Zinc settled up 1.14% at 137.95 as stockpiles at the lowest level in more than three years fueled concern demand. Inventories of zinc monitored by the London Metal Exchange fell 29 percent this year and had a 14th straight weekly drop this week, according to data. Zinc inventories tracked by the LME total 660,800 tons, the lowest since December 2010, according to bourse data. The recent price gains probably stem from stronger investor interest in raw materials.

China's central bank will refrain from choking the supply of cash in the third quarter to lower financing costs and help an economy projected to expand at the slowest pace in 24 years. Global zinc demand will exceed supply by 290,000 tons in 2014 and by 300,000 tons in 2015. A number of mine closures and forecasts of increased demand from the US and China for automobiles have pushed zinc further into supply deficit. In the US, wholesale inventories and sales both missed expectations in May.

The country's initial jobless claims for the week ending in July 5 fell by 11,000 to 304,000, below the estimated 315,000, with the four-week moving average hitting its lowest since August 2007. Meanwhile, China's exports grew by only 7.2% in June, and the country's imports rose by 5.5%, both short of expectations. Technically market is under fresh buying as market has witnessed gain in open interest by 11.51% to settled at 6809 while prices up 1.55 rupee, now Zinc is getting support at 136.8 and below same could see a test of 135.4 level, And resistance is now likely to be seen at 138.8, a move above could see prices testing 139.4.

Trading Ideas:

Zinc trading range for the day is 135.4-139.4.

Zinc prices seen supported as stockpiles at the lowest level in more than three years fueled concern demand.

Inventories of zinc monitored by the LME fell 29 percent this year and had a 14th straight weekly drop this week.

Global zinc demand will exceed supply by 290,000 tons in 2014 and by 300,000 tons in 2015.