Fresh buying seen in MCX Zinc; Support seen at 151.6
Commodity Online | September 21 2016
UPDATED 11:19:12 IST

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Zinc on MCX settled up 2.13% at 153.65 recovered from the two weeks of losses, supported by speculators betting on shortages and an uptick in Chinese demand for industrial metals. Zinc was the top performer on the London Metal Exchange with benchmark prices closing 2.2 percent up at $2,300 a tonne, building on gains of 1.6 percent on Monday.

Zinc is also this year's favorite LME metal for investors with gains of 43 percent to date following the closure and suspension of mines. Meanwhile China's refined zinc output fell by 2.8 percent in August, as smelters face lower processing fees, suggesting they will have to import more refined metal. The overall outlook for base metals has been brightened by a real estate boom in China and stronger than expected factory activity over the summer, with copper also finding support from earlier than expected consumer restocking.

Also traders are eyeing on the U.S. dollar which slipped amid expectations of no rate change from the Fed. While the overwhelming consensus is for the Fed to hold rates steady at the conclusion of its policy meeting on Wednesday, some market players expect it to drop a clearer hint that it is ready to raise rates by December.

Markets are currently pricing in just a 15% chance of a rate hike this week. The metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. Technically market is under fresh buying as market has witnessed gain in open interest by 19.75% to settled at 9052, now Zinc is getting support at 151.6 and below same could see a test of 149.5 level, and resistance is now likely to be seen at 154.8, a move above could see prices testing 155.9.

Trading Ideas:
--Zinc trading range for the day is 149.5-155.9.
--Zinc prices continued its positive trend amid expectations for a supply shortage.
--China's refined zinc output fell by 2.8 percent in August, as smelters face lower processing fees.
--Zinc production fell 1 percent to 4.05 million tons in the first eight months amid tightness in global ore supplies.

Courtesy: Kedia Commodities