Zinc settled down -2.44% at 141.90 as escalating geopolitical chaos caused risk aversion to grow, weighing down base metals prices. Lastweek Zinc prices managed to return to gains, moving closer to a 35-month high on bright demand prospects and falling LME inventories.  Zinc prices have climbed on forecasts that falling mine supply will lead to a shortage of metal. Demand for the metal is likely to be underpinned by a rapid recovery of the global automobile industry. LME zinc prices have risen by 16% since June, but plunged yesterday as a large number of longs left the market after profit-taking, dipping to USD 2,341/mt and closed at USD 2,346.75/mt, down -2.84%. The U.S employment growth likely retained enough momentum in July to help buoy the economy for the rest of the year. Nonfarm payrolls probably increased by 233,000 this month. The European Union and the United States on Tuesday announced further sanctions against Russia, targeting its energy, banking and defence sectors in the strongest international action yet over Moscow's support for rebels in eastern Ukraine. In the week ahead, investors will be looking ahead to Wednesday’s monetary policy announcement by the Federal Reserve. The U.S. will also release the monthly non-farm payrolls report for July later in the week as well as a preliminary estimate on second quarter economic growth. Technically market is under long liquidation as market has witnessed drop in open interest by -18.32% to settled at 4615 while prices down -3.55 rupee, now Zinc is getting support at 140.6 and below same could see a test of 139.2 level, And resistance is now likely to be seen at 144.2, a move above could see prices testing 146.4.

Trading Ideas:

Zinc trading range for the day is 139.2-146.4.

Zinc retreated after hovering near three-year highs on expectations of a tightening market.

In the U.S. consumer confidence jumped in July to a monthly high not seen since October 2007, according to a private sector report.

Several top zinc mines are drying up, including Century in Australia, while a recovery in the construction industry would revive demand from galvanisers.