Commodity Radar: Aluminium hits fresh peak as dollar slips to 4-year low. Analyst flags buying range for favourable risk-reward

Domestic aluminium prices surged 1.6% on Wednesday to hit its all-time high of Rs 325.40 on the MCX, taking cues from international prices. The rally in metal prices is backed by a weaker dollar which hit its four-year low today.

The aluminium prices on the Shanghai Futures Exchange (SHFE) surged nearly 6% and were trading at CNY 25,550 /mt around 2 pm IST while those on the London Metal Exchange (LME) were 2.4% higher at $3,289 per mt.

The U.S. dollar ‍slid to its weakest in nearly four years, aiding the metal pack. A weaker dollar ‌supports commodities ‍traded with the greenback, making it cheaper for ‍investors using other currencies.


The dollar index (DXY), which measures USD's strength against a basket of six major currencies, is down 2.8% in the past five trading sessions and hovering near the 96 mark. It has fallen 11% in the past 12 months.

Commenting on the current trends, Ajit Mishra, Senior Vice President - Research at Religare Broking sees strength in this base metal’s fundamentals

“Aluminum futures in the UK are hovering at more than three-year high, amid supply-side constraints in China, the world’s largest aluminum producer. With demand showing consistent growth, particularly from renewable energy, electric vehicles, and infrastructure, China’s limited ability to raise output has been a major bullish driver,” Mishra said.

Additionally the temporary suspensions at key smelters in Iceland, Mozambique, and Australia have further tightened the global supply, he added.

Also read: Commodity radar: Gold’s weekly RSI of 86, a red flag or strength? 5 technical triggers before making a trade

Technical outlook

The broader framework clearly indicates continuation of the upward trend in the coming weeks, Mishra said, adding that the prices are ruling significantly above the key

exponential moving averages, and also above the Upper Bollinger band level.

He sees a potential for aluminium futures to resume the upside move towards the level of Rs 330/335. There is a strong support base around the Rs 300-305 level, he opines.

Look for stability around or above Rs 305 for buying with the target objective of Rs 325-330 with stop loss below 290.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)