Technically market is getting support at 171.7 and below same could see a test of 169.3 levels and resistance is now likely to be seen at 176.9, a move above could see prices testing 179.7.
Zinc on MCX settled down 1.42% at 174.05 tracking weakness from most of the base metals which declined on a rebounded US dollar, LME Zinc came under pressure on the London Metal Exchange shrugging off continued market optimism about recent US-China trade talks.
The three-month zinc price fell 1.2%, ignoring the continued drawdown of LME inventories - only 109,025 tonnes are now on-warrant. Additionally, the metal’s cash/three-month spread remains in a backwardation of $21.50, narrowing from $77 per tonne on Wednesday and down from its widest backwardation in more than 10 years at $124 per tonne in early December.
LME zinc unsuccessfully tested pressure at the $2,500/mt level as shorts weighed it to a low of $2424.5/mt during yesterdays session. Last night the US dollar rebounded from three-month lows, extending gains against the euro and yen, after Federal Reserve Chairman Jerome Powell said that the US central bank intends to further shrink the balance sheet, suggesting it is not done tightening monetary policy.
The Fed chairman also said he sees no near-term risk of a US recession and expects continued momentum in economic data. However, he reiterated that the Fed can be patient on monetary policy and can move "flexibly and quickly" if economic data warrants it.
From data point China's producer price index increased less than expected on the month in December to hit the lowest growth rate in two years, the National Bureau of Statistics said on Thursday. Now a day ahead the US is expected to release data on its CPI for December today.
--Zinc trading range for the day is 169.3-179.7
--Zinc prices dropped as markets awaited more news on U.S.-China trade talks amid hopes an all-out trade war can be averted.
--China’s producer price index (PPI), rose 0.9% year on year in December, the lowest gain since September 2016, according to data
--Unemployment across the eurozone declined steadily from a peak of 12.1% in 2013 as the region recovered from the global financial crisis.
Courtesy: Kedia Commodities