MCX Copper December contract opened at Rs.457.30 gained 0.73% crossed the resistance level of Rs.460.70 and made the high of Rs.460.85 and erode yesterday loss. The metal gained as People Bank of China (PBOC) infused 29 billion Yuan through seven day repurchase agreement at the yield of 4.1%. Last week also the bank had tried to control increasing borrowing cost by injecting 300 billion Yuan but the rate remained high.
Copper gained as liquidity increased at the world highest metal consumer. Chinese investors are liquidity sensitive that raised stock as well as copper prices today. At London Metal Exchange the contract for delivery for three months rose near to 0.3 percent to $7,262/metric ton and traded at $7,259 at 11:00 a.m. inShanghai.
Last week due to high melting charges copper production increased at China but adequate liquidity may back investors to take the advantage of lower metal prices. If the borrowing cost remains low, below 6%, PBOC may hold back further liquidity injection. Better Chinese market condition may encourage not only copper but also other base metals.