Commodity Radar: Weak dollar and anticipated Fed rate cut could drive Zinc rally. Religare expert sees 6% near-term upside

Zinc contracts were trading lower on the MCX in Tuesday’s session amid profit booking following a rally over the last few trading sessions. September zinc contracts were trading around Rs 274.25, down Rs 1.70, or 0.62%, from Monday’s closing price.

The trend was mixed in two of the world's top markets – the London Metal Exchange (LME) and SHFE. Zinc’s 3-month contract on the LME hovered at $2,876.50 around 2 pm India time, gaining 0.54%, while contracts on the Shanghai Futures Exchange stood at 22,060 yuan per metric tonne, down 0.6%.

Commenting on the trends, Ajit Mishra, Senior Vice President – Research at Religare Broking, said the zinc market experienced a strong uptrend in recent sessions, largely driven by bullish sentiment following positive US economic signals and a continued decline in LME inventories.


“The overall upward momentum was fueled by market optimism as US personal consumption expenditure (PCE) data met expectations, heightening anticipation for a September interest rate cut and subsequently softening the US dollar. LME zinc inventories continued their sharp decline during the week, falling to 54,750 tonnes on September 4 from 55,875 tonnes on September 1,” Mishra said.

Technical view

Mishra added that the daily chart shows zinc gradually climbing from a prior low near Rs 243 to its current level around Rs 276. It has broken above the 200-day moving average, consistently holding above both short- and medium-term trends, signaling a shift from consolidation to a developing upward bias.

Trading strategy

Mishra suggests a buy-on-dip approach, with entries near Rs 272–273 and a stop at Rs 267 to manage downside risk. Alternatively, a breakout above Rs 278 could trigger long positions, targeting Rs 285–290, anticipating the continuation of the recovery.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)