Taking full advantage of the metals upward movement the Chinese government recently sold off almost all of the 50,000 tonnes put up for auction of state reserves in early November, Milton Financials has learned.
Zinc began its multi-month rally off of the June low of $1,600 per tonne and is expected to continue upward toward a January 2011 high of around $2,736 per tonne. Milton Financials has learned that some analysts believe that Zinc is likely to benefit from the broad based rally in base metals as well as idiosyncratic supply dynamics which will see the metal trading in the $2,200 to $2,800 a tonne range in the next few months.
Industry experts predict that the three-month zinc will average $2,459 per tonne and analysts believe the metal will continue its rally going forward with forecast for 2012 being in the region of $2,550 per tonne.
The U.S. Federal Reserve’s recent quantitative easing program, where government will buy an additional $600 billion in treasury bonds over the coming months, will provide sufficient liquidity to markets and will see riskier assets move into positive territory of the medium term.
The Fed’s latest easing strategy will also increase negative pressure on the dollar which has an inverse relationship with commodity prices.
Milton Financials sources report that strong demand by emerging markets, including India, along with a cutback in output with China scaling back on production will cause the Zinc surplus to narrow relatively rapidly.
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