SHANGHAI, Aug. 22 (SMM) – As economic worries overwhelmed on August 19th, more investors turned to gold for risk aversion and gold prices hit a record high of USD 1,878.05/oz. US stock prices were pressed over 1.5% lower in response. The stagnating US economic recovery in the mean time weakened safe haven function of the US dollar, with the US dollar index falling below 74, which finally closed at 73.972, down 0.52%.

LME aluminum prices hit a year-low of USD 2,323/mt in the beginning on August 19th as a result of inventories approaching the historical high. Total positions rose by nearly 3,000 lots later due to higher buying interest at lower prices supported by weakening US dollar, and LME aluminum prices rebounded to USD 2,372.5/mt in response. LME aluminum finally closed at USD 2,350/mt, up USD 10/mt or 0.43% as bearish sentiment still prevailed.

SMM expects LME aluminum prices to test the 5-day moving average and fluctuate between USD 2,340-2,370/mt on August 22nd. Most active SHFE 1111 aluminum contract prices are expected to open slightly higher at RMB 17,200/mt and fluctuate between RMB 17,200-17,450/mt. Spot premiums are expected to stay between RMB 150-250/mt supported by relatively low inventories. As the wait-and-see sentiment was strong at beginning of week, market transactions are expected to be sluggish.