Commodity Radar: MCX aluminium futures gain on weak dollar. See top triggers, outlook and trading strategy here

Aluminium prices were up in Tuesday’s trade, aided by weakness in the greenback. The MCX July aluminium futures hit the day’s high of Rs 249.95 per kg, taking cues from the international prices.

The aluminium contracts with a month expiry were on the LME gained 0.3% to $2,605 while on the SHFE, aluminium prices were up by 0.41% to 20,635 yuan in the day’s trade.

The dollar index (DXY) which measures USD’s strength against a basket of six major currencies slipped below the 97 mark. Over the last five trading sessions, DXY has declined by 1.3% taking the year-to-date fall to 11%.

A lower DXY makes dollar-denominated commodities cheaper for importers using other currencies.

Ajit Mishra, Senior Vice President – Research at Religare Broking said that aluminum has begun the week on a positive note and aluminum futures on LME have reached the highest level since March as risks to raw material supply were combined with bets that manufacturing demand will remain robust this year.

Also Read: US dollar’s 10% fall in H1FY25 is its worst since 1973: Report

Tech View

Mishra noted MCX aluminium to be trading with a positive bias since the last 6 consecutive weeks, indicating the inherent strength in the market. “The ongoing copper rally adds to the positive tone in line with the respective positive fundamentals of aluminium. Moving forward, we can observe aluminium maintaining the trend of higher lows and higher highs,” he added.

Aluminium trading strategy

The Religare Broking expert has placed immediate support near Rs 245, with a further strong base between Rs 240 and Rs 242. On the upside, the first hurdle lies at Rs 255, and if prices break above this resistance, traders may see a further rally.
He suggests initiating a long position at Rs 247-248 levels for the target price of Rs 255 and Rs 265, keeping a stop loss of Rs 241.

Trigger: Trump tariff deadline

US President Donald Trump‘s three-month tariff pause will end on July 9 and that could keep commodity markets jittery. He has indicated that an extension to the deadline is unlikely.

From the Indian standpoint, the discussion between the governments of two countries are ongoing. Donald Trump has indicated that “very big deal with India expected”.

Also Read: Commodity Radar: Sell gold at Rs 93,000 as more cracks seen after Rs 5,600 fall from peak

The 8-day deadline looms before 26% reciprocal tariffs hit exporters on July 8. A failure to strike a deal could raise costs for Indian auto parts, iron, aluminium exports under sectoral tariffs. 25-50% sectoral duties still hit auto parts, iron, aluminium without new concessions.

(Inputs from agencies)

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