Zinc futures declined over 3% on MCX today, extending the broader selloff across metal markets during the special Budget Day trading session. The fall comes amid a sharp correction in global metals after record highs earlier this week and heightened risk aversion among traders.
The primary trigger behind zinc’s decline is profit booking after a strong rally in base metals. Zinc prices had moved up alongside copper and aluminium in recent sessions on expectations of stronger global growth and easier monetary policy. As sentiment reversed, traders moved quickly to lock in gains, leading to a pullback.
Another key factor weighing on zinc is the strengthening of the US dollar. After the announcement of former Federal Reserve Governor Kevin Warsh as the next Fed Chair nominee, markets reassessed expectations of aggressive US interest rate cuts. A firmer dollar makes dollar-denominated metals more expensive for global buyers and often triggers systematic selling by funds.
Zinc also came under pressure due to spillover weakness from copper, which witnessed a near 10% fall after hitting record highs. As an industrial metal closely linked to construction and manufacturing demand, zinc tends to move in tandem with copper during broad-based risk-off phases.
In addition, thin liquidity and leveraged position unwinding amplified price swings across base metals. Traders are also reducing exposure ahead of the China Lunar New Year holiday, when the world’s largest metals consumer shuts markets for a week, further adding to selling pressure.
Overall, zinc’s decline reflects a global metals reset driven by profit booking, dollar strength, leverage unwinding, and cautious positioning after a parabolic rally, rather than any zinc-specific negative development.
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