EPIC COMMODITY UPDATE 30 AUGUST 2013 : ALUMINIUM

Aluminium settled up 0.99% at 121.85 despite of encouraging US employment and GDP data fuelled apprehension that the US Federal Reserve may bring QE3 to an end. As a result, the US dollar index climbed to near 82, dragging base metals prices down. Overall Aluminum prices are likely to remain weak as a large structural surplus more than makes up for strong demand. The firm estimates global aluminum demand growth in 2013 at 6%, in line with the long-term trend. But unless output falls, prices will remain subdued.


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Nickel settled up 1.02% at 950.80 recovered in the late session as worries over possible military strike against Syria remained overnight. On the other hand, US Q2 GDP grew at an annualized 2.5%, up from the preliminary reading of 1.7%. Initial jobless claims in the US dropped 6,000 to 331,000 in the week ending August 24. Inspiring data pushed US stocks higher. However, the US dollar index also strengthened, weighing commodity prices down. The market's focus turned to the QE3 issue again. US and its allies took a mixed attitude whether to take military attack on Syria. Only France expressed its supports, while UK is attempting to resolve political hinders, and Germany said the issue should be resolved by the United Nations Security Council. US Congress required that Obama should not attack Syria without authorization from the Congress, with market concerns over Syria easing, and petroleum and gold prices falling. On the other than, the number of US initial jobless claims last week was 331,000, down 6,000 from a week earlier, showing US job market continues to improve; annualized US Q2 GDP was revised to a growth of 2.5%, higher than the forecast of 2.2% and initially 1.7%. Besides, it was reported Summers will likely take the place of Ben Bernanke, triggering expectations that the Fed will end QE3 in September, pushing up the US dollar index to 82.


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Zinc settled up 0.78% at 128.90 recovered in the late session while pressure seen after Germany's economic data released overnight was depressing, and since situations in Syria were still in chaos, the euro against the US dollar plummeted by 0.73%. US positive GDP and initial jobless claims data enhanced market speculations that the Fed will scale back QE3 soon, lending support to the US dollar index, rebounding to 82, gaining back near-four-week losses, and weighing down zinc prices. Market fears about situations in Syria alleviate, with non-US dollar currencies falling, which supported the US dollar index to rebound, breaking through the 20-day moving average, dipping to a new low of $1,924/mt since mid-August. US positive initial jobless claims strengthened expectations that US non-farm employment data to be released next week will improve, which raised expectations of an end to QE3.

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Copper settled up 0.57% at 486.90 recovered from the day's low in the late session after strength in the U.S. dollar and an economic report that reinforced ideas of many that the Federal Reserve may still taper quantitative easing next month. Prices lost further ground yesterday as the market was hit by fears over the likelihood of the so-called tapering of the Fed in their next September meeting, the sentiment sent the USD higher and as a result put pressure on metals prices. Although it was not the first time this week that we got upbeat numbers, yesterday's GDP data was significantly higher than expected and of higher importance as far as the Fed is concerned. The market's focus turned to the QE3 issue again. US and its allies took a mixed attitude whether to take military attack on Syria. Only France expressed its supports, while UK is attempting to resolve political hinders, and Germany said the issue should be resolved by the United Nations Security Council. US Congress required that Obama should not attack Syria without authorization from the Congress,


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Silver settled down -0.42% at 55542 as pressure seen after rupee rebounded on Thursday from a record low as the central bank sold dollars to oil companies, while policymakers scrambled for more lasting solutions to what some investors are describing as a crisis. Also Silver on Comex eased as the probability of an immediate US strike on Syria faded, and strong US data rekindled fears of an imminent scale-back of the Fed's stimulus measures. Silver prices struggled for upside traction due to a slightly stronger US dollar, also market participants remained cautious amid concerns over an impending US-led military strike against Syria, following the alleged use of chemical weapons. On Wednesday, President Barack Obama said the US has concluded that the Syrian government carried out a chemical weapons attack near Damascus, but added that he had not yet made a decision about whether to intervene militarily. Meanwhile, the US was to publish revised data on second quarter growth and the weekly report on initial jobless claims,


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Gold settled up 0.73% at 33650 in yesterday's volatile session, Gold opened at 33564 level dropped sharply to test 33051 level as Indian rupee rebounded on Thursday from a record low as the central bank sold dollars to oil companies, while policymakers scrambled for more lasting solutions to what some investors are describing as a crisis. But again recovered to the intraday high of 33862 before settled at 33650 while Comex Gold dropped from a three-month peak on Syria's tension as economic data from US may add to the case for the Fed's tapering, also technical also showed an upcoming reduction in prices. Pressure seen after US economic news out Thursday, the U.S. Commerce Department said U.S. GDP grew 2.5% in the Q2, well above the initial reading that showed growth of 1.7%. Meanwhile Obama told on Thursday that a military strike against Syria was in their interest following a gas attack against Syrian civilians last week, and Britain said armed action would be legal. But intervention appeared likely to be delayed until U.N. investigators report back.


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