IGI Logo

Gold

old yesterday settled down by -0.23% at 60241 as market mood remained cautious as the US debt ceiling discussions proceeded. In addition, Treasury Secretary Janet Yellen has frequently warned that if a deal to extend the debt ceiling is not reached, the US might default on its obligations as early as June 1. President Joe Biden and House Speaker Kevin McCarthy are scheduled to meet later today to discuss the debt limit. While the bullion market in top hub China experienced muted activity, a drop in local gold prices from record highs enticed some buyers back to India and forced dealers to cut discounts to a 10-week low. Compared to the $11 reduction from last week, Indian merchants offered discounts of up to $5 per ounce off of official domestic rates. India's imports of gold in April fell by 45% from a year ago to 16 tonnes as the rise in domestic prices reduced demand during a significant holiday. Premiums of $2 to $4 were imposed in China. While some Japanese dealers offered bullion at the same price as the rest of the world, others charged a $0.50 premium. Premiums ranging from $0.50 to $2 were imposed in Singapore. Russia has 74.8 million troy ounces of gold. Technically market is under long liquidation as the market has witnessed a drop in open interest by -4.33% to settle at 9480 while prices are down -138 rupees, now Gold is getting support at 60092 and below same could see a test of 59942 levels, and resistance is now likely to be seen at 60411, a move above could see prices testing 60580.

Trading Ideas:
* Gold trading range for the day is 59942-60580.
* Gold dropped as the US debt ceiling negotiations continued to unfold.
* Investors monitor the debt ceiling impasse and adjust expectations for the next move by the Fed.
* Indian dealers’ trim discounts as price dip reignites some buying

Silver

Silver yesterday settled down by -0.8% at 72733 as the dollar rose as risk aversion prevailed due to growing worries about the state of regional US banks and anxiety about the possibility of an unprecedented US default. The chairman of the US Federal Reserve, Jerome Powell, made remarks that suggested the Fed would hold interest rates constant at its next meeting in June. Powell stated at a research conference at his bank that "the risks of doing too much or doing too little are becoming more balanced and our policy adjusted to reflect that." Powell continued, "We haven't made any decisions about the extent to which additional policy firming will be appropriate." Even if the unemployment rate starts to climb later in the year, the U.S. Federal Reserve must continue to be "super strong" in its fight against inflation, according to Raphael Bostic, president of the Atlanta Fed. The Fed's employment objective is "far beyond success" with the current unemployment rate of 3.4%, but Bostic warned that if it starts to increase, public pressure on the institution will be "enormous." Sales of silver products at the Perth Mint grew to their highest level since October of last year in April. Contrarily, monthly sales of silver increased 6.8% to 1,947,743 ounces. Technically market is under long liquidation as the market has witnessed a drop in open interest by -2.68% to settle at 14301 while prices are down -588 rupees, now Silver is getting support at 72399 and below same could see a test of 72066 levels, and resistance is now likely to be seen at 73223, a move above could see prices testing 73714.

Trading Ideas:
* Silver trading range for the day is 72066-73714.
* Silver dropped as the dollar traded higher
* Risk-off sentiment prevailed on renewed concerns over the health of regional U.S. banks
* Fed Chair Jerome Powell made comments to indicate the Fed may leave interest rates steady at its next meeting in June.

Crude oil

Crude oil yesterday settled up by 1.48% at 6017 as lower Canadian and OPEC+ producer supply helping to boost the price. According to the International Energy Agency, China will account for a sizable chunk of the 2 million barrels per day difference between supply and demand in the second half of 2023. After entering into force this month, the Organisation of the Petroleum Exporting Countries (OPEC) and its partners, including Russia, together known as OPEC+, are already feeling the effects of their voluntary output restrictions. According to the IEA's Executive Director Fatih Birol, the organisation does not anticipate that the Group of Seven's efforts to stop Russia from skirting energy price ceilings would alter the availability of crude oil and petroleum products. The G7, the EU, and Australia decided to cap the price of Russian crude oil carried by sea at $60 per barrel and set a maximum price cap for Russian oil products in order to deny Moscow the funds it needs to invade Ukraine. The G7 announced during its annual leaders' conference that it will step up efforts to combat cap evasion "while avoiding spillover effects and maintaining the global energy supply". Technically market is under short covering as the market has witnessed a drop in open interest by -15.6% to settle at 8686 while prices are up 88 rupees, now Crude oil is getting support at 5917 and below same could see a test of 5817 levels, and resistance is now likely to be seen at 6073, a move above could see prices testing 6129.

Trading Ideas:
* Crude oil trading range for the day is 5817-6129.
* Crude oil gains getting support from lower supplies from Canada, OPEC+ producers.
* IEA projecting that demand will exceed supply by 2 million barrels per day in the second part of 2023
* Oil supply won't be affected by stricter price cap enforcement – IEA

Natural gas

Nat.Gas yesterday settled down by -7.37% at 198.5 on rising output and forecasts for less demand next week than previously expected. The price decline came even though U.S. power generators have burned more gas in recent weeks to produce electricity due to low wind power, and as gas exports from Canada remain lower than normal due to wildfires in Alberta. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 101.5 billion cubic feet per day (bcfd) so far in May, which would top April's monthly record of 101.4 bcfd. Over the past few weeks, the average amount of gas flowing from Canada to the U.S. averaged just 7.0 bcfd as wildfires in Alberta and other western provinces caused some producers to shut oil and gas output, according to Refinitiv. Meteorologists projected the weather in the Lower 48 states would remain mostly near normal through June 6. Refinitiv forecast U.S. gas demand, including exports, would slide from 90.2 bcfd this week to 89.5 bcfd next week. The forecast for this week was higher than Refinitiv's outlook on Friday, while its forecast for next week was lower. Technically market is under long liquidation as the market has witnessed a drop in open interest by -1.46% to settle at 17337 while prices are down -15.8 rupees, now Natural gas is getting support at 192.7 and below same could see a test of 186.9 levels, and resistance is now likely to be seen at 208.5, a move above could see prices testing 218.5.

Trading Ideas:
* Natural gas trading range for the day is 186.9-218.5.
* Natural gas dropped on rising output and forecasts for less demand.
* The price decline came even though U.S. power generators have burned more gas in recent weeks
* Meteorologists projected the weather in the Lower 48 states would remain mostly near normal through June 6.


Copper

Copper yesterday settled down by -0.93% at 717.4 as investors assessed the dim picture for Chinese demand and the prospect for upheaval in the global financial markets following a sudden breakdown in the U.S. debt ceiling discussions. Less than two weeks remain until the June 1 deadline, beyond which Treasury anticipates the federal government would find it difficult to pay its bills. U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling. Failure to increase the debt ceiling would result in a default, which is likely to cause financial market instability and an increase in interest rates. According to figures from the National Bureau of Statistics, China's refined copper output increased 14.1% year over year to 1.06 million tonnes in April, setting a new monthly high. Calculations based on the official statistics show that throughout the month of April, the average daily copper output was 35,300 tonnes. The SHFE warehouses' copper stockpiles have decreased to 102,511 tonnes, the lowest level in more than four months. Stocks in Chinese bonded storage decreased as well. Given that the import arbitrage was active a few times last week, the Yangshan copper premium increased to a seven-week high of $35 per tonne, signalling improved demand for the metal in China. Technically market is under long liquidation as the market has witnessed a drop in open interest by -18.21% to settle at 2528 while prices are down -6.75 rupees, now Copper is getting support at 715.1 and below same could see a test of 712.7 levels, and resistance is now likely to be seen at 720.2, a move above could see prices testing 722.9.

Trading Ideas:
* Copper trading range for the day is 712.7-722.9.
* Copper dropped as investors gauged lacklustre Chinese demand outlook
* Pressure also seen amid potential chaos in global financial markets following a surprise breakdown in the U.S. debt ceiling negotiations.
* China April refined copper output jumps 14% on year

Zinc

Zinc yesterday settled down by -1.8% at 221.2 as the global zinc market surplus climbed to 26,700 tonnes in March, from a surplus of 22,800 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. During the first three months of 2023, ILZSG data showed a surplus of 49,000 tonnes, versus a surplus of 116,000 tonnes in the same period of 2022. The refined zinc output in China declined 16,700 mt or 3.01% month-on-month, but rose 8.97% year-on-year to 540,000 mt. The output totalled 2.11 million mt from January to April, up 7.22% year-on-year. The alloy output registered 87,385 mt in April, up 4,775 mt on the month. Zinc ingot inventories across seven major Chinese markets totalled 116,900 mt as of May 19, down 5,500 mt from May 15 and 7,200 mt from May 12. Survey showed that the inventory in Shanghai, Guangdong and Tianjin declined 3,500 mt. In Guangdong and Shanghai markets, the downstream companies purchased some goods when zinc prices dropped, and the spot arrivals were not high. The inventory in the Tianjin market also decreased, which was contributed by the decline in spot shipments from smelters and the average downstream demand. Technically market is under long liquidation as the market has witnessed a drop in open interest by -5.35% to settle at 2868 while prices are down -4.05 rupees, now Zinc is getting support at 220 and below same could see a test of 218.8 levels, and resistance is now likely to be seen at 223.4, a move above could see prices testing 225.6.

Trading Ideas:
* Zinc trading range for the day is 218.8-225.6.
* Zinc dropped as the global zinc market surplus climbed to 26,700 tonnes in March
* During the first three months of 2023, ILZSG data showed a surplus of 49,000 tonnes
* The refined zinc output in China rose 8.97% year-on-year to 540,000 mt.

Aluminium

Aluminium yesterday settled down by -0.62% at 209 as recent economic data from China indicated a continued downward trend and a fragile recovery. The aluminium ingot social inventories across China’s eight major markets stood at 706,000 mt as of May 18, down 81,000 mt from a week ago and 259,000 mt from the same period last year. The inventories maintain a downward trend and remain at a low level. Judging from cargoes in transit and share of ingot output at smelters, the social inventory is on track to fall below 700,000 mt soon. The pace of cooling of US inflation is not enough for the Federal Reserve to suspend interest rate hikes, and the debt ceiling agreement has not yet been reached, thus there are many macro uncertainties. China's aluminium imports in April rose 27.1% from a year earlier, customs data showed, with domestic supply constrained by lingering power issues in the southwest. The world's biggest aluminium producer and consumer brought in 222,851 tonnes of unwrought aluminium and products – including primary metal and unwrought, alloyed aluminium – last month, according to data from the General Administration of Customs. Global primary aluminium output rose by 0.3% year on year in April to 5.628 million tonnes, data from the International Aluminium Institute (IAI) showed. Technically market is under long liquidation as the market has witnessed a drop in open interest by -4.08% to settle at 2752 while prices are down -1.3 rupees, now Aluminium is getting support at 208.5 and below same could see a test of 207.9 levels, and resistance is now likely to be seen at 209.6, a move above could see prices testing 210.1.

Trading Ideas:
* Aluminium trading range for the day is 207.9-210.1.
* Aluminium dropped as data from China indicated a continued downward trend.
* Global aluminium output up 0.3% y/y to 5.6 mln T in April – IAI
* China exported 73,115 tonnes of alumina last month, down 56.4% on an annual basis

Mentha oil

Mentha oil yesterday settled up by 0.21% at 955.9 on low level buying after prices dropped on better sowing conditions in UP and Bihar. The recent period of rain in Uttar Pradesh and Bihar has been beneficial to planting efforts. The forecast of above-average rainfall in May would be beneficial to Mentha seeding efforts. Rising menthol imports, as well as China's limited purchasing, will put pressure on pricing. Mentha exports during Apr-Mar 2023, dropped by 10.39 percent to 2,430.49 tonnes as compared to 2,712.39 tonnes exported during Apr-Mar 2022. In March 2023 around 202.95 tonnes of Mentha was exported as against 210.78 tonnes in February 2023 showing a drop of 3.71%. In March 2023 around 202.95 tonnes of Mentha was exported as against 218.78 tonnes in March 2022 showing a drop of 7.24%. 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, 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. In Sambhal spot market, Mentha oil gained by 1.8 Rupees to end at 1132.9 Rupees per 360 kgs.Technically market is under short covering as the market has witnessed a drop in open interest by -28.03% to settle at 321 while prices are up 2 rupees, now Mentha oil is getting support at 953 and below same could see a test of 950 levels, and resistance is now likely to be seen at 958, a move above could see prices testing 960.

Trading Ideas:
* Mentha oil trading range for the day is 950-960.
* In Sambhal spot market, Mentha oil gained  by 1.8 Rupees to end at 1132.9 Rupees per 360 kgs.
* Menthaoil gains on low level buying after prices dropped on better sowing conditions in UP and Bihar.
* The forecast of above-average rainfall in May would be beneficial to Mentha seeding efforts.
* Rising menthol imports, as well as China's limited purchasing, will put pressure on prices.

Turmeric

Turmeric yesterday settled down by -3.58% at 7928 on profit booking in expectation of rise in domestic supplies. Traders are also showing lesser interest at prevailing price levels and avoiding bulk buying in expectation of fall in prices. Supplies in Maharashtra and Telangana are likely to increase as farmers are getting fair realization on their produce. Losses in prices are looking limited due to weaker production prospects supported by delayed monsoon forecast. India Meteorological Department projected onset of monsoon is likely to be delayed by three days. The southwest monsoon, which normally sets in over Kerala on June 1, is likely to arrive on June 4. Turmeric exports during Apr-Mar 2023, rose by 11.34 percent at 170,085.36 tonnes as compared to 152,757.59 tonnes exported during Apr- Mar 2022. In March 2023 around 18,810.47 tonnes of turmeric was exported as against 14,806.30 tonnes in February 2023 showing a rise of 27.04%. In March 2023 around 18,810.47 tonnes of turmeric was exported as against 15,740.36 tonnes in March 2022 showing a rise of 19.50%. 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 7486.95 Rupees dropped -149.2 Rupees.Technically market is under long liquidation as the market has witnessed a drop in open interest by -5.02% to settle at 14205 while prices are down -294 rupees, now Turmeric is getting support at 7740 and below same could see a test of 7550 levels, and resistance is now likely to be seen at 8150, a move above could see prices testing 8370.

Trading Ideas:
* Turmeric trading range for the day is 7550-8370.
* Turmeric dropped on profit booking in expectation of rise in domestic supplies.
* Supplies in Maharashtra and Telangana are likely to increase as farmers are getting fair realization on their produce.
* India Meteorological Department projected onset of monsoon is likely to be delayed by three days.
* In Nizamabad, a major spot market in AP, the price ended at 7486.95 Rupees dropped -149.2 Rupees.

Jeera

Jeera yesterday settled down by -2.22% at 44645 on profit booking after prices rose due to good export demand and expectations of lower stocks end of the current marketing year. Prices rose on crop worries grow due to unseasonal rains and hailstorms in Rajasthan, the major producing state. The market is expecting a lower yield and quality of jeera this season, which has boosted the demand from domestic and export buyers. The jeera growing regions in southern and north-western parts of Rajasthan in the districts of Alwar, Jaisalmer, Jaipur, Bikaner, Bhilwara, and Barmer have received a fresh spell of unseasonal rains in the past week, triggering concerns on the crop condition. According to FISS forecasts, cumin demand is predicted to exceed 85 lakh bags this year, with a likely supply of 65 lakh bags. One bag holds 55kg. This will result in a demand-supply imbalance. Currently, at least 70% of the crop in Rajasthan and around 30% in Gujarat have yet to be harvested. Because of the rain in both states, the total yield will be reduced. The cumin crop was destroyed by two bouts of unseasonal rainfall during the harvest season. In comparison to the planned arrival of 70 lakh bags, the stock will be reduced to 60-65 lakh bags, with a carry-forward stock of 5 lakh bags from last year. In Unjha, a key spot market in Gujarat, jeera edged down by -650.6 Rupees to end at 46006.65 Rupees per 100 kg.Technically market is under long liquidation as the market has witnessed a drop in open interest by -1.05% to settle at 9039 while prices are down -1015 rupees, now Jeera is getting support at 43705 and below same could see a test of 42760 levels, and resistance is now likely to be seen at 46010, a move above could see prices testing 47370.

Trading Ideas:
* Jeera trading range for the day is 42760-47370.
* Jeera dropped on profit booking due to good export demand
* The market is expecting a lower yield and quality of jeera this season, which has boosted the demand from domestic and export buyers.
* Cumin demand is predicted to exceed 85 lakh bags this year, with a likely supply of 65 lakh bags.
* In Unjha, a key spot market in Gujarat, jeera edged down by -650.6 Rupees to end at 46006.65 Rupees per 100 kg.

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