Global rally in metals, oil and bullion amid US sanctions on Russia

In the wake of the American sanctions on Russia, includng some of the latter's largest industrial groups, the price of aluminium has risen 30 per cent in two weeks, on worry of a coming supply deficit.

The entire metals segment has seen a price rally; after aluminium, the most marked rise was in nickel. In addition, a Saudi Arabian projection of oil at $100 a barrel, well above the current price, has resulted in a rally in Brent crude, to its highest level after November 2014. These uncertainties has pulled up gold and silver prices as well.

Sanctions were announced on April 5 by the US and global prices of aluminium are up 36.6 per cent since then, to $2,718 a tonne. Nickel is up 24.9 per cent, to $16,690 a tonne. Brent oil is up nine per cent in this period, around $74.6 a barrel; it has risen 40 per cent in 10 months. As for gold, it is up 1.7 per cent, and silver by 4.8 per cent.

On India's Multi Commodity Exchange, aluminum is up 33.3 per cent during the period, nickel by 20 per cent and crude oil by 10.4 per cent; metals have outperformed global prices due to a weaker rupee. Traders are carrying bullish positions on these metals and crude oil.

Aluminium prices are at their highest after 2011 and nickel after 2014 on the London Metal Exchange. Brent is at a three-year high. Continuing conflict in Syria is adding fuel to the fire.

Bernard Dahdah, senior analyst at London-based Natixis Commodities, said: "Although US policy has occasionally reversed course, we believe this disruption to supply will persist for the next three to six months, due to sanctions. However, any reversal of US sanctions on Russia, or signs of a slowdown in China, would have an immediate and reverse impact on the price."

Saudi Arabia, the world's largest exporter of crude oil, has indicated it would be "happy to see a rise to $80 or even $100 a barrel". For this to happen, however, the petro exporting countries' caretel, Opec, will have to agree in June to continue their cap on production beyond December this year. However taking cues from the recent development, oil has rallied.

Kaynat Chainwala, research analyst at Angel Commodities Broking, said: "The rally in base metals is far from over. Aluminium seems to have passed the baton to nickel, boosted by concerns that US sanctions on Russia could extend to Norilsk Nickel, the world's second biggest nickel producer. Nickel is extensively used in production of stainless steel and has jumped to the highest price since late 2014, supported by a rally in Shanghai Steel prices after that country's central bank unexpectedly cut banks' reserve requirement ratio by 100 basis points."

Uncertainties on US sanctions, the US attack on Syria and fear of a trade war has kept precious metals elevated. Prices are rising fast and the metals rally has lifted the price of silver, which had been muted for some time. Around half of silver output is used in industry; it follows metal prices.