Zinc settled down -0.47% at 137.25 on profit booking while outlook remain firm as more investors saw potential in the metal mainly used for galvanizing steel due to upcoming mine closures, which are expected to create shortages. LME zinc prices opened at USD 2,300/mt, and touched USD 2,320.75/mt due to positive Q2 GDP from China. But since the US dollar index strengthened due to upbeat US consumption and manufacturing data. When combined with a large number of longs leaving the market after profit-taking. Since lastweek prices are trading firm to test 35-month high as inventories on the LME-monitored warehouses continued to dwindle. LME inventories of the metal slumped almost 35% year-to-date at a time when car sales in the U.S. ad China are on the rise. While yesterday Base metals finished mostly lower despite stronger-than-expected growth in China in the June quarter, and higher-than-expected growth in China’s industrial production and fixed asset investment in June. China’s GDP grew by 2% (1.8% expected) in the June quarter, from an upwardly revised 1.5% in the March quarter, which left y/y GDP growth at 7.5% (7.4% expected), consistent with policy ‘fine-tuning’ during the quarter. Industrial production rose by 9.2% y/y (9% expected) in June, well above May’s 8.8% y/y growth. Technically market is under long liquidation as market has witnessed drop in open interest by -3.07% to settled at 6321 while prices down -0.65 rupee, now Zinc is getting support at 136.4 and below same could see a test of 135.6 level, And resistance is now likely to be seen at 138.5, a move above could see prices testing 139.8.        

Trading Ideas:

Zinc trading range for the day is 135.6-139.8.

Zinc prices dropped on profit booking after US dollar index strengthened due to upbeat US consumption and manufacturing data.

Data from the NBS showed that China’s GDP grew by 7.5% YoY in the second quarter, in line with the 2014 GDP growth target.

US June housing starts and the number of US initial jobless claims last week will be announced today, which are pessimistic.