Zinc settled up 1.53% at 126.25 as positive US economic data contributed to an improvement in the prices. The market was absorbing positive effects from China’s deposit reserve ratio drop. Besides, US economic data released overnight boosted the market pushing up zinc prices.   US economic data also proved upbeat, with both May factory output and June NAHB housing index exceeding expectations. The People’s Bank of China announced that it has expanded the scope of the reduction in the RRR to the Industrial Bank, China Minsheng Bank, China Merchants Bank, and Bank of Ningbo. The PBOC added that the RRR cut also can apply to big state-owned banks that fulfill the stipulated criteria. Banks with substantial lending to small firms and the farming sector will be eligible for the rate cut. These banks include big state-owned banks, joint-stock banks, city commercial banks and rural commercial banks. Meanwhile, The People’s Bank of China revealed funds outstanding for foreign exchange increased RMB 38.665 billion in May, setting a 9-month low. The Chinese Premier Li Keqiang also stated the central government is prepared for policy adjustment in a bid to achieve the GDP growth target of 7.5% this year. US housing data and inflation reports from the UK and US due for release Tuesday are expected to be positive, helping boost base metals markets. Investors, however, should pay close attention to the US Federal Reserve’s latest interest rate meeting to be held on Thursday. Technically market is under fresh buying as market has witnessed gain in open interest by 17.32% to settled at 2005 while prices up 1.9 rupee, now Zinc is getting support at 125.1 and below same could see a test of 124 level, And resistance is now likely to be seen at 126.8, a move above could see prices testing 127.4.

Trading Ideas:

Zinc trading range for the day is 124-127.4.

Zinc ended with gains as positive US economic data contributed to an improvement in the prices.

A report showed that U.S. industrial production rose by 0.6% last month, beating forecasts for a 0.5% gain.

Zinc daily stocks at Shanghai exchange came up by 300 tonnes.