Base metals in positive territory, copper, zinc steady

Base metal prices ended in the positive territory as investment interest continued to support base metals on Monday. Renewed hopes the US housing sector is pulling out of its downturn offset news of a deal to end a protracted copper mine strike. Base metals continue to draw fresh funds as investors seek currency diversification due to a deteriorating dollar outlook.

A six-week strike at BHP Billiton's mid-tier Spence mine in Chile ended after workers there agreed to a four-percent pay increase. Workers at Codelco Andina workers also accepted a collective contract offer, which kept the bulls constrained. Copper stocks gained 3,050 tonnes, the 15th daily increase in a row, to 424,925 tonnes, their highest level since April.

Zinc was supported on the back of heavy snow in China, which has reportedly affected a limited number of zinc mines in Shanxi province. But prices will only receive support due to this news only if the bad weather persists for a significant time.

On the macroeconomic front, the Dollar Index weakened on Monday and touched a low of 74.95 as a rise in risk appetite led to increased demand for higher-yielding and riskier investment assets and lowered the appeal of the dollar.

Comments by a US Federal Reserve official also became bearish for the dollar as he said that interest rates will continue to remain low for an extended period. This would lower the appeal of the dollar going forward.

Base metal prices may come under pressure today as the Thanksgiving holiday in the US could drain liquidity in the US. Also traders may want to liquidate long positions ahead of the holiday. This could lead to strength in the dollar which could further put downside pressure on prices.

On the macroeconomic front, the US is expected to announce economic data on consumer confidence, HPI and Richmond manufacturing index. Consumer confidence is expected to decline and that could lead to risk aversion in the financial markets and thereby a stronger dollar.

Copper
Copper prices are sideways with immediate support for MCX November contract seen at Rs.315.70. Further below, crucial support is seen at 313 levels.

Whereas resistance is seen at Rs.325.40 levels & further upwards at Rs. 327 levels.

Zinc
Zinc prices are sideways with immediate support seen at Rs.103.20 levels for MCX November contract whereas crucial support is seen at Rs.101.80 level. Short-term resistance is seen at Rs.106.20 whereas major resistance is seen at Rs 107.45 levels.

Courtesy: Angel Commodities

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