Commodity Trading Tips for Aluminium by Kedia Commodity

Ajay Kumar Kedia 31 July 2013

Aluminium yesterday settled up 1.01% at 105.50 as support seen after Rupee fell below the key psychological level of 60 to the dollar to a three-week low on Tuesday, posting its biggest fall in a month, as the central bank kept interest rates on hold and failed to announce any additional steps to defend the currency. While the US dollar index rose sharply overnight on expectations that the US Federal Reserve wind down QE3, weighing base metals down. Market are looking for the clues from the news that the millions of tonnes of aluminium stockpiled by Goldman Sachs and Glencore have led to claims that the firms have used their dominance to control prices of the metal for their own gain. Brewer Miller Coors last week said the US Senate that inflated aluminium prices were costing consumers USD 3 billion a year, putting the focus on the stockpiles held by the Wall Street investment bank and the world's largest commodity trading firm. Together, the two firms are estimated to control two thirds of the world's stockpiles of aluminium, with Goldman Sachs holding 1.5mtns while Glencore has 2mtns in its warehouses. Aluminium prices have more than doubled in the past three years. At the same time, the amount stored in warehouses has hit a record 5.5mtns. The majority of the metal held in each of the firms' warehouses is owned by their clients which include hedge funds. But regulators have begun a crackdown on trading by big banks in commodity markets. The move has been given added impetus by recent trading scandals, such as Libor rigging and the London whale losses at JP Morgan, that have increased the scrutiny on the activities of investment banks. Last week, JP Morgan which has one of the largest commodities trading businesses in the world, said it would be quitting the business. Now technically market is getting support at 104.55 and below same could see a test of 103.6 level, And resistance is now likely to be seen at 106.2, a move above could see prices testing 106.9.