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Gold

Gold yesterday settled up by 0.06% at 50623 as expectations that major central banks will continue to aggressively raise interest rates to target runaway inflation weighed on bullion demand. Federal Reserve Chair Jerome Powell, in a testimony to Congress, reiterated that his commitment to reining in 40-year high inflation is “unconditional,” even as he acknowledged that sharply higher interest rates may push up unemployment. Fed Governor Michelle Bowman also backed raising interest rates by 75 basis points again in July and following that with a few more half-point rate hikes. Physical gold dealers offered bigger discounts in India to lure buyers as the wedding season concluded, while some consumers in China bought bullion to hedge against growing economic concerns. Discounts of about $8 an ounce were quoted over official domestic prices compared with last week's $6 discounts. In China, gold changed hands at anywhere between on par with global benchmark spot prices to $2-$3 an ounce premiums. It has been nearly a month since the Shanghai hub lifted lockdowns but China continues to deal with sporadic COVID-19 outbreaks, and consumers remained cautious. In Hong Kong, gold was sold at anywhere between a discount of $1.8 an ounce to $1.80 premiums, while dealers in Singapore charged $1.20-$1.70 premiums. Technically market is under short covering as market has witnessed drop in open interest by -2.36% to settled at 11824 while prices up 29 rupees, now Gold is getting support at 50441 and below same could see a test of 50260 levels, and resistance is now likely to be seen at 50772, a move above could see prices testing 50922.

Trading Ideas:
* Gold trading range for the day is 50260-50922.
* Gold settled flat as expectations that major central banks will continue to aggressively raise interest rates to target runaway inflation weighed on bullion demand.
* Federal Chair Powell, reiterated that his commitment to reining in 40-year high inflation is “unconditional”
* Physical gold dealers offered bigger discounts in India to lure buyers as the wedding season concluded.

Silver

Silver yesterday settled up by 0.41% at 59749 as the dollar shed ground, and Treasury yields dropped amid slightly easing worries about inflation. The rate hike repricing sent 10-year Treasury yields to two-week lows. Data from the Commerce Department showed a significant rebound in new home sales in the month of May. The report showed new home sales surged 10.7% to an annual rate of 696,000 in May after plunging 12% to an upwardly revised rate of 629,000 in April. The spike surprised economists had expected new home sales to dip 0.5 percent to an annual rate of 588,000 from the 591,000 originally reported for the previous month. Meanwhile, a separate report from the University of Michigan showed consumer sentiment in the U.S. tumbled by slightly more than initially estimated in the month of June. The report showed the consumer sentiment index for June was downwardly revised to 50.0 from the preliminary reading of 50.2. The consumer sentiment index is down sharply from the final May reading of 58.4, plunging to its lowest level on record. The steep drop by the headline index came as the current economic conditions index plunged to 53.8 in June from 53.3 in May, while the index of consumer expectations tumbled to 47.5 from 55.2. Technically market is under short covering as market has witnessed drop in open interest by -15.94% to settled at 7966 while prices up 245 rupees, now Silver is getting support at 58939 and below same could see a test of 58130 levels, and resistance is now likely to be seen at 60223, a move above could see prices testing 60698.

Trading Ideas:
* Silver trading range for the day is 58130-60698.
* Silver remained supported as the dollar shed ground, and Treasury yields dropped amid slightly easing worries about inflation.
* The rate hike repricing sent 10-year Treasury yields to two-week lows.
* Data from the Commerce Department showed a significant rebound in new home sales in the month of May.

Crude oil

Crude oil yesterday settled up by 1.97% at 8384 supported by tight supply, although prices ended the week with losses on concern that rising interest rates could push the world economy into recession. Crude has gained support from the almost total shutdown of output in OPEC member Libya due to unrest. The Libyan oil minister said on Thursday the National Oil Corporation chairman was withholding production data from him, raising doubts over figures he issued last week. OPEC and allied producing countries including Russia will likely stick to a plan for accelerated oil output increases in August, sources said, hoping to ease surging oil prices and inflation pressure as U.S. President Joe Biden plans to visit Saudi Arabia and the Middle East. At its last meeting on June 2, the group known as OPEC+ agreed to boost output by 648,000 barrels per day (bpd) in July - or 0.7% of global demand - and by the same amount in August, up from the initial plan to add 432,000 bpd a month over three months until September. Russia's idled primary oil refining capacity was revised up to 1.827 million tonnes in July, up 23% from the previous estimate, according to sources. Russia's idled primary oil refining capacity was revised up by 2.1% compared to a previous estimate to 4.54 million tonnes in June. Technically market is under fresh buying as market has witnessed gain in open interest by 21.31% to settled at 4782 while prices up 162 rupees, now Crude oil is getting support at 8174 and below same could see a test of 7965 levels, and resistance is now likely to be seen at 8550, a move above could see prices testing 8717.

Trading Ideas:
* Crude oil trading range for the day is 7965-8717.
* Crude oil gained supported by tight supply, although prices ended the week with losses
* Crude has gained support from the almost total shutdown of output in OPEC member Libya due to unrest.
* OPEC+ to stick to oil supply rise plan as Biden heads to Saudi.

Natural Gas

Nat.Gas yesterday settled down by -1.54% at 492.6 on a bigger-than-expected storage build, as the extended shutdown of the Freeport liquefied natural gas (LNG) export plant in Texas allows utilities to quickly rebuild low gas stockpiles. Even though the storage build was bigger than expected, it was still smaller than usual for this time of year as extreme heat in several parts of the country last week boosted the amount of gas power generators burned to keep air conditioners humming. The U.S. Energy Information Administration (EIA) said utilities added 74 billion cubic feet (bcf) of gas to storage during the week ended June 17. The recent explosion at one of the biggest US liquefied natural gas export terminals in Texas is keeping an additional 2 bcf a day of natural gas in the US market despite soaring international demand, easing pressure from domestic prices. Freeport LNG said it doesn't expect the terminal to return to full operations until late 2022, with partial production resuming perhaps in three months. Still, the contract has gained 70% since the start of the year on strong overseas demand, even more so since Europe has been trying to wean off Russian supplies, following the invasion of Ukraine. Technically market is under fresh selling as market has witnessed gain in open interest by 10.03% to settled at 3806 while prices down -7.7 rupees, now Natural gas is getting support at 478.2 and below same could see a test of 463.8 levels, and resistance is now likely to be seen at 505.3, a move above could see prices testing 518.

Trading Ideas:
* Natural gas trading range for the day is 463.8-518.
* Natural gas dropped on a bigger-than-expected storage build
* The extended shutdown of the Freeport LNG export plant in Texas allows utilities to quickly rebuild low gas stockpiles.
* On a daily basis, output was on track to drop to 10.3 bcfd on Wednesday, the lowest since November 2021

Copper

Copper yesterday settled down by -0.31% at 696.1 as demand concerns continued to weigh on sentiment and more hawkish approach from the Fed and other central banks around the world has weighed heavily on the metals. U.S Federal Reserve chief Jerome Powell said it would rein in 40-year-high inflation even if this pushes up unemployment and risks an economic slowdown. Global manufacturing growth is slowing, partly due to coronavirus restrictions in top producer China. Union leaders at Chile's state-owned mining firm Codelco, reached an agreement with the company to end a national strike over the decision to close a smelter located in a highly polluted area. Mainland China reported 143 new coronavirus cases for June 23, compared with 135 new cases a day earlier. COVID restrictions in China have battered the country's economy and manufacturing sector. Copper inventory across major Chinese markets decreased by 1,300 mt from Monday to 102,300 mt, down by 7,600 mt from last Friday. Compared with Monday's data, the inventories in most regions of China increased, only the inventory in Guangdong decreased. The total inventory dropped by 141,400 mt compared with the same period last year when the inventory was recorded at 243,700 mt. Technically market is under fresh selling as market has witnessed gain in open interest by 5.62% to settled at 5622 while prices down -2.15 rupees, now Copper is getting support at 685.8 and below same could see a test of 675.4 levels, and resistance is now likely to be seen at 707.4, a move above could see prices testing 718.6.

Trading Ideas:
* Copper trading range for the day is 675.4-718.6.
* Copper slumped as demand concerns continued to weigh on sentiment and more hawkish approach from the Fed and other central banks
* Global manufacturing growth is slowing, partly due to coronavirus restrictions in top producer China.
* Union leaders at Chile's state-owned mining firm Codelco, reached an agreement with the company to end a national strike

Zinc

Zinc yesterday settled down by -3.32% at 296.8 as growing concerns over recession and weak economic readings pointed to a likely impact on demand. Manufacturing growth is slowing from Asia to Europe as China's COVID-19 curbs and Russia's invasion of Ukraine disrupt supply chains, while the growing risk of a recession in the United States poses a new threat to the global economy. The global zinc market moved to a surplus of 10,900 tonnes in April from a revised deficit of 31,700 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a deficit of 6,300 tonnes in March. During the first four months of 2022, ILZSG data showed a deficit of 13,000 tonnes versus a surplus of 83,000 tonnes in the same period of 2021 as refined zinc production fell over the period. Operational issues at Australian mines and high energy prices in Europe have weighed on zinc production this year. Around 13.5 million tonnes of zinc is produced and consumed each year. The LME zinc cash/3M spread continues to strengthen, hitting a backwardation of US$218/t, which is the highest level seen since 1997. LME zinc inventories have come under pressure in recent days, with on-warrant stocks falling to just 19.8kt, down from 59.6kt on Monday. This is the lowest level seen since at least 2000. Technically market is under fresh selling as market has witnessed gain in open interest by 18.04% to settled at 1551 while prices down -10.2 rupees, now Zinc is getting support at 288.6 and below same could see a test of 280.4 levels, and resistance is now likely to be seen at 307.4, a move above could see prices testing 318.

Trading Ideas:
* Zinc trading range for the day is 280.4-318.
* Zinc dropped as growing concerns over recession and weak economic readings pointed to a likely impact on demand.
* Global zinc market flips to surplus of 10,900 T in April – ILZSG
* Manufacturing growth is slowing from Asia to Europe as China's COVID-19 curbs and Russia's invasion of Ukraine disrupt supply chains.

Aluminium

Aluminium yesterday settled down by -0.26% at 209.25 as the market was in deep concerns over a potential economic recession after the release of major economic readings in the US and Europe. The preliminary US Markit manufacturing PMI for June was significantly less than expected, which refreshed the 23-month low, and the US 30-year mortgage rate hit its highest level since 2008; the number of first-time jobless claims last week was near a five-month high. Global primary aluminium output in May rose 0.43% year on year to 5.805 million tonnes, data from the International Aluminium Institute (IAI) showed. Estimated Chinese production increased to 3.42 million tonnes in May, up from 3.355 million tonnes in May last year, IAI data shows. China's aluminium imports in May fell 16.4% from the same month a year earlier, government data showed, amid high overseas prices and weaker domestic consumption. The country brought in 188,469 tonnes of unwrought aluminium and products – including primary metal and unwrought, alloyed aluminium – last month, according to data from the General Administration of Customs. Monthly aluminium imports into China, the world's biggest producer and consumer of the metal, have been below 200,000 tonnes so far this year as an arbitrage window for cheaper overseas metal shut and downstream demand weakened due to COVID-19 induced lockdowns. Technically market is under long liquidation as market has witnessed drop in open interest by -1.82% to settled at 2856 while prices down -0.55 rupees, now Aluminium is getting support at 206.7 and below same could see a test of 203.9 levels, and resistance is now likely to be seen at 211.7, a move above could see prices testing 213.9.

Trading Ideas:
* Aluminium trading range for the day is 203.9-213.9.
* Aluminium dropped as the market was in deep concerns over a potential economic recession after the release of major economic readings in the US and Europe.
* The preliminary US Markit manufacturing PMI for June was significantly less than expected, which refreshed the 23-month low
* Global primary aluminium output in May rose 0.43% year on year to 5.805 million tonnes

Mentha oil

Mentha oil yesterday settled up by 0.31% at 1049.1 amid low production this season and improving demand post-pandemic. 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 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 27.2 Rupees to end at 1178.6 Rupees per 360 kgs.Technically market is under fresh buying as market has witnessed gain in open interest by 7.65% to settled at 1140 while prices up 3.2 rupees, now Mentha oil is getting support at 1045.5 and below same could see a test of 1042 levels, and resistance is now likely to be seen at 1053, a move above could see prices testing 1057.

Trading Ideas:
* Mentha oil trading range for the day is 1042-1057.
* In Sambhal spot market, Mentha oil gained  by 27.2 Rupees to end at 1178.6 Rupees per 360 kgs.
* Mentha oil gained amid low production this season and improving demand post-pandemic.
* 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.

Turmeric

Turmeric yesterday settled down by -1.02% at 7784 amid reports of sufficient stocks and good sowing progress in south India is pressurizing the prices. As per latest export figures, turmeric exports in Mar 2022 jumped higher 27.4% y/y at 15,750 tonnes vs 12,360 tonnes while for the period of Jan-Mar 2022, exports are only down by 1.15% y/y at 36,750 tonnes. In FY 2021/22, exports were down 16.7% y/y at 1.53 lakh tons but higher by 10% compared with 5-year average. The arrivals of New season turmeric are diminishing and exports demand is improving as season progresses. Traders and exporters are expecting the prices to remain stable as Maharashtra and Andhra Pradesh turmeric arrivals have also increased. Kocha arrivals are good at markets in Sangli, Hingoli and Nanded regions in Maharashtra. Due to aggressive coverages by oleoresin companies, prices were steady during the month. Panangali arrivals have started in Salem, Erode and Gundalpet markets. Turmeric harvesting in Indonesia is likely to start during June – July 2022. Crop is reported to be normal. Domestic demand reduced particularly with the new season crop supplies from Marathwada region of Maharashtra during April. Turmeric all India production for 2022 is estimated at 4.67 lakh tonnes, revised after crop damage due to excessive rainfall in Maharashtra, Andhra Pradesh and Telangana during October and November. In Nizamabad, a major spot market in AP, the price ended at 8074.2 Rupees dropped -58.6 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -1.14% to settled at 15620 while prices down -80 rupees, now Turmeric is getting support at 7738 and below same could see a test of 7694 levels, and resistance is now likely to be seen at 7848, a move above could see prices testing 7914.

Trading Ideas:
* Turmeric trading range for the day is 7694-7914.
* Turmeric dropped amid reports of sufficient stocks and good sowing progress in south India is pressurizing the prices.
* As per latest export figures, turmeric exports in Mar 2022 jumped higher 27.4% y/y at 15,750 tonnes vs 12,360 tonnes
* For the period of Jan-Mar 2022, exports are only down by 1.15% y/y at 36,750 tonnes.
* In Nizamabad, a major spot market in AP, the price ended at 8074.2 Rupees dropped -58.6 Rupees.

Jeera

Jeera yesterday settled down by -0.09% at 21070 as cumin exports dropped by 60.58% in March 2022 to around 13406.43 tonnes as against 33203.08 tonnes in March 2021. On daily basis Jeera arrivals in Unjha market were around 5,000 bags, Saurashtra and Gondal market around 800 t0 1,000 bags are arriving. However downside limited because of lower production of the spice in the country, partly because many farmers shifted to more lucrative commodities. Similarly, in Rajasthan also daily arrivals have remained weak, in Jodhpur market around 1,500 bags, at Nagaur 500 bags and other centres 500 bags arrivals noted. In Rajasthan, the new crop of cumin in the current year has come only 60% i.e. around 30 lakh bags as compared to last year. The arrival of cumin in Rajasthan has been only 50% in the peak season in the current year as compared to the previous years as the crop was less. There was a drought in Turkey and Syria and due to state tensions, the sowing of cumin seeds has been reported to be very low. Export demand for cumin seeds is expected to increase for the rest of the season due to reports of very low harvests in Turkey, Syria and Afghanistan. In Unjha, a key spot market in Gujarat, jeera edged up by 118.85 Rupees to end at 21407.95 Rupees per 100 kg.Technically market is under fresh selling as market has witnessed gain in open interest by 0.35% to settled at 12768 while prices down -20 rupees, now Jeera is getting support at 20935 and below same could see a test of 20800 levels, and resistance is now likely to be seen at 21230, a move above could see prices testing 21390.

Trading Ideas:
# Jeera trading range for the day is 20800-21390.
# Jeera dropped as cumin exports dropped by 60.58% in March 2022 to around 13406.43 tonnes as against 33203.08 tonnes in March 2021.
# In Rajasthan, the new crop of cumin in the current year has come only 60% i.e. around 30 lakh bags as compared to last year.
# Export demand for cumin seeds is expected to increase for the rest of the season due to reports of very low harvests in Turkey, Syria and Afghanistan.
# In Unjha, a key spot market in Gujarat, jeera edged up by 118.85 Rupees to end at 21407.95 Rupees per 100 kg.

Cotton

Cotton yesterday settled down by -0.93% at 41330 tracking weakness ICE cotton as mounting recession worries dimmed the demand outlook for the natural fiber. Cotton sowing fall nearly 14.76% with 31.83 lakh hectares of area sown against area of 37.37 lakh hectares in 2021. There is a rush among farmers in Gujarat for sowing cotton in anticipation of good returns. Kharif cotton sowing for the season in Gujarat is likely to increase by at least 15% compared to the previous season amid a rush to sow the crop well ahead of its schedule. Farmers had got good prices for cotton in domestic and international markets last season. Indian Meteorological Department (IMD) in its forecast for next five days has said gradual maximum temperature is likely to rise by 2-4 degree centigrade over most parts of northwest India and Madhya Pradesh. Between June 27 and 29, scattered to fairly widespread rainfall is likely over peninsular India and east India, while there could be an increase in rainfall over northwest and central India, it said. The Cotton Association of India (CAI), is bullish about the sowing prospects this kharif season. “Sowing will increase by 12 per cent and go up to 133-135 lakh hectares from last year’s 120 lakh,” said Atul Ganatra, President, CAI. In spot market, Cotton dropped by -990 Rupees to end at 45330 Rupees.Technically market is under fresh selling as market has witnessed gain in open interest by 13.74% to settled at 1424 while prices down -390 rupees, now Cotton is getting support at 39940 and below same could see a test of 38560 levels, and resistance is now likely to be seen at 42580, a move above could see prices testing 43840.

Trading Ideas:
* Cotton trading range for the day is 38560-43840.
* Cotton dropped tracking weakness ICE cotton as mounting recession worries dimmed the demand outlook for the natural fiber.
* Cotton sowing fall nearly 14.76% with 31.83 lakh hectares of area sown against area of 37.37 lakh hectares in 2021.
* Sowing will increase by 12 per cent and go up to 133-135 lakh hectares from last year’s 120 lakh – CAI
* In spot market, Cotton dropped  by -990 Rupees to end at 45330 Rupees.

-www.kediaadvisory.com

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