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Gold

Gold yesterday settled up by 0.53% at 50644 as the dollar lost ground testing the 106 mark for the first time in over two weeks as worse-than-expected business activity surveys weighed on a market outlook clouded by soaring inflation and recession fears. The US business activity contracted in July for the first time in nearly two years, pressured by a sharp slowdown in the service sector. The DXY was already under pressure as markets recently moved to price in on a less hawkish move from the Federal Reserve. The US central bank is on track to raise interest rates by another 75 basis points next week after pushing back against expectations of a mammoth 100 basis point increase. Physical gold demand picked up in some Asian hubs as softer prices drew buyers, allowing dealers in India to narrow discounts and driving up premiums in Singapore. Indian dealers were offering a discount of up to $10 an ounce over official domestic prices down from last week’s $20 discount. Chinese dealers sold gold at $3.5-$9 over global prices, while Hong Kong saw sales between at par with the benchmark to a $2.5 premium. India's gold jewellery demand is likely to fall by 5 per cent to 550 tonnes this fiscal, mainly due to the hike in customs duty, according to a report. Technically market is under short covering as market has witnessed drop in open interest by -6.36% to settled at 4752 while prices up 269 rupees, now Gold is getting support at 50350 and below same could see a test of 50055 levels, and resistance is now likely to be seen at 50905, a move above could see prices testing 51165.

Trading Ideas:
* Gold trading range for the day is 50055-51165.
* Gold gained as the dollar lost ground testing the 106 mark for the first time in over two weeks
* Investors now expect the U.S. Federal Reserve to raise interest rates by 75 basis points at its July 26-27 policy meeting.
* Physical gold demand picked up in some Asian hubs as softer prices drew buyers, allowing dealers in India to narrow discounts

Silver

Silver yesterday settled down by -0.51% at 55131 as worries about demand in China and an aggressive tightening by the Federal Reserve to rein on sky-high inflation spooked investors from metal. U.S. business activity contracted for the first time in nearly two years in July as a sharp slowdown in the service sector outweighed continued modest growth in manufacturing, painting a glum picture for an economy stunted by high inflation, rising interest rates and deteriorating consumer confidence. S&P Global said its preliminary U.S. Composite PMI Output Index had tumbled far more than expected to 47.5 this month from a final reading of 52.3 in June. With a reading below 50 indicating business activity had contracted, it is a development likely to feed into a vocal debate over whether the U.S. economy is back in a recession after rebounding sharply from the downturn in early 2020 at the start of the COVID-19 pandemic. Eurozone business activity unexpectedly contracted this month, suggesting that recessionary pressures are becoming more widespread in the Eurozone economy. S&P Global's flash Eurozone composite purchasing managers' index, which measures activity at both services and manufacturing companies across the Eurozone, fell to a 17-month low of 49.4, down from 52 in June as output and new orders both fell for the first time since coronavirus lockdowns in early 2021. Technically market is under fresh selling as market has witnessed gain in open interest by 2.94% to settled at 22767 while prices down -280 rupees, now Silver is getting support at 54895 and below same could see a test of 54658 levels, and resistance is now likely to be seen at 55562, a move above could see prices testing 55992.

Trading Ideas:
* Silver trading range for the day is 54658-55992.
* Silver dropped as worries about demand in China and an aggressive tightening by the Federal Reserve to rein on sky-high inflation spooked investors from metal.
* Disappointing U.S. data dampened expectations of a large 100-basis-point (bps) interest rate hike by the Federal Reserve at its July 26-27 policy meeting.
* U.S. business activity contracted for the first time in nearly two years in July as a sharp slowdown in the service sector outweighed

Crude oil 
 

Crude oil yesterday settled down by -1.52% at 7660 weighed down by weakening US gasoline demand and mounting risk of a global economic slowdown as investors monitor supply-side issues. President Joe Biden failed to secure a pledge from Arab leaders this week to pump more oil despite remarks from a top US energy envoy indicating confidence that major producers have spare capacity and are likely to boost supplies. Elsewhere, Libya’s National Oil Corp announced crude production had resumed at several oilfields, after lifting force majeure on oil exports last week. Meanwhile, the US is working on a plan to impose a price cap on Russian crude aimed at pressuring Moscow over its invasion of Ukraine. On the demand side, official data indicated weakening US gasoline demand despite the peak summer driving season, while aggressive rate hikes by major central banks triggered slowdown concerns. Switzerland is releasing 245,000 cubic metres of its oil reserves to help ease supply constraints caused by low water levels hitting barge capacity on the River Rhine and train delays, the government said. "Logistic bottlenecks on the Rhine and on foreign railways are affecting the replenishment of mineral oil products. In order to ensure the supply, the Federal Office for National Economic Supply has decided to undershoot the compulsory stocks by 6.5%," it said in a statement. Technically market is under long liquidation as market has witnessed drop in open interest by -4.89% to settled at 3055 while prices down -118 rupees, now Crude oil is getting support at 7527 and below same could see a test of 7393 levels, and resistance is now likely to be seen at 7818, a move above could see prices testing 7975.

Trading Ideas:
* Crude oil trading range for the day is 7393-7975.
* Crude oil dropped weighed down by weakening US gasoline demand and mounting risk of a global economic slowdown
* Libya’s National Oil Corp announced crude production had resumed at several oilfields, after lifting force majeure on oil exports
* The US is working on a plan to impose a price cap on Russian crude aimed at pressuring Moscow over its invasion of Ukraine.

Natural gas 
Nat.Gas yesterday settled up by 3.14% at 659.7 on forecasts for hotter weather and higher demand next week than previously expected and ongoing problems with shipping a turbine needed to boost output on the Russia-Germany Nord Stream gas pipe. Extreme heat has already caused U.S. power demand to hit all-time highs many times this summer in several regions, including Texas, as homes and businesses crank up their air conditioners to escape the heat. Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 96.1 bcfd so far in July from 95.3 bcfd in June. That compares with a monthly record high of 96.1 bcfd in December 2021. Refinitiv projected average U.S. gas demand including exports would slide from 101.1 bcfd this week to 100.6 bcfd next week and 99.9 bcfd in two weeks as extreme heat starts to ease in some parts of the country. The forecast for next week was higher than Refinitiv's outlook on Thursday. The U.S. Energy Information Administration (EIA) said utilities added just 32 billion cubic feet (bcf) of gas to storage during the week ended July 15. Technically market is under short covering as market has witnessed drop in open interest by -25.7% to settled at 3836 while prices up 20.1 rupees, now Natural gas is getting support at 627 and below same could see a test of 594.4 levels, and resistance is now likely to be seen at 683.2, a move above could see prices testing 706.8.

Trading Ideas:
* Natural gas trading range for the day is 594.4-706.8.
* Natural gas gained on forecasts for hotter weather and higher demand next week than previously expected
* Support also seen amid ongoing problems with shipping a turbine needed to boost output on the Russia-Germany Nord Stream gas pipe.
* Average gas output in the U.S. Lower 48 states has risen to 96.1 bcfd so far in July from 95.3 bcfd in June.

Copper

Copper yesterday settled up by 0.85% at 631.9 after top consumer China sought to ease concerns over financial distress facing its property sector. The China Banking and Insurance Regulatory Commission urged banks to extend loans to qualified real estate projects and meet developers financing needs where reasonable, after a growing number of home buyers across China threatened to stop making mortgage payments for unfinished houses. Still, prices for the red metal remain more than 30% below their March peak as fears of a demand-sapping global recession continued to mount. An aggressive tightening from major central banks to rein on sky-high inflation has sparked concerns about a worldwide recession and China continues to battle Covid-19. ECB raised interest rate by 50 basis points, higher than the expected 25 bps rate hike, pressuring the base metals market. On the other hand, US Fed officials’ voices recently have lowered market expectation of a 100 bps rate hike, while high inflation still dragged on the real estate and labour market. Codelco said it was temporarily halting construction of all mining projects after reporting the death of two workers in less than a month. Technically market is under fresh buying as market has witnessed gain in open interest by 27.39% to settled at 5320 while prices up 5.35 rupees, now Copper is getting support at 626.6 and below same could see a test of 621.3 levels, and resistance is now likely to be seen at 638.8, a move above could see prices testing 645.7.

Trading Ideas:
* Copper trading range for the day is 621.3-645.7.
* Copper rose after top consumer China sought to ease concerns over financial distress facing its property sector.
* Copper inventories in warehouses monitored by the Shanghai Futures Exchange were down 29.4% from a week earlier.
* A manufacturing downturn is accelerating in the euro zone and factory growth is slowing in Japan and Australia.

Zinc

Zinc yesterday settled up by 1.09% at 273.15 as data from the National Bureau of Statistics showed that China’s refined zinc output was 549,000 mt in June, down 4.2% year-on-year. The domestic refined zinc production in June was lower than expected mainly due to unexpected output reductions. According to survey, some zinc smelters resumed production in July, but their output still did not return to normal levels, while some other smelters were overhauled this month. Thus, the total output in July may still fall. Gains, however, were capped as outlook remained weak amid tepid demand in top consumer China due to COVID-19 restrictions and a looming global recession risk. The global zinc market flipped to a deficit of 3,900 tonnes in May from a revised surplus of 31,000 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a surplus of 10,900 tonnes in April. During the first five months of 2022, ILZSG data showed a surplus of 29,000 tonnes versus a surplus of 44,000 tonnes in the same period of 2021. About 13.5 million tonnes of zinc is produced and consumed each year. Technically market is under fresh buying as market has witnessed gain in open interest by 15.91% to settled at 1370 while prices up 2.95 rupees, now Zinc is getting support at 270.2 and below same could see a test of 267.3 levels, and resistance is now likely to be seen at 274.9, a move above could see prices testing 276.7.

Trading Ideas:
* Zinc trading range for the day is 267.3-276.7.
* Zinc prices gained as data from NBS showed that China’s refined zinc output was 549,000 mt in June, down 4.2% year-on-year.
* The global zinc market flipped to a deficit of 3,900 tonnes in May from a revised surplus of 31,000 tonnes a month earlier
* Zinc inventories in warehouses monitored by the Shanghai Futures Exchange were down 3.5% from a week earlier.

Aluminium

Aluminium yesterday settled up by 0.68% at 213.15 as China aluminium ingot inventory stood at 668,000 mt as of Thursday July 21, down 29,000 mt from last Thursday and 161,000 mt from a year ago. The ingot social inventory began to fall again in July. Wuxi saw a weekly reduction of 15,000 mt due to delayed arrivals and shipments, and most arrivals are in transportation after the pandemic situation improves. Aluminium billet social inventory dropped 3,100 mt from a week ago to 95,400 mt as of July 21. The inventory dropped across the major markets except Foshan and Huzhou, which is partly due to less shipments from smelters in north-west China. On the other hand, falling aluminium prices also triggered downstream restocking demand. It is expected that aluminium billet inventory will keep falling next week. According to customs data, in June 2022, the total imports of primary aluminium imports stood at 28,500 mt, down 23.6% month-on-month and down 82% year-on-year; primary aluminium exports totalled 6,623 mt, down 89.8% MoM and up 8,746.9% YoY. According to the latest customs data, China imported 124,600 mt of aluminium scrap in June 2022, an increase of 220.3% year-on-year and 23.67% month-on-month. Technically market is under fresh buying as market has witnessed gain in open interest by 43.24% to settled at 2173 while prices up 1.45 rupees, now Aluminium is getting support at 211.4 and below same could see a test of 209.6 levels, and resistance is now likely to be seen at 214.6, a move above could see prices testing 216.

Trading Ideas:
* Aluminium trading range for the day is 209.6-216.
* Aluminium prices gained as China aluminium ingot inventory stood at 668,000 mt as, down 29,000 mt from last Thursday
* Aluminium billet social inventory dropped 3,100 mt from a week ago to 95,400 mt
* The total imports of primary aluminium imports stood at 28,500 mt, down 23.6% month-on-month

Mentha oil 
Mentha oil yesterday settled down by -0.67% at 1015.3 as Synthetic Mentha supply remains uninterrupted. However, downside seen limited amid low production this season and improving demand post-pandemic. Many states have seen gutkha and pan masala ban which have seen a lower demand from the pan masala industry. The harvest is expected to be almost the same as last year's in Barabanki area but harvesting this year is expected to be delayed. Crop growth is poor this year compared with last year despite use of fertiliser. The plant is about 25% less than the total crop, water is being felt after every three days. 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. Germany's BASF said it would have to stop production if natural gas supplies fell to less than half its needs, as the world's largest chemicals group warned of the damage to its operations from Europe's power crunch. In Sambhal spot market, Mentha oil gained by 1.3 Rupees to end at 1117.9 Rupees per 360 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 19.1% to settled at 1272 while prices down -6.8 rupees, now Mentha oil is getting support at 1012.6 and below same could see a test of 1010 levels, and resistance is now likely to be seen at 1019.9, a move above could see prices testing 1024.6.

Trading Ideas:
* Mentha oil trading range for the day is 1010-1024.6.
* In Sambhal spot market, Mentha oil gained  by 1.3 Rupees to end at 1117.9 Rupees per 360 kgs.
* Mentha oil dropped as Synthetic Mentha supply remains uninterrupted.
* In the month of May 2022 around 209.90 tonnes Mentha was exported as against 170.22 in April 2022 showing a rise of 23.31%.
* In the month of May 2022 around 209.90 tonnes of Mentha was exported as against 179.76 in May 2021 showing a rise of 16.77%.

Turmeric

Turmeric yesterday settled down by -1.78% at 7706 on profit booking after prices remained supported amid expectations of decline in sown area in the ongoing kharif sowing season. Mandi arrivals of Turmeric, at all-India level, 0.22 lakh tonnes, marking a decline of 38% on m-o-m basis and 48% on y-o-y basis. The major Turmeric producing states such as Telangana, Maharashtra witnessed fall in mandi arrivals during the month of July. Turmeric sowing for marketing year 2023 has started across major production states. In the beginning of June, with the delay in monsoon progress over key Turmeric growing states like Andhra Pradesh, Maharashtra and Tamil Nadu, Turmeric sowings remained sluggish. Stockists have remained inactive due to availability of stock in Marathwada region. As per market feedback, in the ongoing season, no major quality concerns were observed in the crop arrived in the Marathwada region. Turmeric exports during Apr-May 2022 has rose by 14.94 percent at 30,899.73 as compared to 26,881.41 exported during Apr-May 2021. In the month of May 2022 around 17,137.15 tonnes turmeric was exported as against 13762.59 in April 2022 showing a rise of 24.51%. In the month of May 2022 around 17,137.15 tonnes of turmeric was exported as against 13,598.88 in May 2021 showing an increase of 26.02%. In Nizamabad, a major spot market in AP, the price ended at 8062.5 Rupees gained 44.5 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -2.31% to settled at 15665 while prices down -140 rupees, now Turmeric is getting support at 7544 and below same could see a test of 7384 levels, and resistance is now likely to be seen at 7872, a move above could see prices testing 8040.

Trading Ideas:
* Turmeric trading range for the day is 7384-8040.
* Turmeric dropped on profit booking after prices remained supported amid expectations of decline in sown area in the ongoing kharif sowing season.
* In the ongoing season, no major quality concerns were observed in the crop arrived in the Marathwada region.
* Turmeric exports during Apr-May 2022 has rose by 14.94 percent at 30,899.73 as compared to 26,881.41 exported during Apr-May 2021.
* In Nizamabad, a major spot market in AP, the price ended at 8062.5 Rupees gained 44.5 Rupees.

Jeera

Jeera yesterday settled down by -0.04% at 23890 on profit booking after prices remained supported 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. However, mandi arrivals were also lower by 39% compared to the corresponding period of the previous year. As per market feedback, export demand has decreased as compared to corresponding period of the previous year. The reason behind decline in export demand was lower exports to China, as the country had imposed lockdown amid resurgence of Covid. In last 3 years Jeera export was observed to be 7.30 Lakh Tonnes out of which 2.01 Lakh Tonnes was exported to China i.e 28% of total jeera exported. As per preliminary estimates, all-India Jeera production is expected to fall in the Marketing year 2022-23 (April-March) by around 33% to 3 lakh tonnes on y-o-y basis due to lower sowings. As per Fourth advance estimates released by Govt of Gujarat Jeera production is likely to fall by 45% to 2.22 lakh tonnes over the previous year. Area covered under cumin seed in Gujarat and Rajasthan state (considered together) has decreased by 28% over last year. In Unjha, a key spot market in Gujarat, jeera edged up by 184.85 Rupees to end at 23649.4 Rupees per 100 kg.Technically market is under long liquidation as market has witnessed drop in open interest by -5.82% to settled at 11547 while prices down -10 rupees, now Jeera is getting support at 23710 and below same could see a test of 23530 levels, and resistance is now likely to be seen at 24085, a move above could see prices testing 24280.

Trading Ideas:
* Jeera trading range for the day is 23530-24280.
* Jeera dropped on profit booking after prices remained 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 184.85 Rupees to end at 23649.4 Rupees per 100 kg.

Cotton

Cotton yesterday settled up by 1.14% at 42470 as crop has been damaged as excessive rains continue to hit parts of the Maharashtra State. According to government sources, if rains continue to hit the State for the next few days more crop is likely to get damaged. However, upside seen limited after CAI reports at least 10% higher sowing is expected compared to previous kharif season’s 12 million hectares. Looking at the current trend, cotton sowing in Maharashtra is expected to cross 4.2 million hectares. In Gujarat, it would be around 2.7 million hectares. The cotton acreage in north will be around 1.5 million hectares and the same for southern states is likely to remain at around 3.5-4.0 million hectare. Reports of severe damage to crop due to heavy rains in Gujarat in the last 4 days, most of the sowings have failed. In Punjab, area under cotton cultivation dips to lowest since 2010, also Cotton crop in Punjab is on radar for second straight year as attack of whitefly, pink bollworm seen, as per the report. China has decided to buy three to five lac tonnes of cotton from international markets for its state reserves. The U.S. 2022/23 cotton projections show lower production, exports, and ending stocks compared with last month. In spot market, Cotton gained by 460 Rupees to end at 41510 Rupees.Technically market is under fresh buying as market has witnessed gain in open interest by 32.36% to settled at 544 while prices up 480 rupees, now Cotton is getting support at 41800 and below same could see a test of 41140 levels, and resistance is now likely to be seen at 43300, a move above could see prices testing 44140.

Trading Ideas:
* Cotton trading range for the day is 41140-44140.
* Cotton gains as crop has been damaged as excessive rains continue to hit parts of the Maharashtra State.
* However, upside seen limited after CAI reports at least 10% higher sowing is expected compared to previous 12 million hectares.
* The U.S. 2022/23 cotton projections show lower production, exports, and ending stocks compared with last month.
* In spot market, Cotton gained  by 460 Rupees to end at 41510 Rupees.

- www.kediaadvisory.com

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