Zinc settled down -0.96% at 124.05 as US dollar index continued to rebound on expectations that QE3 will be brought to an end increased. Earlier in the day HSBC's August PMI for China was 50.1, unexpectedly positive, boosting market sentiment and inducing a large number of longs to enter the market. HSBC's flash China manufacturing PMI for August climbed to 50.1 from 47.7. The output sub-index was 50.6, a 3-month high. New orders increased, but new export orders shrank considerably. This indicates the rally in China's manufacturing PMI is due chiefly to the central government's fine-tuning of its policy. China's official manufacturing PMI for July released earlier by the National Bureau of Statistics (NBS) was 50.6, suggesting expansion in manufacturing, pushing commodity prices up. Although France's August manufacturing PMI was below 50 at 49.7, manufacturing PMI in Germany and the euro zone both exceeded forecasts and rose above 50. The euro zone's manufacturing PMI jumped to a 26-month high of 51.3, while Germany's manufacturing PMI rose to its highest since July 2011 of 52.0. These upbeat figures suggest recovery in the European economy and that the euro zone has basically got rid of recession, pushing European stock markets and base metals higher. Technically market is under long liquidation as market has witnessed drop in open interest by -0.65% to settled at 3371 while prices down -1.2 rupee, now Zinc is getting support at 122.3 and below same could see a test of 120.5 level, And resistance is now likely to be seen at 126.8, a move above could see prices testing 129.5.

Trading Ideas:

Zinc trading range for the day is 120.5-129.5.

Zinc dropped as US dollar index continued to rebound on expectations that QE3 will be brought to an end increased.

The flash euro zone manufacturing purchasing managers' index rose to 51.3 in August from a final reading of 50.3 in July.

Data out of the euro zone fuelled optimism over the region's economic outlook.