Zinc settled down -1.45% at 118.95 dropped for the third consecutive month in July amid fears over a slower Chinese demand for the industrial metals, bringing zinc to the bear market along with other commodities, including copper, aluminum and lead. Yesterday LME zinc prices opened at USD 1,896.5/mt, and dipped to a new low since November 28, 2013, and closed at USD 1,865.5/mt, down USD 24.5/mt or 1.29%. Despite LME zinc inventories fell 1,225 to 429,650 mt. Investors exited the market on caution before release of nonfarm payrolls, and large companies reported weak results, pressuring US stock prices. But the decline in base metals was limited as the US dollar index edged lower. Metals were supported by data showing activity in China's services sector expanded at its fastest pace in 11 months in July, thanks to stronger new business, a private survey showed on Wednesday. It was a welcome development at a time factories in the world's second largest economy are struggling. A firmer dollar, however, restricted gains. The dollar index held near a more than three-month high on Thursday, after U.S. data provided further evidence that the U.S. Federal Reserve could hike interest rates as early as next month. The U.S. Institute for Supply Management's services sector index rose to 60.3 last month, the highest since August 2005, far beyond expectations for a 56.2 reading. Market players now looked ahead to Friday's U.S. nonfarm payrolls report. The consensus forecast is that the report will show jobs growth of 223,000 last month. Technically market is getting support at 118.1 and below same could see a test of 117.2 level, And resistance is now likely to be seen at 120.6, a move above could see prices testing 122.2.

Trading Ideas:

Zinc trading range for the day is 117.2-122.2.

Zinc prices dropped amid fears over a slower Chinese demand for the industrial metals, bringing zinc to the bear market along with other commodities.

U.S. data provided further evidence that the U.S. Federal Reserve could hike interest rates as early as next month.

Zinc daily stocks at Shanghai exchange came down by 2099 tonnes.