Zinc on MCX settled up 0.87% at 156.65 continued to show strength as benchmark zinc on the London Metal Exchange surged 1.2 percent to close at $2,338 a tonne, its highest since May 2015 surged with other metals also rallying, after upbeat factory data from top metals consumer China and a weak dollar spurred buying.
Support seen in basemetals complex as activity in China's manufacturing sector unexpectedly expanded at its fastest pace in nearly two years in August as construction boomed, suggesting the economy is steadying in response to stronger government spending. Also supporting metals was a slide in the dollar after U.S. manufacturing activity unexpectedly declined in August, casting new doubts on the strength of the U.S. economy. The consensus forecast is that the data will show jobs growth of 180,000 in August, following an increase of 255,000 in the preceding month.
Now investors looked ahead to data on U.S. nonfarm payrolls on Friday to see if the economy is strong enough to withstand a rate hike in the coming weeks. A strong nonfarm payrolls report would reinforce the view that a U.S. rate hike in September may be on the cards, after hawkish signals from senior Fed officials in recent days revived speculation of a near-term rate hike. Technically market is getting support at 155.8 and below same could see a test of 155 level, and resistance is now likely to be seen at 157.1, a move above could see prices testing 157.6.
--Zinc trading range for the day is 155-157.6.
--Zinc prices rallied after upbeat factory data from the world's top metals consumer China spurred buying.
--The official China manufacturing purchasing managers' index swung back to expansion territory in August, rising to 50.4 from 49.9 a month earlier.
--U.S. factory activity contracted in August for the first time in six months as new orders and production tumbled.
Courtesy: Kedia Commodities