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Informist, Monday, Aug 26, 2024

By Sandeep Sinha

MUMBAI – Futures contracts of most base metals rose on the Multi Commodity Exchange of India because of improved risk appetite and a rally in the equity market after US Federal Reserve Chair Jerome Powell hinted at an interest rate cut. The sentiment was further aided by a persistent decline in the dollar index, which makes dollar-denominated commodities, such as base metals, cheaper for holders of other currencies.

Powell in his keynote speech at the central bankers' conference in Jackson Hole on Friday said the "time has come" to cut interest rates. "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," Powell said.

Earlier in the day, the dollar index, which measures the strength of the greenback against a basket of six major currencies, slipped to a fresh 52-week low of 100.53. According to the CME FedWatch tool, markets are now pricing a 63.5% chance of the Fed cutting interest rates by 25 basis points in its September meeting.

However, volume is on the lower side due to a lack of fresh cues from the London Metal Exchange as it is shut today for the Summer Bank Holiday in the UK.

The further upside in industrial metals was also restricted by weak economic data from Germany. Germany’s Institute for Economic Research Business Climate Index slipped to 86.6 in August from 87 in July, the fourth straight month of decline. "The cyclical hope that grabbed the German economy in the first months of the year has disappeared, mainly due to a weaker global economy but also because of fears of a cooling US economy, ongoing geopolitical tensions and domestic policy uncertainty," ING Economics said in a note.

ALUMINIUM prices rose because of short-covering of positions by traders on the domestic exchange.

COPPER prices gained as traders rolled over their bullish positions on the domestic bourse.

LEAD contracts traded lower as market participants trimmed their long positions on the MCX.

ZINC contracts traded higher on tight supply and seasonal uplift in demand in coming months.

At 1528 IST, on the MCX, the August futures contract of:

–Aluminium was at 231.0 rupees a kg, up 0.5%

–Copper was at 799.60 rupees a kg, up 0.1%

–Lead was at 188.35 rupees a kg, down 0.6%

–Zinc was at 269.10 rupees a kg, up 0.7%

Outlook for the evening session on the MCX:

–Aluminium contract seen at 226.00-234.00 rupees

–Copper seen at 796.00-804.00 rupees

–Lead seen at 188.00-191.00 rupees

–Zinc seen at 265.00-270.0 rupees

End

US$1 = 83.90 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Manisha Baxla

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