Aluminum prices jumped nearly two and half percent yesterday. That was the biggest single day gain after 16 February 2023. Prices sparked to the eight week high after stronger-than-expected GDP data from China data released. Which boosted optimism over a demand recovery in the country, although fears of rising U.S. rates and a stronger dollar kept gains limited.
China’s economy grew more than expected in the first quarter of 2023, indicating that an economic rebound was on track after the lifting of anti-COVID measures earlier this year. The reading also bolstered bets that a recovery in China will drive oil demand to record highs this year.
Meanwhile, industrial production missed expectations for a second straight month in March, while investment in the property sector also slowed. Prolonged weakness in the manufacturing sector could hamper a bigger economic recovery this year.
On the other hand, uncertainty over just how much the Federal Reserve will hike interest rates kept sentiment toward cautiousness. Hawkish comments from Fed officials, as well as some signs of resilience in the U.S. economy, saw markets rethink their expectations for an imminent pause in the Fed’s rate hike cycle
Focus is now on headlines of Fed speakers in the coming days, before the bank enters its pre-meeting blackout period. The Fed is set to announce its decision on interest rates on May 3, 2023.
Technical View
As per report released on 28 March 2023, Aluminum prices sparked and tested 214.55, just near to our second predicted level 215.00.
Revise upside level 218-225 in near future, if prices break and close to 215.25.
Aluminum prices bottomed out from the 22 March 2023 low and witnessed a smart recovery. Prices recovered more than 4%, since then.
Yesterday, prices witnessed 2.49% its biggest single day’s gain since mid February 2023. And it settled at 214.35 as compared to previous day’s close of 209.15.
On the above chart, Aluminum prices trading on the verge of massive resistance 215.25 coincided with 38.2% Fibonacci Retracement level, and a break and close above will create a probability for upside target 218.50-225.00.
Hence, prices expect to test first immediate resistance 218.50. And a break above 218.50 on a closing basis will open the door for next resistance 225 and above in near future.
On the downside, immediate support is seen at 207.50 and a closing below it only will expect to retreat towards immediate support 203.50-201.00.
