Zinc prices traded firm at Rs 220.25 per kg on April 5 as participants increased their long position as seen by the open interest. The base metal extended gain after a gap-up open to trade at day’s high.
Zinc prices had declined Rs 1.45 or 0.66 percent last week on the MCX.
The non-ferrous metal has been trading higher than 5, 20, 50, 100 and 200 days' moving averages on the daily chart. The Relative Strength Index (RSI) is at 51.05 which indicates positive momentum in prices.
London Metal Exchange (LME) is shut today on account of Easter Monday.
Zinc price was getting support from lower inventory at LME and ShFE-accredited warehouses. The cash over three-month forward futures premium on LME Zinc is in contango at $17.35 per MT.
According to the International Lead and Zinc Study Group (ILZSG), the global zinc market was oversupplied by 11,700 metric tonnes (MT) in January after a revised surplus of 23,500 tonnes in December.
The US dollar trades lower at 92.60, or down 0.48 percent in the evening session against rival currencies.
Hareesh V, Head of Commodity Research at Geojit Financial Services said, “Prices continue to consolidate in the immediate future, but it may gradually gain momentum on expectations over increased physical demand from top consuming countries.”
On the LME, the inability to break $3,000 expects corrective selling immediately but it is likely to hold the support of $2,590 and turn higher later. On the MCX, prices need to break and stabilise above Rs 226 to continue the bullish outlook on the counter. Else, there are chances of selling pressure but stiff support is seen at Rs 184, he said.
In the futures market, zinc for April delivery touched an intraday high of Rs 219.95 and a low of Rs 218.15 per kg on the MCX. So far in the current series, the base metal has touched a low of Rs 211.40 and a high of Rs 233.
Zinc delivery for April contract gained Rs 1.95, or 0.89 percent, to Rs 220.25 per kg at 20:04 hours with a business turnover of 1,912 lots. The same for May contract rose Rs 1.50, or 0.69 percent, to Rs 219.35 per kg with a turnover of 124 lots.
The value of April and May’s contracts traded so far is Rs 256.80 crore and Rs 8.41 crore, respectively.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited, said, “MCX Zinc April future has formed an ascending triangle pattern on the hourly chart and we had a price momentum within a channel throughout the week with some correction. Zinc’s three-month price was down to $2,788 per tonne, from its closing price on Wednesday of $2,818.50 per tonne. LME prices were mostly unfazed by US President Joe Biden’s $2.3 trillion infrastructure package, formally announced on Wednesday.”
Widening of positions by participants following a pick-up in demand from consuming industries kept zinc prices higher in futures trade. The key resistance level is at Rs 220.50 and a breakout above this level may test the next resistance at Rs 222-223.50. The immediate support is at Rs 217.50, he said.
The base price settled on April 1 with a loss of 0.73 percent, quoting at $2,770.25 per tonne in London.
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