Commodity Trading Tips for Zinc by Kedia Commodity

Ajay Kumar Kedia 28 June 2013

zinc Zinc yesterday settled down -0.64% at 109.05 despite of China's scale-efficiency industrial enterprises realized margins of RMB 470.55 billion in May, up 15.5% YoY, helping ease market apprehension of cash flow problem, and boosting LME zinc prices to break through the 5-day moving average, challenging USD 1,850/mt level. Many US Federal Reserve officials stated in an effort to relieve concerns of QE exit, expressing they will not scale back assets purchasing until US real economy recoveries as the FOMC expected, and will not raise short-term interest rates any time soon. Coupled with upbeat employment and home sales data, market risk appetite was boosted. LME zinc inventories fell by 5,250 mt, to 1,057,700 mt. China's cash flow problem takes center stage. Due to ongoing market concerns, zinc prices should continue to encounter resistance. Initial jobless claims in the US in the week ending June 22 fell to 346,000. Personal income and spending in the US in May both grew more than expected, pushing the US dollar index above 83. However, William Dudley, President of the Federal Reserve Bank of New York and Dennis Lockhart, President of the Federal Reserve Bank of Atlanta said investors had overreacted to Fed Chairman Bernanke's speech, claiming that the Fed will not taper off debt-buying program until US economy recovers as the FOMC expects and that there is still a long way to go before the Fed hikes interest rate. Their remarks helped appease market concerns, pushing the US dollar index and US 10-year government bond yields down while helping S&P's 500 Index record the biggest three-day gain since January. Technically market is getting support at 108.40 and below same could see a test of 107.80 level, And resistance is now likely to be seen at 109.90, a move above could see prices testing 110.80.