Zinc settled down -2.08% at 122.60 as market is facing fresh selling as ongoing probe into metal financing fraud in China and instability in Iraq will keep investors cautious. The U.S. economy likely contracted at a much sharper pace in the first quarter than previously estimated with data showing weaker healthcare spending. While China's central bank said it would keep monetary policy steady in 2014, even as the finance ministry said fiscal spending had surged nearly 25 percent in May from a year earlier, highlighting government efforts to energise the slowing economy. China's cabinet also revealed that it was now planning more big infrastructure projects, including highways, train networks and oil and gas distribution and storage facilities, as part of its efforts to keep the economy growing at a stable rate. But the ongoing investigation at the Port of Qingdao and escalating tensions in Iraq should stoke uncertainties in base metals markets on Friday. With the lack of support from fundamentals, Zinc prices look set to fall in the near term. Lastweek Zinc closed almost 2% up last week as demand is on the rise. LME inventories dropped more than 35% year-to-date, while global markets recorded a 17,000 deficit in 2013, according to the ILSZG report. Technically market is under fresh selling as market has witnessed gain in open interest by 0.9% to settled at 2252 while prices down -2.6 rupee, now Zinc is getting support at 121.5 and below same could see a test of 120.3 level, And resistance is now likely to be seen at 124.7, a move above could see prices testing 126.7.

Trading Ideas:

Zinc trading range for the day is 120.3-126.7.

Zinc ended with losses as concerns over China’s metal demand and weak US economic data reported weighed on prices.

Combined with worse-than-expected US retail sales in May, risk aversion increased, pushing down prices.

Zinc daily stocks at Shanghai exchange came up by 1503 tonnes.