Aluminium market rises on short covering, open interest drops 6.57%

Aluminium settled up 0.54 per cent at 103.15 as support seen from ShFE aluminium which climbed 1.5 percent rallied on Tuesday on hopes that China would unleash fresh easing measures to kickstart its economy after January trade was dragged down by faltering growth in global markets. Support also seen after the Asian shares consolidated to gains as the Chinese currency and shares show signs of stability, oil prices rebound, and solid U.S. consumption data suggest last week's sell-off was overdone.

Overnight trading was light with U.S. markets closed for the President’s Day holiday. Metals has been well-supported in recent weeks amid indications global economic and financial headwinds could make it tough for the Federal Reserve to raise interest rates as much as it would like this year. Market participants have all but priced out any rate hikes this year, while the Fed is anticipating four more. A gradual path to higher rates is seen as less of a threat to prices than a swift series of increases.

In the week ahead, market players will be turning their attention to Wednesday’s minutes of the Fed’s latest policy meeting for fresh indications on whether the U.S. central bank will raise interest rates at all this year. Investors will also be looking ahead to U.S. data on inflation for further clues on the strength of the economy. Technically market is under short covering as market has witnessed drop in open interest by -6.57 per cent to settled at 2049 while prices up 0.55 rupee, now Aluminium is getting support at 102.7 and below same could see a test of 102.1 level, and resistance is now likely to be seen at 104, a move above could see prices testing 104.7.