Zinc settled up 2.51% at 146.80 settled neared its highest level in three years as prospects the United States may hold off raising interest rates encouraged investors to buy metals facing a supply crunch. Zinc, lead and aluminium have been the top choice for investors due to the impending closure of giant zinc and lead mines, such as Century in Australia, capacity cuts, a bottleneck in aluminium exchange stocks and weak prices. Since lastweek Zinc managed to return to gains, moving closer to a 35-month high on bright demand prospects and falling LME inventories. Demand for the metal is likely to be underpinned by a rapid recovery of the global automobile industry. For example, total vehicle sales in the U.S. attained pre-crisis levels this summer. China’s State Council announced on Monday that the number of low-income houses renovated in 2013 hit more than 3.2 million and is expected to exceed 4.7 million this year. The chief administrative authority also urged local governments to approve plans on low-income housing renovation in a more efficient and timely manner. The central government will also step up its effort to support low-income housing renovation by establishing a mature system of issuing debts by local governments. The Chinese government also unveiled a flurry of other measures to provide fund for the renovation. This, combined with encouraging manufacturing reports released earlier, boosted market sentiment, sent China’s stocks surging and base metals prices rebounding markedly. Technically market is under fresh buying and getting support at 144.1 and below same could see a test of 141.3 level, And resistance is now likely to be seen at 148.3, a move above could see prices testing 149.7.

Trading Ideas:

Zinc trading range for the day is 141.3-149.7.

Zinc rose as prospects the United States may hold off raising interest rates encouraged investors to buy metals facing a supply crunch.

Sentiment was tempered however after growth in China's services sector slowed sharply in July to its lowest level in nearly nine years

Zinc daily stocks at Shanghai exchange came up by 82 tonnes.