Informist, Thursday, Oct 12, 2023

By Ishan Rathi

MUMBAI – Futures of most base metals on the Multi Commodity Exchange of India and the London Metal Exchange fell because of strength in the dollar, as higher than expected inflation in the US increased the possibility of another rate hike by the Federal Reserve.

Minutes of the Fed's September meeting released on Wednesday showed that most participants were in support of another rate hike, which also weighed on sentiment. Higher rates increase the cost of doing business and reduces the demand for base metals.

The dollar index, which measures the strength of the greenback against a basket of major currencies, was up 0.3% at 106.09. A firm greenback makes dollar-denominated commodities such as non-ferrous metals expensive for holders of other currencies.

Data by the US Bureau of Labor Statistics showed consumer price inflation came in at 3.7% on year in September compared to market expectation of a 3.6% increase.

However, prospects of further economic support from top consumer China cushioned the fall in non-ferrous metals. For further cues, investors will await data on China's consumer price index, producer price index, and new loans and trade on Friday.

ALUMINIUM prices fell due to greater selling by commodity trading advisers as prices moved below the short-term trading average on the LME.

COPPER prices rose on hope of improved demand from China, but the upside was limited due to rising inventories with LME.

LEAD contracts traded lower as investors increased their short positions on the domestic exchange.

ZINC contracts slipped, taking cues from LME and traders raising their short positions on the MCX.

* At 1910 IST, on the MCX, the October contract of:

–Aluminium was at 203.6 rupees a kg, down 0.3%

–Copper was at 703.30 rupees a kg, up 0.2%

–Lead was at 186.0 rupees a kg, down 0.3%

–Zinc was at 220.90 rupees a kg, down 0.2%

* Outlook for the evening session on the MCX:

–Aluminium contract seen at 201.50-206.50 rupees

–Copper seen at 700.0-710.0 rupees

–Lead seen at 184.0-189.0 rupees

–Zinc seen at 219.0–225.0 rupees

End

US$1 = 83.24 rupees

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

Edited by Avishek Dutta

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