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Informist, Thursday, Dec. 19, 2024

By Ashutosh Pati

MUMBAI – Futures contracts of all base metals fell on the Multi Commodity Exchange of India and the London Metal Exchange because of increased risk aversion and broad-based sell-off across asset classes after the US Federal Open Market Committee indicated a slower pace of rate cuts in 2025. The intensified selling by commodity trading advisers also weighed on prices. 

"The Fed's hawkish shift pushed bond yields up, strengthened the dollar to 25-month highs, spiked volatility, and drove important commodity currencies sharply lower," Dow Jones quoted analysts at Peak Trading Research as saying. "This is a very bearish environment for commodity futures, and, unfortunately, there isn't much on the calendar through year-end to stem the bleeding," the analysts said.

The dollar index surged to an over two-year high of 108.27 after the Summary of Economic Projections released along with the FOMC's statement showed that Federal Reserve officials now expect another 50 bps of rate cuts in 2025, against the previous projection of 100 bps.

Additionally, the lack of detailed policy plans and the ongoing economic uncertainty in China also weighed on copper and other industrial metals, Kotak Securities said in a note. Investors now await the US core personal consumption expenditures price index data due Friday for further cues.

COPPER prices fell to a four-week low of INR 797.10 on the domestic exchange, taking cues from the LME.

ALUMINIUM prices extended decline for the fourth consecutive day as traders rolled over their bearish positions on the domestic exchange.

ZINC prices fell, tracking weakness in steel prices as the metal is used for galvanisation.

At 1808 IST, on the MCX, the December futures contract of:

–Aluminium was at INR 241.50 a kg, down 0.3%

–Copper was at INR 798.75 a kg, down 1.2%

–LEAD was at INR 177.05 a kg, down 0.4%

–Zinc was at INR 280.20 a kg, down 0.7%

Trading levels for the day on the MCX:

-Aluminium contract seen at INR 239.10-244.90

-Copper contract seen at INR 785.90-812.40

-Lead contract seen at INR 175.50-178.90

-Zinc contract seen at INR 274.30-285.40

End

US$1 = INR 85.07

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

Edited by Akul Nishant Akhoury

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