MELBOURNE, Aug 10 (Reuters) – London zinc rallied to the highest in nearly 15 months on Wednesday as the dollar eased and risk appetite focused on zinc, which has rallied on bets a shortage of mine supply will curb output of refined metal.
The dollar fell against a basket of currencies on Wednesday as investors re-evaluated whether the U.S. Federal Reserve will raise interest rates this year.
A weaker dollar blunts commodity demand by eroding the buying power of those paying with other currencies. “The trigger is the dollar,” said analyst Dominic Schnider of UBS Wealth Management in Hong Kong.
“Zinc is the best fundamentally, that’s true. But it’s already pricey and everyone makes money now. At some stage, the mine supply that was voluntarily closed comes back in, and the deficit that we have in the concentrate market is going to narrow. But for the time being it’s a solid story.”
Three-month zinc on the London Metal Exchange rallied 1.4 percent to $2,305.50 a tonne, having earlier hit the highest since mid-May 2015 at $2,310 a tonne. Prices are up 43 percent this year.
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