A strong dollar to weigh on LME Aluminium, money supply tightens in China

<p>LME aluminium after diving overnight on Monday moved above the 10 and 20-day moving averages to close at US$1,766.50/mt. The price fall was in tandem with other base metal futures traded on the exchange. The US long-term government treasury rate increased over market expectations of a possible Fed rate hike later this year. As a result, dollar index rose forcing capital out of the emerging markets. The strengthening dollar, in turn, put downward pressure on the base metal prices thereby reining in their bull run. <br /><br />As per SMM forecast, LME aluminium will move between US$1,730-1,760/mt on Tuesday, November 29. The 3-month buyer price of aluminium as on November 28, stands at US$1,768/mt. The LME official opening stock is estimated at 2131750mt. <br /><br /><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/LME%20prices%20graph%201(1).jpg" alt="News" width="517" height="226" /><br />The People&rsquo;s Bank of China raised capital cost; monetary policy in and outside China is expected to tighten. SMM thinks, investors should be wary of risks after overbought of base metals. <br /><br />Aluminium traded on Shanghai Metal Exchange closed at US$2,121/mt on Monday, and opened at US$2,077/mt on Tuesday, November 29. Aluminium futures traded on Shanghai&nbsp; Futures Exchange, SHFE 1702 aluminum is predicted to test support at the 20-day moving average and will range at US$1,959.11-2,002.64/mt, predicts SMM. <br /><br />{googleAdsense}<br /><br />Following graph shows the price movement of aluminium A00 ingot as surveyed by SMM:<br /><br /><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/SMM%20aluminium%20price%20graph%202.jpg" alt="News" width="500" height="210" /><br />&ldquo;Most base metals fell back in overnight trading, and in the short run, investors should pay attention to money supply, which serves as a major driving factor, in addition to a strong dollar,&rdquo; SMM says.&nbsp;</p>