Zinc yesterday traded with the negative node and settled -2.23% down at 100.80 at seven-month low after disappointing US and Chinese manufacturing data raised concerns over the strength of the global economic recovery. In China, government data showed that manufacturing activity in China rose by 0.8 points to 50.9 in March, below expectations for a gain of 1.5 points to 51.6. China is the world’s largest base metal consumer, accounting for almost 40% of world consumption last year. The industrial metal was further weighed after weak manufacturing data out of the U.K. and the euro zone fuelled concerns over the outlook for global growth. Revised data showed that manufacturing activity in the euro zone contracted for the 20th consecutive month in March, while the U.K. manufacturing sector shrank for the second straight month. Base metal is sensitive to the global economic outlook because of its widespread uses in construction and manufacturing. A weaker euro will keep base metal in check. Due to political uncertainty, Moody’s plans to downgrade Italy’s sovereign rating, and political deadlock in Italy will also depress investor sentiment, which will weigh down zinc prices. Mixed attitude of US Federal Reserve officials towards QE3 policies will also enlarge zinc price fluctuation ranges. In yesterday's trading session zinc has touched the low of 100.65 after opening at 102.85, and finally settled at 100.8. For today's session market is looking to take support at 100, a break below could see a test of 99.1 and where as resistance is now likely to be seen at 102.3, a move above could see prices testing 103.8.

Trading Ideas:

Zinc trading range for the day is 99.13-103.83.

Zinc prices plunged due to growing Cyprus debt crisis as well as Italy’s political turmoil.

Downstream buyers will replenish stocks ahead of the Qingming Festival in China, and will give support to zinc prices.

Data showed that US factory orders for February rose by 3% MoM to hit 5-month high better than market expectation