March 9 (Bloomberg) -- Zinc may fall as much as 5.9 percent as industrial metals reverse gains, paving the way for copper and lead to drop, according to technical analysis by Barclays Capital.
Zinc risks sliding toward $2,250 a metric ton in case of a “clear” break under the lows of its trading range near $2,425, Barclays technical analysts including Philip Roberts said in a report dated March 7. Zinc for three-month delivery fell $3.50 to $2,391.50 a ton by 6:33 a.m. on the London Metal Exchange.
“At the moment the base-metals markets are in their uptrend, but they are starting to reverse, and zinc could be showing the way,” Roberts said by phone yesterday. “We are waiting for some sort of confirmation, and confirmation will come from either lead or copper.”
Zinc, used to make steel rust-resistant, is forming a so- called topping pattern that indicates further losses, according to Barclays. That would be confirmed if copper and lead were to fall below respective prices of $9,311 a ton and $2,445 a ton, according to Roberts.
“We are hanging on to the bullish view, but we are getting more worried,” he said. Still, copper may head for $10,467 a ton and zinc may rebound toward $2,900 a ton if industrial metals continue to climb, the report shows.
Zinc fell 1.2 percent last week on the LME, one of only two declines among the six main metals traded on the exchange. Tin also retreated. Zinc has dropped 2.6 percent this year in London, the worst performance of the main LME metals.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.