Base metals are falling from last few days. Earthquake and Tsunami in Japan also drift metal down in Asian session. Traders and investors are confused at present. Metals are technically weak at present levels. While, some investors are anticipating that metals may rebound from present levels because base metals will be needed in rebuilding Japan.
While, U.S. and China are likely to raise interest rate to curb inflation which may drag Base metals further lower. However, long term investors are waiting to buy on dips. Base metals are well supported as there is strong demand of metals and tight supply. Falling inventories at LME is also shows strong demand and supportive for metal prices.
Crude prices are falling in international markets which is a good sign for metals as inflation may ease in the future. If Crude prices remain weak or fall further, selloff in the metals may stop and base metals may stabilise at present levels.
The political crisis in Middle East and weak USD lifted Crude prices up in the last few days. Once Middle East tension resolved, then Crude prices will start falling further.
Crude has broken psychological level of USD 100 a barrel and trading below it. Crude prices last traded at $ 99.56 per barrel.
LME 3 Month Copper last traded at USD 9050 a tonne. While 3 Months Lead and Nickel on LME traded at USD 2400 per tonne and USD 25635 per tonne respectively. At LME, 3 Month Aluminium last traded at 2521 USD a tonne. Zinc 3 Month LME contract last traded at 2261 USD per tonne. All the metals are trading weak and down by approximately 1.5% to 2%.
USD is also trading strong against Euro and its other major counterparts which also put some pressure on metals.
Traders are waiting for US Retail Sales, Preliminary Inflation Expectation and Business Inventories data due tonight for further direction of base metals.