Zinc on MCX settled up 0.06% at 164.45 as support seen after Indian rupee weakened over 1.1%, its steepest fall in 21-month against the US dollar as concern over US President Donald Trump spurred. LME Zinc fell 1 per cent to $US2,533 as uncertainty about U.S. President Donald Trump's future undermined expectations of a boost to infrastructure spending in the United States. Allegations that Trump tried to interfere with a federal investigation have raised the possibility of him having to resign from the presidency, putting his pro-growth policies at risk.
While sentiments improved after the update that China's production of zinc fell 5.6 percent to 474,000 tonnes, its lowest in more than two years, while output of steelmaking ingredient iron ore was at its weakest in a year, according to the National Statistics Bureau. Base metals and iron ore output in the world's top metals producer all showed an annual increase, except for zinc.
The lower U.S. currency helped offset some of the negative sentiment because when it falls dollar-denominated commodities become cheaper for non-U.S. firms, potentially boosting demand. Focus is on large holdings of cash contracts and warrants in aluminium, zinc, lead, tin and copper, which could mean tighter supplies on the LME market.
Technically market is under short covering as market has witnessed drop in open interest by -4.55% to settled at 3422 while prices up 0.1 rupees, now Zinc is getting support at 161 and below same could see a test of 157.4 level, And resistance is now likely to be seen at 166.5, a move above could see prices testing 168.4.