Technically Zinc market is under fresh selling as market has witnessed gain in open interest by 3.32% to settled at 4391 while prices down -1.1 rupees.
Now MCX Zinc is getting support at 177.9 and below same could see a test of 176 levels and resistance is now likely to be seen at 183.4, a move above could see prices testing 187.
Zinc on MCX settled down -0.61% at 179.85 on fresh selling while prices gained sharply in morning session tracking LME Zinc which gained to test $2,614.50 as China's stock markets and yuan gained on Thursday, helping to lift industrial metals, even after China the day before said it was slapping additional tariffs of 25 percent on $16 billion worth of U.S. imports, the latest step in a worsening trade dispute.
China is the world's biggest metals consumer. While upside was capped as China's factory price inflation cooled in July amid a slowdown in economic growth. Economists expect punitive tariffs on U.S goods to push price growth higher in months ahead. Weakness in the dollar index is helping boost metals prices already yesterday morning.
The greenback has struggled to garner bids since the Monday August 6 high of 95.53. A technical break below psychological price level at 95.00 could trigger more selling. This bodes well for both the base and precious metals prices as well as commodities currencies to wiggle higher.
Ever since the People's Bank of China (PBoC) took steps on Friday August 3 to boost forwards foreign exchange trading requirements to 20%, the Chinese yuan has firmed to 6.8164. Last night the dollar index jumped 0.54% to 95.61 overnight as investors bet global trade tensions and a robust US economy would continue to support the currency.
--Zinc trading range for the day is 176-187.
--Zinc dropped tracking weakness in LME prices due to a rapid rise in the dollar.
--The U.S. Trade Representative’s office said the U.S. would begin collecting 25 percent tariffs on another $16 billion in Chinese goods later this month.
--China's foreign exchange reserves increased in July, figures from People's Bank of China showed.
Courtesy: Kedia Commodities