IGI Logo

Gold

Gold yesterday settled up by 1.51% at 52165 as a pullback in the dollar and U.S. Treasury yields provided support ahead of a key U.S. jobs report that could influence the Federal Reserve's policy stance. The Fed is really out in force this week trying to reinforce its message about the possibility of a larger September hike and not quickly reversing course next year, but investors seem keen to push back against that idea. Meanwhile, brewing tensions between the US and China after House Speaker Nancy Pelosi visited Taiwan boosted demand for the safe-haven asset. Several Fed policymakers moved to scotch recent market speculation that the central bank would adopt a less aggressive stance on interest rates by reassuring markets that it remains fully committed to taming inflation even at the risk of a recession. San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari voiced their determination to rein in high inflation. Fed officials have uniformly flagged that they remain determined to deliver rate hikes until there is strong evidence that inflation is headed back down to the Fed's 2% goal. Money markets price in a 50 bps hike at the Fed's September meeting, and a roughly 44% chance of another massive 75 bps increase. The Fed hiked rates by 75 bps at its meeting in June and July. Technically market is under fresh buying as market has witnessed gain in open interest by 3.87% to settled at 16063 while prices up 776 rupees, now Gold is getting support at 51795 and below same could see a test of 51424 levels, and resistance is now likely to be seen at 52364, a move above could see prices testing 52562.

Trading Ideas:
* Gold trading range for the day is 51424-52562.
* Gold rose as a pullback in the dollar and U.S. Treasury yields provided support
* U.S. 10-year Treasury yields slipped from their highest levels in more than a week
* Brewing tensions between the US and China boosted demand for the safe-haven asset.

Silver

Silver yesterday settled up by 0.74% at 57982 amid lingering recession concerns, while the negative sentiment around the dollar lent optimism to bulls. The Federal Reserve extended its tightening path with a 75bps interest rate hike in its July meeting. The move furthered the tightening momentum by major central banks, as inflation in the world’s largest economies have shown no sign of peaking. The ECB raised policy rates by a larger than expected 50bps increase and the BoE is likely to follow the same path next week. The U.S. services industry unexpectedly picked up in July amid strong order growth, while supply bottlenecks and price pressures eased, supporting views that the economy was not in recession despite output slumping in the first half of the year. The Institute for Supply Management said its non-manufacturing PMI rebounded to a reading of 56.7 last month from 55.3 in June. The increase ended three straight monthly declines. The surprise rebound followed on the heels of the ISM's manufacturing survey on Monday showing factory activity slowing moderately last month. It was in stark contrast with the S&P Global survey showing the services sector shrinking in July. Services activity is being supported by a shift in spending from goods. The ISM's measure of new orders received by services businesses shot up to 59.9 from 55.6 in June. Technically market is under short covering as market has witnessed drop in open interest by -5.44% to settled at 16591 while prices up 428 rupees, now Silver is getting support at 57520 and below same could see a test of 57058 levels, and resistance is now likely to be seen at 58472, a move above could see prices testing 58962.

Trading Ideas:
* Silver trading range for the day is 57058-58962.
* Silver rose amid lingering recession concerns, while the negative sentiment around the dollar lent optimism to bulls.
* The Federal Reserve extended its tightening path with a 75bps interest rate hike in its July meeting.
* The move furthered the tightening momentum by major central banks, as inflation in the world’s largest economies have shown no sign of peaking.

Crude oil

Crude oil yesterday settled down by -3.13% at 7034 as investors are coming to terms that higher interest rates and the global economic slowdown will heavily impact the demand. U.S. crude oil inventories rose unexpectedly last week as exports fell and refiners lowered their runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration said. Crude inventories rose by 4.5 million barrels in the week to July 29 to 426.6 million barrels, the EIA said, compared with expectations for a 600,000-barrel drop. Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. futures rose by 926,000 barrels in the week, the EIA said. Refinery crude runs fell by 174,000 barrels per day, and refinery utilization rates dropped by 1.2 percentage points to 91% of total capacity. U.S. crude oil in the Strategic Petroleum Reserve (SPR) dropped 4.7 million barrels last week to 469.9 million barrels, its lowest since May 1985, the U.S. Energy Information Administration (EIA) said. The EIA also said U.S. crude imports rose about 1.2 million barrels per day (bpd) in the latest week to 7.3 million bpd, the highest since July 2020. Crude oil production at Kazakhstan's giant Kashagan oilfield fell sharply in early August due to technical issues. Kashagan output was down to just 27,230 barrels per day (bpd) as of August 3 versus an average of 167,755 bpd in July, the sources said. Technically market is under fresh selling as market has witnessed gain in open interest by 40.83% to settled at 10875 while prices down -227 rupees, now Crude oil is getting support at 6900 and below same could see a test of 6766 levels, and resistance is now likely to be seen at 7239, a move above could see prices testing 7444.

Trading Ideas:
* Crude oil trading range for the day is 6766-7444.
* Crude oil dropped as investors are coming to terms that higher interest rates and the global economic slowdown will heavily impact the demand.
* U.S. crude, gasoline stockpiles rise unexpectedly – EIA
* U.S. SPR crude stockpiles fall to lowest since May 1985 – EIA

Nat.Gas

Nat.Gas yesterday settled up by 2.45% at 649.2 after Freeport LNG, a key export terminal in Texas, reached an agreement with regulators to restart as soon as October. Prospects of increasing need for cooling amid hotter-than-normal temperatures in the United States and continued robust demand from Europe as Nord Stream pipeline gas flows are down to 20% of capacity have been supporting prices. Russia has already halted shipments to Demark, Finland, Bulgaria, the Netherlands, and Poland and reduced supplies to Germany for not consenting to its natural gas payments demand in Russian rubles. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 97.5 bcfd so far in August from a record 96.7 bcfd in July. On a daily basis, however, output was on track to drop 1.9 bcfd to a preliminary 96.4 bcfd on Wednesday after soaring 2.4 bcfd to a daily record high of 98.4 bcfd on Friday. Preliminary data is often changed later in the day. With hotter weather expected, Refinitiv projected that average U.S. gas demand including exports would rise from 99.5 bcfd this week to 101.3 bcfd next week. The forecast for next week was higher than Refinitiv's outlook on Tuesday. Technically market is under fresh buying as market has witnessed gain in open interest by 4.9% to settled at 4385 while prices up 15.5 rupees, now Natural gas is getting support at 622.5 and below same could see a test of 595.9 levels, and resistance is now likely to be seen at 673.3, a move above could see prices testing 697.5.

Trading Ideas:
* Natural gas trading range for the day is 595.9-697.5.
* Natural gas rose after Freeport LNG, a key export terminal in Texas, reached an agreement with regulators to restart as soon as October.
* Russia has already halted shipments to Demark, Finland, Bulgaria, the Netherlands, and Poland and reduced supplies to Germany
* The United States became the world's top LNG exporter during the first half of 2022.

Copper

Copper yesterday settled up by 0.69% at 646.55 as 10-year US Treasury note yield retreated to the 2.7% level, closing in on its lowest level since April, as investors continued to assess the risks of a recession in the world's largest economy. Hawkish comments from Federal Reserve policymakers shifted investors' focus to further monetary tightening. A number of Federal Reserve officials indicated this week that the central bank will continue hiking rates until it sees compelling evidence that inflation is turning lower, shooting down speculations that the Fed may tighten less aggressively to avoid a recession. Brewing tensions between the US and China after House Speaker Nancy Pelosi visited Taiwan and signs of slowdown in major economies are also keeping markets on edge and clouding the overall outlook for metals. Meanwhile, major copper producers have recently reported declining output and flagged supply risks, providing a floor to copper prices. Hopes for a rebound in demand and more stimulus from top importer China also somewhat aided sentiment. Global copper smelting activity extended its slide in July, hit by weakness in top refined producer China and biggest mining region South America. China imported 373,000 tonnes of refined copper in June, the highest monthly tally this year. Technically market is under short covering as market has witnessed drop in open interest by -3.77% to settled at 5487 while prices up 4.4 rupees, now Copper is getting support at 639.7 and below same could see a test of 632.9 levels, and resistance is now likely to be seen at 651.9, a move above could see prices testing 657.3.

Trading Ideas:
* Copper trading range for the day is 632.9-657.3.
* Copper rose as 10-year US Treasury note yield retreated to the 2.7% level, closing in on its lowest level since April
* Brewing tensions between the US and China and signs of slowdown in major economies are also keeping markets on edge
* Meanwhile, major copper producers have recently reported declining output and flagged supply risks, providing a floor to copper prices.

Zinc

Zinc yesterday settled up by 4.69% at 308.3 after top producer Glencore Plc warned that Europe’s energy crisis poses a substantial threat to supply. Glencore has already suspended production at one of its zinc smelters in Europe, leading to a sharp drop in its metal output this year, and on Thursday it disclosed that its other smelters in the region are barely turning a profit. While risks to industrial-metals demand are mounting, Europe’s power crisis is also weighing heavily on the supply outlook, the company said. Zinc ore supply and demand was in a tight shortage, while the social inventory remained low. SHFE/LME price ratio dropped to 6.92 as LME zinc gained strong support on the fundamentals, and the zinc concentrate import loss was as high as 4,151 yuan/mt. On the macro front, the hawkish voices of US Fed officials recently weighed on the non-ferrous metals, with rising expectations over a 75-basis-point rate hike in September, and the US dollar index rallied. 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. Technically market is under fresh buying as market has witnessed gain in open interest by 29.52% to settled at 1742 while prices up 13.8 rupees, now Zinc is getting support at 297.7 and below same could see a test of 287.1 levels, and resistance is now likely to be seen at 315.5, a move above could see prices testing 322.7.

Trading Ideas:
* Zinc trading range for the day is 287.1-322.7.
* Zinc prices rallied after top producer Glencore Plc warned that Europe’s energy crisis poses a substantial threat to supply.
* European zinc output under threat as energy prices spike
* SHFE/LME price ratio dropped to 6.92

Aluminium

Aluminium yesterday settled up by 0.82% at 209.45 reversing an earlier decline, showing resillience as investors weigh threats to growth after Federal Reserve officials signaled again that they will do what’s required to cool high inflation even if that raises the risk of recession. US-China tensions are also clouding the outlook following House Speaker Nancy Pelosi’s visit to Taiwan. China’s military kicked off three days of live-fire military exercises around Taiwan in response to Pelosi’s visit, even as Taipei played down the impact on flights and shipping. In the biggest missile test in decades, China fired 11 Donfeng ballistic missiles into waters surrounding Taiwan. The aluminium ingot social inventories across China’s eight major markets totalled 678,000 mt as of August 1, up 7,000 mt from last Thursday, but 81,000 mt lower than in the same period last year. The inventory of aluminium ingots and billets in Foshan has been rising for two consecutive weeks due to poor trades and smooth arrivals. New order growth accelerated slightly, while quicker falls in employment across both manufacturing and service sectors led to the fastest drop in composite employment in 17 months. Prices data pointed to the softest rise in overall input costs for just over two years, while output charges fell slightly amid price discounting at manufacturers. Technically market is under short covering as market has witnessed drop in open interest by -16.23% to settled at 3340 while prices up 1.7 rupees, now Aluminium is getting support at 207.8 and below same could see a test of 206 levels, and resistance is now likely to be seen at 210.6, a move above could see prices testing 211.6.

Trading Ideas:
* Aluminium trading range for the day is 206-211.6.
* Aluminium recovered showing resillience as investors weigh threats to growth after Fed officials signaled again that they will do what’s required to cool high inflation
* US-China tensions are also clouding the outlook following House Speaker Nancy Pelosi’s visit to Taiwan.
* The aluminium ingot social inventories across China’s eight major markets totalled 678,000 mt as of August 1, up 7,000 mt from last Thursday

Mentha oil

Mentha oil yesterday settled down by -0.43% at 990.1 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 dropped by -7.8 Rupees to end at 1104.2 Rupees per 360 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 0.25% to settled at 1613 while prices down -4.3 rupees, now Mentha oil is getting support at 981.1 and below same could see a test of 972.1 levels, and resistance is now likely to be seen at 999, a move above could see prices testing 1007.9.

Trading Ideas:
* Mentha oil trading range for the day is 972.1-1007.9.
* In Sambhal spot market, Mentha oil dropped  by -7.8 Rupees to end at 1104.2 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 -1.97% at 7358 on profit booking after prices seen 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 7714.6 Rupees dropped -139.95 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -9.7% to settled at 12145 while prices down -148 rupees, now Turmeric is getting support at 7218 and below same could see a test of 7080 levels, and resistance is now likely to be seen at 7510, a move above could see prices testing 7664.

Trading Ideas:
* Turmeric trading range for the day is 7080-7664.
* Turmeric dropped on profit booking after prices seen 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 7714.6 Rupees dropped -139.95 Rupees.

Jeera

Jeera yesterday settled up by 0.27% at 23875 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 24.15 Rupees to end at 23995.1 Rupees per 100 kg.Technically market is under short covering as market has witnessed drop in open interest by -8.65% to settled at while prices up 65 rupees, now Jeera is getting support at 23720 and below same could see a test of 23570 levels, and resistance is now likely to be seen at 24010, a move above could see prices testing 24150.

Trading Ideas:
* Jeera trading range for the day is 23570-24150.
* Jeera prices 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 24.15 Rupees to end at 23995.1 Rupees per 100 kg.
 

Cotton

Cotton yesterday settled down by -2.17% at 46820 after report showing in Rajasthan, Cotton sowing witnessed a gain of 7.99% with 647.1 thousand hectares as against 599.22 thousand hectares on the same day last year. However downside seen limited 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. 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. In spot market, Cotton gained by 620 Rupees to end at 44560 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -10.95% to settled at 1204 while prices down -1040 rupees, now Cotton is getting support at 45570 and below same could see a test of 44320 levels, and resistance is now likely to be seen at 48660, a move above could see prices testing 50500.

Trading Ideas:
* Cotton trading range for the day is 44320-50500.
* Cotton dropped after report showed in Rajasthan, Cotton sowing witnessed a gain of 7.99% to 647.1 thousand hectares
* 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 620 Rupees to end at 44560 Rupees.

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