The zinc price is becoming less volatile, but is likely to rise.
Volatility in zinc prices reflects the market sentiment. US plans for further engagement with China could have an impact on industrial metals markets. Tension between the world's two biggest economies has hampered high-level talks. US Secretary of the Treasury Janet Yellen will outline the main objectives of the US-China economic relationship during her speech in Washington on Thursday.
Meanwhile, market participants are keeping a close eye on monetary policy changes by the US Federal Reserve System. Atlanta Fed Chief Rafael Bostic said on Tuesday that another interest rate hike is likely to happen. He expects an increase by 25 basis points to the level of 5.00–5.25%.
Yesterday, the LME zinc price rose by $14.5 per tonne, or 0.51%. Trading volume amounted to 4 881 lots, while open interest fell by 3 192 lots to a total of 172 000. Various views on a subsequent Fed interest rate hike supported the bearish sentiment of the market, which kept the LME zinc prices from rising.
The most traded zinc lot on the SHFE fell by 0.45% during yesterday's session. The trading volume was 61 000 lots. Although zinc concentrate prices are still falling, zinc processors are increasing their profits and stockpiling imported concentrates.
US plans for engagement with China may have a direct impact on zinc supply and demand, as China is the largest producer and consumer of the metal. Lower zinc prices on the Shanghai Exchange could indicate an oversupply of the metal, but an increase in zinc inventories at plants may also lead to a recovery in demand and higher prices.
On the H4 time frame, the price is forming a downward corrective trend. The price being close to the resistance and slower volatility could take zinc prices out of the downtrend.
On the H1 time frame, the price is forming the third ascending wave. Breaking through the top of the first wave at the level of 2 904 will strengthen the signal for growth.
A short-term prospect for zinc suggests buying.
The target is at the level of 2 955.
A Take profit could be placed near the level of 2 904.
A Stop-loss is at the level of 2 765.
The bullish trend is short-term, so trading volume should be no more than 2% of the balance.
This content is for informational purposes only and is not intended to be investing advice.