Is Zinc Secretly Preparing for a Bullish Take-off?

 Zinc prices rose sharply last week as Shanghai-listed zinc contracts hit November highs on expectations of future tariffs in China and fears of supply delays due to attacks in the Red Sea.

 Chinese banks and the Big Five said they would cut interest rates on some deposits from Friday. Markets see the move as an attempt to pave the way for more tariffs to help the economy.

 At the same time, some metal shipping lanes are likely to suffer as ocean liners avoid the Red Sea due to Palestinian-led shipping attacks, disrupting trade through the Suez Canal, which handles about 12 percent of global trade. 

 The U.S. dollar fell, making dollar-denominated metals more attractive to buyers using other currencies after data showed continued easing of U.S. inflation in November, which could bolster financial markets’ expectations of a rate cut next March.

Technical Outlook – Zinc:

 The price of zinc increased by 2.58% in the week. Prices rose to 229.35, the highest since 11/20/2023, and compared to last week’s highs of 228.95 and 223.20.

 In the chart above, prices are trading at the border of a bullish pennant. A break above 230.50 will attract a sharp rally soon. Prices may test 234.90-238.50 on the upside.  Else, any dip towards 224.00-224.50 will witness bounce back.

On the downside, crucial support is seen at 217.00 and a closing below only prices may retreat towards 211.50-208.50.

Therefore, traders should stay long with zinc futures.

Commodity Samachar
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