IGI Logo

Gold

Gold yesterday settled up by 1.13% at 50000 after Japan intervened to prop up the yen for the first time since 1998 after the Federal Reserve's aggressive U.S. rate hike signals had markets on the run. The Federal Reserve delivered a 75bps hike while signaling larger increases in the next few months. The terminal rate, the peak spot where the federal funds rate is, is now seen at 4.6%, with policymakers anticipating cutting interest rates in 2024 and extending that into 2025. Officials also significantly cut their outlook for 2022 economic growth, expecting just a 0.2% gain in GDP, down from 1.7% in June. Meantime, the 2-year Treasury yield surged above 4.1%, the highest since 2007. A strong dollar and treasury yields rising to historic levels have increased the opportunity cost of non-yield-baring assets, making gold less attractive resulting in its decline from its March highs of $2050. A series of interest rate decisions worldwide are widely expected to fall in line with the Fed’s hawkish stance. European Central Bank President Christine Lagarde said that the ECB might need to raise interest rates to restrictive levels to stem demand and combat surging inflation. Technically market is under short covering as the market has witnessed a drop in open interest by -13.2% to settle at 6673 while prices are up 557 rupees, now Gold is getting support at 49485 and below same could see a test of 48969 levels, and resistance is now likely to be seen at 50346, a move above could see prices testing 50691.

Trading Ideas:
* Gold trading range for the day is 48969-50691.
* Gold prices rallied after Japan intervened to prop up the yen for the first time since 1998
* The Federal Reserve delivered a 75bps hike while signaling larger increases in the next few months.
* The US 10-year Treasury note yield briefly broke above the 3.61% mark for the first time since April 2011

Silver

Silver yesterday settled up by 1.27% at 58027 as the dollar eased after the Bank of Japan said it had intervened in the forex exchange market to buy yen for the first time since 1998. The Federal Reserve raised the target range for the fed funds rate by another 75bps to 3%-3.25% during its September meeting, the fifth consecutive rate hike, and pushing borrowing costs to the highest since 2008. The central bank also signaled larger increases to come in new projections showing its policy rate reaching 4.4% by the end of 2022 before topping out at 4.6% in 2023. Officials significantly cut their outlook for 2022 economic growth, expecting just a 0.2% gain in GDP, down from 1.7% in June. Meantime, the 2-year Treasury yield surged above 4.1%, the highest since 2007. Federal Reserve Chair Jerome Powell said the U.S. housing market will probably go through a "correction" after a period of "red hot" price increases that have put home ownership out of reach for many Americans. "For the longer term what we need is supply and demand to get better aligned so housing prices go up at a reasonable level, at a reasonable pace and people can afford houses again. We probably in the housing market have to go through a correction to get back to that place." Technically market is under short covering as the market has witnessed a drop in open interest by -4.74% to settle at 15671 while prices are up 729 rupees, now Silver is getting support at 57159 and below same could see a test of 56292 levels, and resistance is now likely to be seen at 58695, a move above could see prices testing 59364.

Trading Ideas:
* Silver trading range for the day is 56292-59364.
* Silver rose as the dollar eased after BOJ said it had intervened in the forex exchange market for the first time since 1998.
* The number of Americans filing new claims for unemployment benefits rose by 5 thousand to 213,000
* The US current account deficit narrowed to $251.1 billion in Q2 2022, following a record gap of $282.5 billion in Q1.

Crude oil

Crude oil yesterday settled up by 0.96% at 6807 as the prospect of higher Chinese demand and heightened geopolitical risks outweighed recession fears after a flurry of central bank interest rate hikes, including from the Bank of England. Prices rose on news that crude oil demand in China, the world's largest oil importer, is rebounding, having been dampened by strict COVID-19 restrictions. At least three Chinese state oil refineries and a privately run mega refiner are considering increasing runs by up to 10% in October from September, eyeing stronger demand and a possible surge in fourth-quarter fuel exports, people with knowledge of the matter said. Chinese refiners are expecting Beijing to release up to 15 million tonnes worth of oil products export quotas for the rest of the year to support the no. 2 economy's sagging exports. Such a move would signal a reversal in China's oil products export policy, add to global supplies and depress fuel prices. After a recent slide in benchmark Brent crude prices to below $100 a barrel, Chinese refiners have taken arbitrage opportunities to boost stockpiles, traders said, booking supertankers to haul crude oil to China from the Americas and Middle East. An official with a state refinery said his plant is eyeing a 10% hike in runs from September to about 240,000 barrels per day (bpd). Technically market is under short covering as the market has witnessed a drop in open interest by -24.58% to settle at 5234 while prices are up 65 rupees, now Crude oil is getting support at 6687 and below same could see a test of 6567 levels, and resistance is now likely to be seen at 6951, a move above could see prices testing 7095.

Trading Ideas:
* Crude oil trading range for the day is 6567-7095.
* Crude oil rises on rebounding Chinese demand, geopolitical risks
* China's crude oil demand rebounds as refiners prepare to ramp up output
* U.S. crude inventories rose in the week to Sept. 16


Nat.Gas

Nat.Gas yesterday settled down by -4.54% at 593.6 on record output and forecasts for milder weather through early October that should allow utilities to inject more gas than usual into storage over the next few weeks. Gas prices were also weighed down by expectations demand for the fuel would decline in October when the Cove Point liquefied natural gas (LNG) plant in Maryland shuts for a couple weeks of maintenance. Freeport, the second-biggest U.S. LNG export plant, was consuming about 2 billion cubic feet per day (bcfd) of gas before it shut on June 8. Freeport LNG expects the facility to return to at least partial service in early to mid-November. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 98.8 bcfd so far in September from a record 98.0 bcfd in August. With the coming of cooler autumn weather, Refinitiv projected average U.S. gas demand, including exports, would slip from 92.3 bcfd this week to 89.8 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Tuesday, while its forecast for next week was lower. The average amount of gas flowing to U.S. LNG export plants rose to 11.3 bcfd so far in September from 11.0 bcfd in August. Technically market is under fresh selling as the market has witnessed a gain in open interest by 18.77% to settle at 5030 while prices are down -28.2 rupees, now Natural gas is getting support at 578.1 and below same could see a test of 562.5 levels, and resistance is now likely to be seen at 619.4, a move above could see prices testing 645.1.

Trading Ideas:
* Natural gas trading range for the day is 562.5-645.1.
* Natural gas fell on record output and forecasts for milder weather through early October
* A rail strike could boost demand for gas by threatening coal supplies to power plants.
* Gas prices rose despite expectations gas demand would decline next month when the Cove Point LNG plant shuts for a couple weeks of maintenance in October.


Copper

Copper yesterday settled up by 1.27% at 652.35 as the global refined copper market showed a 30,000 tonne deficit in July, compared with a 105,000 tonne deficit in June, the International Copper Study Group (ICSG) said in its latest monthly bulletin. For the first 7 months of the year, the market was in a 126,000 tonne deficit compared with a 183,000 tonne deficit in the same period a year earlier, the ICSG said. Shrinking copper demand in Europe due to a manufacturing recession caused by the energy crisis will dominate market sentiment for some time with prices likely to retreat towards two-year lows early next year. Copper prices typically react to the ebb and flow of demand in China, which accounts for half of global consumption estimated at around 25 million tonnes this year. London Metal Exchange (LME) warehouses saw 11,200 tonnes of copper arrivals, the largest single-day warranting since June. Inflows have totalled over 35,000 tonnes so far this month but have been largely offset by departures. Headline stocks of 118,000 tonnes are up by only 3,625 tonnes on the end of August. LME inventory remains ultra-low by any historical yardstick, representing just two days' worth of global usage. The LME premium for cash over three-month delivery spiked to $150 per tonne last week and is still trading around $55 despite Tuesday's hefty deliveries of copper onto warrant. Technically market is under short covering as the market has witnessed a drop in open interest by -20.78% to settle at 3618 while prices are up 8.15 rupees, now Copper is getting support at 646.8 and below same could see a test of 641.1 levels, and resistance is now likely to be seen at 656.8, a move above could see prices testing 661.1.

Trading Ideas:
* Copper trading range for the day is 641.1-661.1.
* Copper gained as the global refined copper market showed a 30,000 tonne deficit in July
* Europe upstages China as main driver for copper outlook
* China's 2023 GDP projection is reduced by Goldman Sachs to 4.5% from 5.3%.


Zinc

Zinc yesterday settled up by 1.4% at 282.2 as the global zinc market moved to a deficit of 72,800 tonnes in July from a surplus of 34,600 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a deficit of 1,400 tonnes in June. During the first seven months of 2022, ILZSG data showed a surplus of 83,000 tonnes versus a deficit of 23,000 tonnes in the same period of 2021. China's Shanghai city announced 1.8-trillion-yuan investment worth of infrastructure projects, echoing national policymakers' calls to revive sluggish economic growth hurt by the COVID-19 pandemic, a property downturn, weak domestic demand, and a fading trade outlook. Fed Chair Jerome Powell vowed to beat down inflation, as the U.S. central bank raised interest rates by three-quarters of a percentage point for a third straight time and signaled that borrowing costs would keep rising this year. About half of the European Union's zinc production capacity has already been forced offline due to the power crisis. Prospects of better demand from the real estate sector also lifted sentiment, after property giant China Evergrande Group announced it would restart frozen construction projects, and on hopes of more supportive policies in China. Technically market is under short covering as the market has witnessed a drop in open interest by -21.96% to settle at 846 while prices are up 3.9 rupees, now Zinc is getting support at 280 and below same could see a test of 277.8 levels, and resistance is now likely to be seen at 283.9, a move above could see prices testing 285.6.

Trading Ideas:
* Zinc trading range for the day is 277.8-285.6.
* Zinc gained as the global zinc market moved to a deficit of 72,800 tonnes in July from a surplus of 34,600 tonnes a month earlier
* China's Shanghai city announced 1.8-trillion-yuan investment worth of infrastructure projects, echoing national policymakers' calls to revive sluggish economic growth
* About half of the European Union's zinc production capacity has already been forced offline due to the power crisis.



Aluminium

Aluminium yesterday settled up by 1.76% at 196.95 as traders assessed the prospects of further stimulus measures and stronger demand from China's sprawling construction sector towards the end of the monsoon season. Global primary aluminium output in August rose 3.49% year on year to 5.888 million tonnes, data from the International Aluminium Institute (IAI) showed. Estimated Chinese production was 3.5 million tonnes in August, the IAI said. The China Development Bank (CDB) said it will increase the number of infrastructure loans it gives to local governments, while prioritising the needs of major economic provinces. It comes after China's cabinet was quoted as saying in August it would take more steps to support the world's second-largest economy, including increasing funding support for infrastructure projects. The lender has spent 360 billion yuan ($50.76 billion) to fund more than 800 infrastructure projects, the CDB said in a statement, without giving a timeframe. "The fund will give priority to supporting infrastructure projects in key areas that can start construction as soon as possible in the third quarter," said the CDB, the country's largest policy lender by assets. As part of the 360 billion yuan, the CDB had spent two billion on a railway linking Guangzhou Baiyun International Airport to a village in the southern city of Guangzhou and one billion yuan on a water project in the southern region of Guangxi. Technically market is under short covering as the market has witnessed a drop in open interest by -31.81% to settle at 2572 while prices are up 3.4 rupees, now Aluminium is getting support at 194.9 and below same could see a test of 192.6 levels, and resistance is now likely to be seen at 198.6, a move above could see prices testing 200.

Trading Ideas:
* Aluminium trading range for the day is 192.6-200.
* Aluminium rose as traders assessed the prospects of further stimulus measures and stronger demand from China's sprawling construction sector
* China's largest policy bank to boost infrastructure loans to local govts
* Global primary aluminium output in August rose 3.49% year on year to 5.888 million tonnes

Mentha oil

Mentha oil yesterday settled up by 0.55% at 980 amid low production this season and improving demand post-pandemic. However, upside seen limited as Synthetic Mentha supply remains uninterrupted. Many states have seen gutkha and pan masala ban which have seen a lower demand from the pan masala industry. The production of Mentha oil was historically high in 2020-21, the area remained almost similar last year but the yields were lower which affected the production. In the current year we forecast production to fall to around 46,238 MT due to sharp fall in area and loss in yields following severe summer heat. which will come closed 14% down in the year 20-21. Mentha exports during Apr-July 2022 has dropped by 19.63 percent at 648.49 tonnes as compared to 806.87 tonnes exported during Apr-July 2021. In the month of July 2022 around 155.04 tonnes Mentha was exported as against 113.33 tonnes in June 2022 showing a rise of 36.80. In the month of July 2022 around 155.04 tonnes of Mentha was exported as against 283.33 tonnes in July 2021 showing a decline of over 45.28%. In the month of June 2022 around 113.33 tonnes Mentha was exported as against 209.90 tonnes in May 2022 showing a drop of 46%. In Spot market, support seen after IMD issues Yellow Alert in key sowing area ; light-moderate rain to continue till Sept 4 impacting arrival in the mandi. In Sambhal spot market, Mentha oil gained by 5.5 Rupees to end at 1129.7 Rupees per 360 kgs.Technically market is under short covering as the market has witnessed a drop in open interest by -12.47% to settle at 772 while prices are up 5.4 rupees, now Mentha oil is getting support at 974.1 and below same could see a test of 968.3 levels, and resistance is now likely to be seen at 983.8, a move above could see prices testing 987.7.

Trading Ideas:
* Mentha oil trading range for the day is 968.3-987.7.
* In Sambhal spot market, Mentha oil gained  by 5.5 Rupees to end at 1129.7 Rupees per 360 kgs.
* Mentha oil gained amid low production this season and improving demand post-pandemic.
* However, upside seen limited as Synthetic Mentha supply remains uninterrupted.
* In the month of July 2022 around 155.04 tonnes Mentha was exported as against 113.33 tonnes in June 2022 showing a rise of 36.80.


Turmeric

Turmeric yesterday settled down by -1.52% at 7128 as sowing activities has almost completed in major growing states across India and Crop size is expected to be on par. The Product Advisory Committee (PAC) on turmeric has rejected calls for banning futures trade in the commodity, claiming that it has not found any unusual movement in its price. As per Andhra Pradesh agricultural department, sowing activity completed around 7,958 hectares as compared to last year same period 7,764 hectares. Sufficient stocks and good sowing reports kept turmeric prices under pressure. Turmeric exports during Apr-July 2022 has rose by 17.72 percent at 62,245.73 tonnes as compared to 52,875.44 tonnes exported during Apr-July 2021. In the month of July 2022 around 12,810.36 tonnes turmeric was exported as against 18,532.00 tonnes in June 2022 showing a drop of 30.87%. In the month of July 2022 around 12,810.36 tonnes of turmeric was exported as against 12,826.38 tonnes in July 2021 showing a decrease of 0.12%. In the month of June 2022 around 17,532.00 tonnes of turmeric was exported as against 13,206 tonnes in June 2021 showing an increase of 40.33%. Production of spices in India is likely to have declined 1.5% on year to 10.9 mln tn in 2021-22 (Jul-Jun), according to data from Spices Board India. The country had produced 11.0 mln tn of spices in the previous year. The Spices Board has pegged turmeric production at 1.33 mln tn, up 18.4% on year. In Nizamabad, a major spot market in AP, the price ended at 7272.1 Rupees dropped -30.6 Rupees.Technically market is under long liquidation as the market has witnessed a drop in open interest by -1.36% to settle at 12715 while prices are down -110 rupees, now Turmeric is getting support at 7034 and below same could see a test of 6942 levels, and resistance is now likely to be seen at 7244, a move above could see prices testing 7362.

Trading Ideas:
* Turmeric trading range for the day is 6942-7362.
* Turmeric dropped as sowing activities has almost completed and Crop size is expected to be on par.
* In the ongoing season, no major quality concerns were observed in the crop arrived in the Marathwada region.
* In the month of July 2022 around 12,810.36 tonnes turmeric was exported as against 18,532.00 tonnes in June 2022 showing a drop of 30.87%.
* In Nizamabad, a major spot market in AP, the price ended at 7272.1 Rupees dropped -30.6 Rupees.

Jeera

Jeera yesterday settled up by 0.42% at 24910 as supply was observed to be less as farmers and stockists were holding stocks in expectations of higher prices in coming months. Arrivals also observed to be less during the month. Mandi arrivals of Jeera, at all-India level decreased by 10% as compared with previous month supported by decrease in arrivals in Rajasthan as well as in Gujarat. Jeera exports during Apr-July 2022 has dropped by 37.28 percent at 67,057.16 tonnes as compared to 1,06 ,929.72 tonnes exported during Apr-July 2021. In the month of July 2022 around 19,866.18 tonnes jeera was exported as against 21,587.63 tonnes in June 2022 showing a drop of 7.97%. In the month of July 2022 around 19,866.18 tonnes of jeera was exported as against 24,167.64 tonnes in June 2021 showing a decrease of 17.80%. In the month of June 2022 around 21,587.63 tonnes of jeera was exported as against 30,989.86 tonnes in June 2021 showing a decrease of 30.34%. Production of spices in India is likely to have declined 1.5% on year to 10.9 mln tn in 2021-22 (Jul-Jun), according to data from Spices Board India. The country had produced 11.0 mln tn of spices in the previous year. Jeera production was seen at 725,651 tn, down 8.8% on year due to lower acreage in Rajasthan and Gujarat, the key producer, according to data from Spices Board India. According to fourth advanced estimates by Gujarat government, jeera production is seen fall by 44.5 per cent to 221500 tonnes in 2021-22 on yoy basis In Unjha, a key spot market in Gujarat, jeera edged up by 30.85 Rupees to end at 24529.65 Rupees per 100 kg.Technically market is under short covering as the market has witnessed a drop in open interest by -6.16% to settle at 7581 while prices are up 105 rupees, now Jeera is getting support at 24700 and below same could see a test of 24495 levels, and resistance is now likely to be seen at 25050, a move above could see prices testing 25195.

Trading Ideas:
* Jeera trading range for the day is 24495-25195.
* Jeera price seen supported as supply was observed to be less as farmers and stockists were holding stocks
* Mandi arrivals of Jeera, at all-India level decreased by 10% as compared with previous month
* All-India Jeera production is expected to fall in the Marketing year 2022-23 by around 33% to 3 lakh tonnes on y-o-y basis due to lower sowings.
* In Unjha, a key spot market in Gujarat, jeera edged up by 30.85 Rupees to end at 24529.65 Rupees per 100 kg.


Cotton

Cotton yesterday settled down by -1.32% at 32810 as Cotton output is expected to rebound from last years’ experience of unseasonal rain affecting the crop. Production this year is seen at 341.9 lakh bales (170 kg) against 312.03 lakh bales last year. Record prices for cotton, topping ?1 lakh a candy (356 kg) have helped increase the area under the fibre crop by 7.5 per cent this year. Pakistan’s cotton production has shrunk 19% to 2.19 million bales till September 15, 2022 in the current season mainly due to the devastation caused by heavy rainfall and flash floods nationwide. In its monthly supply-demand report, the 2022/23 U.S. cotton projections include higher beginning stocks, production, exports and ending stocks this month, the USDA's report said. Additionally, the 2022/23 world cotton projections include higher production and ending stocks relative to last month, and lower consumption. In recent time, the heavy rainfalls and pest attacks are affecting the cotton crop. In the northern states of Punjab, Haryana, and Rajasthan cotton crop has been affected due to pink bollworm infestation. In spot market, Cotton dropped by -60 Rupees to end at 36620 Rupees.Technically market is under fresh selling as the market has witnessed a gain in open interest by 5.12% to settle at 903 while prices are down -440 rupees, now Cotton is getting support at 32600 and below same could see a test of 32380 levels, and resistance is now likely to be seen at 33240, a move above could see prices testing 33660.

Trading Ideas:
* Cotton trading range for the day is 32380-33660.
* Cotton dropped as Cotton output is expected to rebound from last years’ experience of unseasonal rain affecting the crop.
* India’s Cotton sowing gained by nearly 7.54% to 127.15 lakh hectares in 2022.
* Cotton area is estimated at 126 lakh hectares till September 2 — up 8-9 per cent from 117 lakh hectares last year.
* In spot market, Cotton dropped  by -60 Rupees to end at 36620 Rupees.

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer