LONDON, Nov 15: Base metals continued to stage a technical downward reaction to this week’s explosive short-covering rally during Thursday London Metal Exchange (LME) pre-market trading, although buyers defended the lows.

Analysts said a lack of consumer demand and trade buying at the height of the rally meant that fund-led buying lacked follow-through. More losses may be seen before the metals can stage another swing upwards, they said.

The market has gone up such a long way in a short time vertical really but if there is no follow-through they could drift back, a trader said.

However, the mood has changed in the complex as business has picked up and prices have risen, and some fresh buying is starting to emerge, others said.

Metals have been bought this morning as speculators look to establish new longs in anticipation of a continuation of this weeks rallies, broker IFX said in a daily report.

Copper eased to around the $1,460 level at one stage in early trading, but then moved back up to $1,469/1,472 a ton still $11 down from Wednesday’s overnight kerb close, and well off the $1,515 2-1/2 month peak hit yesterday.

Copper has been supported by the production cuts, and that may well stop people selling it, the trader said.

More production curtailments may be forthcoming as the price drifts off, which should further strengthen the case for another strong techncial rally. Support is expected around $1,455/1,460, analysts said.

As we know, there is good buying around this level.

The upside objective is $1,500, but if the support fails at $1,450 a return to $1,425 can’t be ruled out, IFX said.

Aluminium is similarly correcting its overbought situation, with its RSI around 71 per cent.—Reuters