Zinc settled down -0.36% at 123.80 on Friday at the domestic markets after Retail sales in Germany fell unexpectedly last month signaling weak sentiment in the region which reduced the demand outlook for the metal. Destatis said that German Retail Sales fell to a seasonally adjusted -2.5 per cent from 0.9 per cent in the preceding month. Base metals are edging lower in the absence of China as the country embarks on its New Year celebrations. Volumes overnight were thin as expected. Heading into next week, the key data point for base metals may well be the official manufacturing PMI for China due for release. The December print was 51. Market note that the average m/m decline for Jan is 0.25 and as a result we would read any drop in the PMI of more than 0.25 as a bearish outcome. However, the price impact may be limited given that the flash PMI and the HSBC PMI have already signalled the downturn in manufacturing. In the week ahead, investors will be keenly anticipating Friday's U. S. nonfarm payrolls report for January after December's report showed that the economy added far fewer jobs than expected. Some market participants believe the Fed will taper its bond purchases by USD10 billion in each of its next six meetings before ending the program in December 2014, amid indications of an improving U. S. economy. Now Zinc is getting support at 123.1 and below same could see a test of 122.3 level, And resistance is now likely to be seen at 124.7, a move above could see prices testing 125.5.

Trading Ideas:

Zinc trading range for the day is 122.3-125.5.

Zinc dropped on concern that slowing economic growth will curb demand.

Base metals are edging lower in the absence of China as the country embarks on its New Year celebrations.

Some believe Fed will taper its bond purchases by USD10 billion in each of its next six meetings before ending the program in December 2014