Zinc settled up 1.46% at 125.25 despite that LME zinc prices continued to fall to USD 1,960.5/mt, finding support at the 10-day moving average, and closing at USD 1,966/mt, down USD 20/mt, or 1.01%. Zinc on MCX got support from weakness in rupee which plunged to a record low on Wednesday on heavy dollar demand from importers and as traders fretted over mixed signals from the central bank over its efforts to prop up the currency without choking off economic growth. Investors remained cautious ahead of the release of major economic news, and LME zinc prices hovered between USD 1,975-1,980/mt. The US Federal Reserve confirmed it will begin to scale back QE3, pushing down US stocks across the board, with the Dow Jones Industrial Average falling to the second lowest since June. The US dollar index rebounded, weighing down base metals. The minutes of the US Federal Reserve's latest policy meeting showed that QE3 will be ended at mid-2014, provided that economic data are in line with forecasts. However, there is no specific timetable for when to start tapering off the bond-buying program. The Fed will consider bringing QE3 to an end once unemployment rate falls to 7% and inflation reaches 2%. Many Fed officials are in favor of trimming monetary stimulus soon, so the Fed may probably begin to do so in September. Existing home sales in the US in July were well above forecasts and jumped to the highest since November 2009. Now Zinc is getting support at 123 and below same could see a test of 120.8 level, And resistance is now likely to be seen at 126.6, a move above could see prices testing 128.

Trading Ideas:

Zinc trading range for the day is 120.8-128.

Zinc ended with gains as support seen due to weak rupee and LME data showed zinc inventories fell to 1,028,625 mt

The minutes of the Fed's latest policy meeting showed that QE3 will be ended at mid-2014, provided that economic data are in line with forecasts

World refined Zinc markets were in surplus of 44000 tonnes as per the latest data from international Lead and Zinc Study Group