Zinc on MCX settled up 0.35% at 184.35 as support seen after dollar sank to a four-week low against a basket of currencies after the U.S. Federal Reserve raised interest rates for the second time in three months, as expected, but said that further increases would be gradual. Also fresh buying seen on the counter after the update that the global zinc market was in deficit by 27,000 tonnes in January and the lead market deficit more than doubled to 15,000 tonnes, data from the International Lead and Zinc Study Group (ILZSG) showed.
Meanwhile Chinese data on Thursday showed that its base metals output rose quickly in the first two months of the year as producers responded to higher prices by ramping up output. While in U.S. the homebuilding jumped in February as unseasonably warm weather boosted the construction of single-family houses to near a 9-1/2-year high, suggesting the economy remained on solid ground despite an apparent slowdown in the first quarter. In basemetals complex LME zinc was the biggest gainer, targeting a 5 percent rally in prices this week.
Price have been supported by a widening shortfall in metal after several large mines closed in recent years. Meanwhile, after the Fed four Gulf countries hiked their rates as well given that their currencies are pegged to the dollar and China’s PBOC raised rates by 10 basis points on both its medium-term lending facility loans and on repos. These hikes did not cause any selling pressure on basemetals. Technically now Zinc is getting support at 183 and below same could see a test of 181.7 level, And resistance is now likely to be seen at 186, a move above could see prices testing 187.7.