Zinc futures slip nearly 1% to Rs 220.70 per kg on firm dollar, new COVID strain worries

Zinc prices trade weak at Rs 220.70 per kg on December 21 as participants trimmed their position. The base metal slipped into the red after a gap-up opening on a firm dollar and new coronavirus strain in the UK.

Zinc prices had gained 1.27 percent or Rs 2.8 last week on the MCX.

More than 16 million Britons are now required to stay at home as full lockdown came into force in London and the southeast of England, with some EU nations taking steps to limit travel with the UK.

According to the International Lead and Zinc Study Group (ILZSG), the global zinc market surplus expanded in October.

The US dollar traded higher at 90.77, or up 0.90 percent in the evening session on safe-haven demand.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Base metals prices witnessed mixed trading on Monday with Copper, Aluminium prices traded off the recent highs while Nickel and Zinc prices kept firm trading range. Base metals may trade under pressure on stronger dollar and demand growth worries over spreading coronavirus strain. The slower economic recovery from the UK and Europe over virus restriction may cap the upside for the short term in base metals.”

He said MCX Zinc December has support at Rs 221 and resistance at Rs 226.

In the futures market, zinc for December delivery touched an intraday high of Rs 225.65 and a low of Rs 217.65 per kg on the MCX. So far in the current series, the base metal has touched a low of Rs 197.55 and a high of Rs 225.65.

Zinc delivery for December contract slipped Rs 2.10, or 0.94 percent, to Rs 220.70 per kg at 16:35 hours with a business turnover of 1,833 lots. The same for January contract eased Rs 1.95, or 0.87 percent, to Rs 221.65 per kg with a turnover of 1,395 lots.

The value of December and January’s contracts traded so far is Rs 1,005.23 crore and Rs 115.60 crore, respectively.

The 14-period Relative Strength Index (RSI) is trading close to overbought zone and MACD is yet to give any signs of reversal. The counter is facing immediate resistance at Rs 226 whereas support is placed at Rs 212, said Motilal Oswal in its weekly report.

At 1109 (GMT), the base metal declined 1.19 percent at $2,826.50 per tonne in London trading.

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