Continuous selling is being seen in base metals. Base metals are vulnerable for further profit booking and there is more room for base metals to go down from present levels. Copper prices are likely to fall further and may test levels below 9000 USD mark. Lead prices also likely to correct further and may touch 2350-2200 levels in the next few trading days.
Base metals have risen by 2-3 percent in last two weeks. The recent bounce in base metal was due to expected reconstruction demand from Japan, the third world’s largest economy. Among base metals, Lead was the out performer with a gain of more than eight percent in last two weeks.
Metal complex may bounce on bargain buying but any rise may be short lived and could be selling opportunity for short term. Positional traders can sell metals on every rise with the proper stop loss. Base metal prices are likely to fall further and may give 3-5 percent correction from present levels.
Middle East problem and worsening debt problem in Europe may trigger further sell off in base metals ahead.
Crude prices are hovering around 105 USD a barrel which is a concern that global economic recovery may slow down due to inflation worries.
Physical market of base metal is also weak which is also a bearish signal for metal complex. Weakness in Asian equity markets also put some pressure on metal prices at present.
Metals may find its direction from global equity markets and currency movements in the next couple of weeks. Traders are eyeing on US, Personal Income, Personal Spending and Pending Home Sales data due tonight.