hard by the falling crude oil. In true sense it is just the sentiment that has gone against the bulls in aluminium. The long term trend is still pointing towards out performance in the current year. Rs. 120 is an important support for aluminium in INR terms, with $2800 being the pivot support on LME.

Important to note that Gold prices are down nearly $90 from the selling levels I mentioned in my previous updates. Next support now stands at $875. FOMC would be crucial to warrant any rebound.