IGI Logo

Gold

Gold yesterday settled up by 0.2% at 56658 amid anticipation of slower rate hikes from the U.S. Federal Reserve and fears of a possible recession. Fed funds futures are pricing in a smaller 25-basis-point interest rate increase by the U.S. central bank at the conclusion of its two-day meeting on Feb. 1, after recent economic data showed signs of cooling inflation. However, several Fed policymakers have recently signalled they will push on with more interest rate hikes, with a few supporting a top policy rate of at least 5% to curtail inflation despite signs the economy is slowing. Physical gold demand in China moderated in the run-up to the Lunar New Year holiday, while in Japan and Singapore some consumers sold their bullion to cash in on high domestic prices. Premiums in top consumer China eased to a range of $9-$20 an ounce over global benchmark spot prices after climbing as high as $30 last week. In Singapore, premiums of $1.50-$3 were charged, while bullion changed hands in Hong Kong between at par to $3 an ounce. Dealers in India were offering a discount of up to $24 an ounce over official domestic prices versus $35 last week. Technically market is under short covering as the market has witnessed a drop in open interest by -6.18% to settle at 9574 while prices are up 112 rupees, now Gold is getting support at 56528 and below same could see a test of 56399 levels, and resistance is now likely to be seen at 56818, a move above could see prices testing 56979.
Trading Ideas:
* Gold trading range for the day is 56399-56979.
* Gold rose to all time high amid anticipation of slower rate hikes from Fed and fears of a possible recession.
* 10-year U.S. Treasury yields hit 4-month low
* Physical gold demand in China moderated in the run-up to the Lunar New Year holiday


Silver

Silver yesterday settled up by 0.28% at 68547 amid a weaker US dollar and expectations of a slower pace of Federal Reserve rate hikes. The dollar remains vulnerable to data releases as investors look for signs the economy is weakening. Federal Reserve Bank of New York President John Williams said the U.S. central bank has more rate hikes ahead and sees signs inflationary pressures might be starting to cool off from torrid levels. “With inflation still high and indications of continued supply-demand imbalances, it is clear that monetary policy still has more work to do to bring inflation down to our 2% goal on a sustained basis,” Williams said. “Bringing inflation down is likely to require a period of below-trend growth and some softening of labor market conditions,” Williams warned. He added that “restoring price stability is essential to achieving maximum employment and stable prices over the longer term, and it is critical that we stay the course until the job is done.” The latest housing data provided further evidence of deceleration in the economy, but new claims for unemployment benefits unexpectedly fell last week, adding to concerns that the Fed could overtighten policy. Markets currently expect that the Fed might end its tightening cycle after a 25-basis point hike at each of its next two policy meetings. Technically market is under fresh buying as the market has witnessed a gain in open interest by 0.98% to settle at 18075 while prices are up 188 rupees, now Silver is getting support at 68210 and below same could see a test of 67873 levels, and resistance is now likely to be seen at 69014, a move above could see prices testing 69481.
Trading Ideas:
* Silver trading range for the day is 67873-69481.
* Silver gains amid a weaker US dollar and expectations of a slower pace of Federal Reserve rate hikes.
* Federal Reserve Bank of New York President John Williams said the U.S. central bank has more rate hikes
* The latest housing data provided further evidence of deceleration in the economy


Crude oil

Crude oil yesterday settled up by 0.64% at 6620 ended the week with gains spurred largely by brightening economic prospects for China and resulting expectations of a boost to fuel demand in the world's second-biggest economy. The lifting of COVID-19 restrictions in China is set to increase global demand to a record high this year, the International Energy Agency (IEA) said, a day after OPEC also forecast a Chinese demand rebound in 2023. Oil was also supported by hopes that the U.S. central bank will soon downshift to smaller rises in interest rates and by hopes for the U.S. economic outlook. The chances of a "soft landing" for the U.S. economy appear to be growing, Federal Reserve Vice Chair Lael Brainard said. The Fed's next rate-setting meeting is over Jan. 31 to Feb. 1. U.S. crude oil stockpiles last week posted a large build that took analysts by surprise, as inventories in the Cushing, Oklahoma, storage hub gained while the market continued to recover from a winter storm last month, data from the Energy Information Administration showed. Winter Storm Elliott last month brought sub-freezing temperatures and extreme weather alerts to about two-thirds of the United States, forcing oil and gas well freeze-ins at the time. Technically market is under short covering as the market has witnessed a drop in open interest by -6% to settle at 4419 while prices are up 42 rupees, now Crude oil is getting support at 6533 and below same could see a test of 6446 levels, and resistance is now likely to be seen at 6676, a move above could see prices testing 6732.
Trading Ideas:
* Crude oil trading range for the day is 6446-6732.
* Crude oil gains spurred largely by brightening economic prospects for China
* OPEC and IEA forecast growing Chinese oil demand in 2023
* Hopes for Fed downshift on interest rate hikes also support


Natural gas

Nat.Gas yesterday settled down by -2.31% at 262.6 as two-week forecasts calling for less cold weather and lower heating demand than previously expected. US natural gas production is likely to grow more than 2% this year to a record daily average of 100.3 billion cubic feet, the Energy Information Administration said. At the same time, EIA data showed that utilities unexpectedly injected 11 bcf into storage last week. Adding to the bearish tone, the Freeport LNG export plant in Texas, forced to go offline in June following a fire, again delayed the restart to the second half of January, leaving more supply on the domestic market. Still, arctic weather will move into the United States next week, resulting in below-normal temperatures, which, in turn, should boost demand for heating and push prices higher. Natural gas production in North Dakota slid to 3.029 billion cubic feet per day (bcfd) in November from 3.146 bcfd in October, while the amount of flaring held steady, according to a report from the North Dakota Industrial Commission. Monthly production in the state hit an all-time high of 3.176 bcfd in September 2022. Technically market is under long liquidation as the market has witnessed a drop in open interest by -33.91% to settle at 13249 while prices are down -6.2 rupees, now Natural gas is getting support at 252.7 and below same could see a test of 242.8 levels, and resistance is now likely to be seen at 274.1, a move above could see prices testing 285.6.
Trading Ideas:
* Natural gas trading range for the day is 242.8-285.6.
* Natural gas dropped as two-week forecasts calling for less cold weather and lower heating demand than previously expected.
* US natural gas production is likely to grow more than 2% this year to a record daily average of 100.3 billion cubic feet
* Natural gas production in North Dakota slid to 3.029 billion cubic feet per day (bcfd) in November from 3.146 bcfd in October



Copper

Copper yesterday settled up by 0.12% at 776.1 as the higher proportion of LME cancelled warrants intensified the overseas supply tightness. Recent data showed retail sales, producer prices, and industrial production fell more than expected in December, exacerbating worries of a slowdown in the world's largest economy. Dismal economic data have boosted bets that the Federal Reserve will continue to slow the pace of policy rate increases. Money markets see the rate peaking at 4.85% by June, with a 25-basis point hike baked in for February, expectations that Fed officials have pushed back on recently. Copper inventory across major Chinese markets added 18,700 mt from last Friday to 154,200 mt. The total inventory was 63,800 mt higher than in the same period last year when the figure was 90,400 mt. However, as the visible inventory of LME and COMEX dropped, SHFE copper failed to catch up with the growth of the prices in overseas markets despite the bullish macro factors in the mid and long-term. Chinese smelters will be enthusiastic about production owing to high profits, but the demand may hardly improve greatly in the short term. Technically market is under short covering as the market has witnessed a drop in open interest by -12.27% to settle at 3024 while prices are up 0.9 rupees, now Copper is getting support at 771.5 and below same could see a test of 766.8 levels, and resistance is now likely to be seen at 779.8, a move above could see prices testing 783.4.
Trading Ideas:
* Copper trading range for the day is 766.8-783.4.
* Copper prices surged as the higher proportion of LME cancelled warrants intensified the overseas supply tightness.
* Recent data showed retail sales, producer prices, and industrial production fell more than expected in December
* Copper inventory across major Chinese markets added 18,700 mt from last Friday to 154,200 mt.


Zinc

Zinc yesterday settled up by 0.08% at 295.7 amid renewed concerns of global recession, driven by bright demand expectations from China and a weaker dollar. Data showed the U.S. job market remained tight, reinforcing concerns that Federal Reserve would stick to its aggressive interest rate hike path that could lead the economy into a recession. China's refined zinc output was 525,800 mt in December 2022, a month-on-month increase of 1,100 mt or 0.21%, and a year-on-year growth of 12,500 mt or 2.43%, data showed. Output in 2022 totalled 5.98 million mt, down 1.77% from 2021. Domestic refined zinc output in December increased compared with November, but was slightly lower than market expectations as a large-sized smelter in north-west China reduced its output in December after completing its annual production plan ahead of schedule. In addition, a smelter in north China cut the output due to equipment failure. The People’s Bank of China continued to inject liquidity into the financial system through open market operations on Friday. The PBOC launched a total CNY 381 billion of reverse repos, including CNY 62 billion through the seven-day tenor and CNY 319 billion through the 14-day tenor, while keeping the rate unchanged at 2% and 2.15%, respectively. Technically market is under short covering as the market has witnessed a drop in open interest by -16.01% to settle at 1521 while prices are up 0.25 rupees, now Zinc is getting support at 293.9 and below same could see a test of 291.9 levels, and resistance is now likely to be seen at 297.9, a move above could see prices testing 299.9.
Trading Ideas:
* Zinc trading range for the day is 291.9-299.9.
* Zinc prices amid renewed concerns of global recession, driven by bright demand expectations from China and a weaker dollar.
* China's refined zinc output was 525,800 mt in December 2022, a month-on-month increase of 1,100 mt or 0.21%
* The People’s Bank of China continued to inject liquidity into the financial system through open market operations on Friday



Aluminium

Aluminium yesterday settled up by 0.23% at 220.6 driven by the optimism about China's economic recovery and the expectation for a falling US dollar index. The People's Bank of China (PBoC) left its key lending rates unchanged for the fifth straight month at January fixing, as widely expected. The decision came on the last working day in China before the week-long Spring Festival holiday. The one-year loan prime rate (LPR), which uses for corporate and household loans, was kept unchanged at 3.65%; while the five-year rate, a reference for mortgages, was maintained at 4.3%. The People’s Bank of China continued to inject liquidity into the financial system through open market operations on Friday. The PBOC launched a total CNY 381 billion of reverse repos, including CNY 62 billion through the seven-day tenor and CNY 319 billion through the 14-day tenor, while keeping the rate unchanged at 2% and 2.15%, respectively. Global primary aluminium output in December rose 6.12% year on year to 5.859 million tonnes, data from the International Aluminium Institute (IAI) showed. Estimated Chinese production was 3.47 million tonnes in December, the IAI said. China produced 3.44 million mt of aluminium in December 2022 (31 calendar days), up 8.3% on the year. Technically market is under short covering as the market has witnessed a drop in open interest by -11.1% to settle at 3308 while prices are up 0.5 rupees, now Aluminium is getting support at 219.5 and below same could see a test of 218.3 levels, and resistance is now likely to be seen at 221.9, a move above could see prices testing 223.1.
Trading Ideas:
# Aluminium trading range for the day is 218.3-223.1.
# Aluminum prices gained driven by the optimism about China's economic recovery and the expectation for a falling US dollar index.
# PBOC left its key lending rates unchanged for the fifth straight month at January fixing, as widely expected.
# Global aluminium output rises 6.1% y/y in December – IAI


Mentha oil

Mentha oil yesterday settled down by -0.05% at 1018.5 on profit booking after prices gained on improving export demand especially from China. Mentha exports during Apr-Nov 2022 has dropped by 18.10 percent at 1,485.25 tonnes as compared to 1,813.38 tonnes exported during Apr- 2022 2021. In the month of November 2022 around 236.22 tonnes Mentha was exported as against 141.82 tonnes in October 2022 showing a rise of 66.56%. In the month of November 2022 around 236.22 tonnes of Mentha was exported as against 249.26 tonnes in November 2021 showing a drop of 5.23%. 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 dropped by -4 Rupees to end at 1182.9 Rupees per 360 kgs.Technically market is under long liquidation as the market has witnessed a drop in open interest by -25.67% to settle at 443 while prices are down -0.5 rupees, now Mentha oil is getting support at 1010.1 and below same could see a test of 1001.8 levels, and resistance is now likely to be seen at 1022.9, a move above could see prices testing 1027.4.
Trading Ideas:
* Mentha oil trading range for the day is 1001.8-1027.4.
* In Sambhal spot market, Mentha oil dropped  by -4 Rupees to end at 1182.9 Rupees per 360 kgs.
* Mentha oil dropped on profit booking after prices gained on improving export demand especially from China.
* Mentha exports during Apr-Nov 2022 has dropped by 18.10 percent at 1,485.25 tonnes
* In the month of November 2022 around 236.22 tonnes of Mentha was exported as against 249.26 tonnes in November 2021


Turmeric

Turmeric yesterday settled down by -0.57% at 8028 on an “unexpected” slump in domestic and export demand. Turmeric production in the 2021-22 crop year (June-July) has been projected at 13.31 lakh tonnes against 11.24 lakh tonnes the previous year with the area increasing to 3.5 lakh hectares from 2.93 lakh hectares. In the first advance estimate, the crop was pegged at 11.76 lakh tonnes. Turmeric exports during Apr-Nov 2022 has rose by 9.90 percent at 1,11,968.51 tonnes as compared to 1,01,882.03 tonnes exported during Apr-Nov 2021. In the month of November 2022 around 12,398.63 tonnes turmeric was exported as against 11,178.11 tonnes in October 2022 showing a rise of 10.92%. In the month of November 2022 around 12,398.63 tonnes of turmeric was exported as against 12,255.64tonnes in November 2021 showing a rise of 1.17%. 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 7396.85 Rupees dropped -29.05 Rupees.Technically market is under long liquidation as the market has witnessed a drop in open interest by -0.41% to settle at 12180 while prices are down -46 rupees, now Turmeric is getting support at 7952 and below same could see a test of 7876 levels, and resistance is now likely to be seen at 8112, a move above could see prices testing 8196.
Trading Ideas:
# Turmeric trading range for the day is 7876-8196.
# Turmeric prices dropped on an “unexpected” slump in domestic and export demand.
# Turmeric production in 2023 has been projected at 5.13 Lakh Mt against 4.67 Lakh Mt the previous year
# Marathwada region has been serving as a round-the-year supply centre for Turmeric since past couple of years.
# In Nizamabad, a major spot market in AP, the price ended at 7396.85 Rupees dropped -29.05 Rupees.


Jeera

Jeera yesterday settled down by -1.58% at 34270 on profit booking after prices gained amid reduced sowing in Gujarat, coupled with a tight supply, and climatic uncertainties. Projections of lower carryover stock and fears of sowing in key growing regions of Gujarat being affected. Sowing In Gujarat, dropped by nearly -8% with 274,995.00 hectares against sown area of 2021 which was 300,401.00 hectares. Prices gained to all time high amid higher demand for the fresh crop and supply tightness in the physical market. Good demand expected from China in December-January and Ramzan demand during January-February from gulf & other countries. Jeera exports during Apr-Nov 2022 has dropped by 17.40 percent at 133,250.24 tonnes as compared to 161,317.94 tonnes exported during Apr-Nov 2021. In the month of November 2022 around 11,235.11 tonnes jeera was exported as against 12,427.86 tonnes in October 2022 showing a drop of 9.60%. In the month of November 2022 around 11,235.11 tonnes of jeera was exported as against 10,838.83 tonnes in November 2021 showing a rise of 3.66%. 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 76.3 Rupees to end at 34620.7 Rupees per 100 kg.Technically market is under long liquidation as the market has witnessed a drop in open interest by -6.54% to settle at 5100 while prices are down -550 rupees, now Jeera is getting support at 33750 and below same could see a test of 33235 levels, and resistance is now likely to be seen at 34780, a move above could see prices testing 35295.
Trading Ideas:
* Jeera trading range for the day is 33235-35295.
* Jeera dropped on profit booking after prices gained amid reduced sowing in Gujarat, coupled with a tight supply, and climatic uncertainties.
* Projections of lower carryover stock and fears of sowing in key growing regions of Gujarat being affected.
* Sowing in Gujarat, dropped by nearly -10% with 275,830.00 hectares against sown area of 2021 which was 307,135.00 hectares.
* In Unjha, a key spot market in Gujarat, jeera edged up by 76.3 Rupees to end at 34620.7 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