Base metals responded positively to the rally in equities in the US and Europe. Copper was also helped by rumours of further production cuts and this time, the name mentioned was that of Grupo Mexico. It is just a matter of time before major copper producers come out clean on their stand on production cuts. It appears that copper industry's, for that matter entire base metals industry, only hope may be a rapid economic recovery besides production cuts. However, the extent to which copper prices moved up last week on a single rumour suggest that even modest production cuts in copper may result in significant improvement in market sentiment. Copper closed over key 1,500 dollars level and eyes the resistance band of 1,525-50 dollars which may only be pierced if supported by firmer equities or production cuts. Aluminium has made good progress in past couple of weeks although it faces tough resistance at 1,330-50 dollars band. Nickel can test 7,000 dollars in next couple of weeks if rest of the base metals keep the momentum going. Lead looks well supported at 420's dollars and any dips towards that level are likely to be bought into. Zinc in spite of cloudy fundamentals is poised for a technical bounce and during next copper rally may test 800 dollars. However, a word of caution as at this point it is all sentiment driven which can change very rapidly.
NSTL
