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Gold

Gold yesterday settled up by 0.57% at 50899 as Federal Reserve Chairman Jerome Powell allayed investor fears over bigger interest rate hikes in the U.S. central bank's efforts to rein in soaring inflation. As expected, the Fed raised interest rates by 50 basis points (bp), the biggest jump in 22 years. However, Powell told reporters afterwards it was not considering 75-bp moves in the future. The number of Americans filing new claims for unemployment benefits increased by 19 thousand to 200 thousand in the week ended April 30th, 2022, from a revised 181 thousand in the previous period and above the market estimate of 182 thousand. It is the highest reading since mid-February. On a non-seasonally adjusted basis, initial claims decreased by 7,164 from the previous week to 196,962, with notable declines in California (-2,860) and Ohio (-2,609). The 4-week moving average, which removes week-to-week volatility, was 1,417,000, a drop of 3,250 from the previous week's revised average. Nonfarm labor productivity in the US slumped an annualized 7.5 percent in the first quarter of 2022, much more than market expectations of a 5.4 percent drop and following a downwardly revised 6.3 percent expansion in the previous period. Technically market is under short covering as market has witnessed drop in open interest by -6.76% to settled at 9586 while prices up 289 rupees, now Gold is getting support at 50649 and below same could see a test of 50399 levels, and resistance is now likely to be seen at 51353, a move above could see prices testing 51807.

Trading Ideas: 

Gold trading range for the day is 50399-51807.

Gold prices rose as Fed Chairman Powell allayed investor fears over bigger interest rate hikes in the U.S. central bank's efforts to rein in soaring inflation.

As expected, the Fed raised interest rates by 50 basis points (bp), the biggest jump in 22 years.

However, Powell told reporters afterwards it was not considering 75-bp moves in the future.

Silver

Silver yesterday settled up by 0.36% at 62336 after the Federal Reserve announced its widely expected decision to raise interest rates by 50 basis points, but indicated larger 75-basis-point increases weren't in play for the next couple of meetings. The Federal Reserve raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said the U.S. central bank would begin trimming its bond holdings next month as it battles sky-high inflation. It started raising rates in March. Fed Chair Jerome Powell told reporters that "the labor market is extremely tight, and inflation is much too high." He expressed confidence the U.S. central bank could engineer a "soft landing" that tames inflation without sending the economy into a recession. The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at a level consistent with tightening labor market conditions and further wage gains. Initial claims for state unemployment benefits rose 19,000 to a seasonally adjusted 200,000 for the week ended April 30, the Labor Department said. Claims had hovered below the 200,000 level since mid-February amid strong demand for workers. The Bank of England raised the key Bank Rate by 25bps to 1% during its May 2022 meeting, which is the 4th consecutive rate hike, pushing borrowing costs to the highest since early 2009. Technically market is under short covering as market has witnessed drop in open interest by -4.63% to settled at 14850 while prices up 222 rupees, now Silver is getting support at 61591 and below same could see a test of 60845 levels, and resistance is now likely to be seen at 63647, a move above could see prices testing 64957.

Trading Ideas: 

Silver trading range for the day is 60845-64957.

Silver rose after the Federal Reserve announced its widely expected decision to raise interest rates by 50 basis points

The Federal Reserve raised its policy interest rate by half a percentage point, the biggest hike in 22 years

U.S. weekly jobless claims increase; layoffs creep up in April

Crude oil

Crude oil yesterday settled up by 0.49% at 8265 on supply concerns after the European Union laid out plans for new sanctions against Russia, including an embargo on crude in six months, and OPEC+ again rebuffed consumer calls for a faster pace of output rises. OPEC+ agreed to stick to plans for a gradual oil output increase amounting to 432,000 barrels per day in June. U.S. crude oil stockpiles rose unexpectedly last week, while distillate and gasoline inventories dropped again as refiners continue to boost fuel exports to a world in need of supply, the Energy Information Administration said. Crude inventories rose by 1.3 million barrels in the week to April 29 to 415.7 million barrels. Distillate stockpiles, which include diesel and heating oil, fell 2.3 million barrels to 104.9 million barrels, their lowest since April 2008. Gasoline stocks dropped by 2.2 million barrels to 228.6 million barrels. Moscow's invasion of Ukraine, and subsequent moves by the United States and allies to curtail imports of Russian oil, has tightened supply worldwide. The United States also continued to release stocks from its strategic reserves, putting roughly 3.1 million barrels into the market in an effort to keep prices from spiraling higher, leaving levels at their lowest since December 2001 at just under 550 million barrels. Technically market is under fresh buying as market has witnessed gain in open interest by 16.87% to settled at 7067 while prices up 40 rupees, now Crude oil is getting support at 8116 and below same could see a test of 7968 levels, and resistance is now likely to be seen at 8453, a move above could see prices testing 8642.

Trading Ideas: 

Crude oil trading range for the day is 7968-8642.

Crude oil prices extended gains on supply concerns after the European Union laid out plans for new sanctions against Russia

OPEC+ agrees to stick to gradual oil – output hike in June

France sees EU consensus on Russian oil ban this week

Nat.Gas

Nat.Gas yesterday settled up by 3.9% at 666 as hot spring weather boosted air conditioning demand, while much higher global prices kept demand for U.S. liquefied natural gas (LNG) exports strong. The U.S. Energy Information Administration (EIA) said utilities added 77 billion cubic feet (bcf) of gas to storage during the week ended April 29. That was bigger than the 68-bcf build compares with an increase of 53 bcf in the same week last year and a five-year (2017-2021) average increase of 78 bcf. Last week's increase boosted stockpiles to 1.567 trillion cubic feet (tcf), or 16.3% below the five-year average of 1.873 tcf for this time of the year. The US is set for temperatures in May that would even be considered hotter-than-normal during summer months, while production remained 2 billion cubic feet below this year’s highs amid the maintenance season and recent freeze-offs. At the same time, export facilities have been running at near record levels to supply Europe with LNG as the region tries to wean off Russian supplies. The combination of late wintry weather, soaring overseas demand and insufficient supplies is offsetting efforts by utilities to inject natural gas into underground storage, which currently sit 17% below the 5-year average Technically market is under fresh buying as market has witnessed gain in open interest by 4.63% to settled at 7773 while prices up 25 rupees, now Natural gas is getting support at 634.7 and below same could see a test of 603.5 levels, and resistance is now likely to be seen at 683.4, a move above could see prices testing 700.9.

Trading Ideas: 

Natural gas trading range for the day is 603.5-700.9.

Natural gas jumped as hot spring weather boosted air conditioning demand, while much higher global prices kept demand for U.S. LNG exports strong.

The U.S. Energy Information Administration (EIA) said utilities added 77 billion cubic feet (bcf) of gas to storage during the week ended April 29.

The US is set for temperatures in May that would even be considered hotter-than-normal during summer months

Copper

Copper yesterday settled down by -0.43% at 762.15 as the global copper market is expected to see a surplus of 142,000 tonnes this year and of 352,000 tonnes in 2023, the International Copper Study Group (ICSG) said. "World mine production this year is expected to benefit from additional output from new and expanded mines as well as an improvement in the general situation regarding the pandemic," the ICSG said in a release. Global refined copper production is expected to rise by about 4.3% in 2022 and 3.6% in 2023, mainly supported by the continued expansion of Chinese electrolytic capacity and new and expanded operations in the Democratic Republic of Congo (DRC). The U.S. Federal Reserve raised interest rates as expected and tempered market expectations for an aggressive tightening path, which dented the dollar and lifted investor sentiment. Fed Chairman Jerome Powell, however, sounded a less hawkish tone than some had feared and said the U.S. central bank was not "actively considering" a 75 basis-point rate hike. China's services sector activity contracted at the second-steepest rate on record in April, as COVID-19 curbs halted the industry. Global copper smelting activity rose in April even as COVID-19 lockdowns intensified in top producer China, data from satellite surveillance of metal processing plants showed. Technically market is under long liquidation as market has witnessed drop in open interest by -1.04% to settled at 4173 while prices down -3.3 rupees, now Copper is getting support at 753.6 and below same could see a test of 745 levels, and resistance is now likely to be seen at 775.4, a move above could see prices testing 788.6.

Trading Ideas: 

Copper trading range for the day is 745-788.6.

Copper dropped as the global copper market is expected to see a surplus of 142,000 tonnes this year and of 352,000 tonnes in 2023

China's services sector activity contracted at the second-steepest rate on record in April, as COVID-19 curbs halted the industry

Global copper smelting activity rose in April even as COVID-19 lockdowns intensified in top producer China

Zinc

Zinc yesterday settled down by -1.33% at 330.55 as total zinc inventories across seven markets in China stood at 281,100 mt as of May 5, up 4,000 mt from April 29, down 2,800 mt from April 25. In Shanghai, the market finally saw actual de-stocking of 900 mt under the recovery of picking up goods. In Tianjin, the market continued to de-stocking with stable arrivals and the recovery of consumption. In Guangdong, the goods arrived in the market during the holiday, with a slight increase in the market inventory under the stable consumption. Inventories in Shanghai, Guangdong and Tianjin rose 700 mt, and inventories across seven major markets in China increased 4,000 mt. The Fed announced a 50 basis point rate hike and progressive balance sheet reduction plans, in line with market expectations, and said that a single 75 basis point rate hike in the future was not an option to be "actively considered". Market transactions picked up slightly amid falling zinc prices and heightening downstream restocking on tighter circulation of goods in the market. The global zinc market moved to a surplus of 14,300 tonnes in February from a revised deficit of 17,500 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a deficit of 15,000 tonnes in January. Technically market is under long liquidation as market has witnessed drop in open interest by -0.86% to settled at 1151 while prices down -4.45 rupees, now Zinc is getting support at 325.5 and below same could see a test of 320.5 levels, and resistance is now likely to be seen at 338.5, a move above could see prices testing 346.5.

Trading Ideas: 

Zinc trading range for the day is 320.5-346.5.

Zinc dropped as total zinc inventories across seven markets in China stood at 281,100 mt as of May 5, up 4,000 mt from April 29

The Fed announced a 50 basis point rate hike and progressive balance sheet reduction plans

The global zinc market moved to a surplus of 14,300 tonnes in February from a revised deficit of 17,500 tonnes a month earlier

Nickel

Nickel yesterday settled down by -1.67% at 2336.4 as Sumitomo Metal sees global nickel demand for battery use at 410,000 in 2022. China manufacturing PMI which stood at 48.83, down 4.62% YoY, and the climate index was greatly impacted by the pandemic. On the supply side, the pandemic has brought transportation problems, and the supply of Jinchuan nickel in Shanghai is relatively tight. As the price difference between SHFE and LME nickel remains great, and the supply of Sumitomo, NORNICKEL, NIKKELVERK nickel and nickel briquette is still tight. In terms of nickel pig iron, the production and transportation problems of NPI plants in Liaoning and Inner Mongolia have been seriously affected, and the output is expected to fall in March. On the demand side, the cost efficiency of self-dissolved nickel briquette in the nickel sulphate plant has not recovered amid high futures prices. In addition, the output of the downstream precursor plants and the ternary cathode material plants did not contract in March thanks to their in-plant stocks, but the inventory in April will be low, hence there is possibility of production cuts. Technically market is under fresh selling as market has witnessed gain in open interest by 2.33% to settled at 44 while prices down -39.6 rupees, now Nickel is getting support at 2331 and below same could see a test of 2325.5 levels, and resistance is now likely to be seen at 2341, a move above could see prices testing 2345.5.

Trading Ideas: 

Nickel trading range for the day is 2325.5-2345.5.

Nickel settled flat as Sumitomo Metal sees global nickel demand for battery use at 410,000 in 2022

Global nickel market sees surplus in February – INSG

Nickel briquette prices stood above 200,000 yuan/mt, and demand from nickel sulphate plants may contract.

Aluminium

Aluminium yesterday settled down by -1.21% at 243.95 as China's services sector activity contracted at the second-steepest rate on record in April, as tighter COVID curbs halted the industry, leading to sharper reductions in new business and employment, a private-sector survey showed. The Caixin services purchasing managers' index (PMI) fell to 36.2 in April, the second-lowest since the survey begun in November 2005 and down from 42 in March. The index hit 26.5 in February 2020 during the onset of the pandemic, representing the biggest contraction in activity on record. The pessimistic findings from the survey, which focuses more on small firms in coastal regions, are in line with the government's official PMI, pointing to the fast deterioration in a sector that accounts for about 60% of the economy and half of urban jobs. Aluminium ingot social inventory stood at 1,033 million mt as of Thursday May 5, up 46,000 mt from a week ago, down 82,000 mt from the same period last year. The shipment of aluminium may face pressure amid frequent arrivals after the Labour Day holiday, and the downstream consumption is still cautious amid repeating COVID though the pandemic situation has eased and the downstream operating rates rebounded. Technically market is under fresh selling as market has witnessed gain in open interest by 2.09% to settled at 2681 while prices down -3 rupees, now Aluminium is getting support at 239.8 and below same could see a test of 235.5 levels, and resistance is now likely to be seen at 249.5, a move above could see prices testing 254.9.

Trading Ideas: 

Aluminium trading range for the day is 235.5-254.9.

Aluminium dropped as China's services sector activity contracted at the second-steepest rate on record in April

The Caixin services purchasing managers' index (PMI) fell to 36.2 in April, the second-lowest since the survey begun in November 2005

Aluminium ingot social inventory stood at 1,033 million mt as of Thursday May 5, up 46,000 mt from a week ago

Mentha oil

Mentha oil yesterday settled up by 1.12% at 1076.5 as 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. Prices gained on reports that due to poor prices farmers has shifted to other crops resulting lower production. 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. Mentha farming has lost its allure in Uttar Pradesh as farmers struggle without stable price, MSP and government support. High input costs and lack of support price have drastically brought down the return of farmers who have already been struggling to increase their incomes. Prices gains amid loss in production and improvement in demand while monsoon is yet to be seen as last year heavy rains in the pre-monsoon season came like a disaster for farmer. FMCG industry reels under extraordinary inflationary pressures, experts believe it will continue to grow in both volume and value, but margins will get squeezed. In Sambhal spot market, Mentha oil gained by 11.6 Rupees to end at 1206.1 Rupees per 360 kgs.Technically market is under short covering as market has witnessed drop in open interest by -0.85% to settled at 1056 while prices up 11.9 rupees, now Mentha oil is getting support at 1065 and below same could see a test of 1053.4 levels, and resistance is now likely to be seen at 1085.1, a move above could see prices testing 1093.6.

Trading Ideas: 

Mentha oil trading range for the day is 1053.4-1093.6.

In Sambhal spot market, Mentha oil gained  by 11.6 Rupees to end at 1206.1 Rupees per 360 kgs.

Mentha oil prices gained as the harvest is expected to be almost the same as last year's in Barabanki area but harvesting 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.

Turmeric

Turmeric yesterday settled down by -0.83% at 8108 as new season turmeric is arriving in the market and exports are normal this season. As per first advance estimates by the Govt for 2021/22 season, the production of turmeric is pegged at 11.76 lakh tonnes in 2021-22 against 11.24 lt in 2020-21. As per govt data, turmeric exports in Jan 2022 is down by 25% m/m at 10,600 tonnes Vs 14275 tonnes in Dec 2021. In Feb, turmeric exports recorded lower by 17% on year at 10400 tonnes vs 12,575 tonnes while in FY 2021/22 (Apr-Feb), exports down 20% at 1.37 lakh tons compared to last year but higher by 8.3% compared with 5-year average. Turmeric crop was damaged in Maharashtra, Nizamabad in Telangana and Kadapa in Andhra Pradesh due to rains and cyclones. The farmers, who incurred losses during this period due to low price, are hoping to get good price this year, so that they could clear their dues to some extent. The market sentiment is buoyant mainly since the ending stocks are expected to be 17-18 lakh bags (50 kg each) this year against 25 lakh bags last year. Spices Board data showed turmeric production this year being projected at 11.01 lakh tonnes against 11.78 lakh tonnes last year, mainly on the output being affected in Telangana, Karnataka, Tamil Nadu, Assam and Haryana. In Nizamabad, a major spot market in AP, the price ended at 8575.1 Rupees dropped -31 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -17.11% to settled at while prices down -68 rupees, now Turmeric is getting support at 7886 and below same could see a test of 7662 levels, and resistance is now likely to be seen at 8342, a move above could see prices testing 8574.

Trading Ideas: 

Turmeric trading range for the day is 7662-8574.

Turmeric dropped as new season turmeric is arriving in the market and exports are normal this season.

As per first advance estimates, the production of turmeric is pegged at 11.76 lakh tonnes in 2021-22 against 11.24 lt in 2020-21.

In FY 2021/22 (Apr-Feb), exports down 20% at 1.37 lakh tons compared to last year but higher by 8.3% compared with 5-year average.

In Nizamabad, a major spot market in AP, the price ended at 8575.1 Rupees dropped -31 Rupees.

Jeera

Jeera yesterday settled down by -2.9% at 20780 as new crop arrivals started coming with moisture content 8% to 10%. The low yield in India will affect the global prices as the country is the largest producer of jeera or cumin in the world. Total cumin output is estimated to have declined about 35% year-on-year to 558 million tonnes in 2022. The main reason for the low yield and low acreage under cultivation is that during the cumin sowing period (October-December 2021) farmers shifted to gram and mustard whose prices were higher than that of cumin. Secondly, excess rainfall in the key cumin belts of Dwarka, Banaskantha and Kutch in Gujarat, and Jodhpur and Nagaur in Rajasthan increased the probability of wilt attack, preventing farmers from sowing the crop. Unjha mandi in Gujarat, which accounts for ~40% of India’s cumin arrivals, witnessed a 60% on-year decline in arrivals in March 2022. While arrivals for April (1st – 23rd) show ~38% increase on-year, it is on a low base of last year where there were no arrivals in the second half of April amid the pandemic. Fall in exports will put pressure on global price as well. Short supply from India, higher prices in Turkey and estimated lower production in Syria will support the bullish trend. In Unjha, a key spot market in Gujarat, jeera edged down by -177.55 Rupees to end at 21519.5 Rupees per 100 kg.Technically market is under long liquidation as market has witnessed drop in open interest by -12.85% to settled at while prices down -620 rupees, now Jeera is getting support at 20370 and below same could see a test of 19965 levels, and resistance is now likely to be seen at 21355, a move above could see prices testing 21935.

Trading Ideas: 

Jeera trading range for the day is 19965-21935.

Jeera dropped as new crop arrivals started coming with moisture content 8% to 10%

The low yield in India will affect the global prices as the country is the largest producer of jeera or cumin in the world.

Total cumin output is estimated to have declined about 35% year-on-year to 558 million tonnes in 2022.

In Unjha, a key spot market in Gujarat, jeera edged down by -177.55 Rupees to end at 21519.5 Rupees per 100 kg.

Cotton

Cotton yesterday settled up by 0.65% at 46540 due to concerns over production, slow arrivals, better domestic and exports demand. Domestic cotton arrivals down 25% or 88.95 lakh bales so far this season to around 238 lakh bales compared to last year. The Telangana government is targeting to increase the area under cotton by 55–65 per cent to about 28–30 lakh hectares (lh) from last year’s 18 lakh hectares even as the cottonseed industry pegged the growth in cotton acreage at 15 per cent in the upcoming kharif season, starting July. As per USDA report, all cotton planted area for coming season (2022) is estimated at 12.2 million acres, up 9 percent from last year. In its latest Apr report, the USDA increase global cotton production forecast in 2021-22 to 120.2 million bales (1 US bale= 218kg), compared to 119.9 million bales in Feb 2022. India’s crop is being unchanged at 26.50 million bales. India allowed duty-free imports of cotton until Sept. 30 as prices in the local market jumped to a record high because of a drop in the production, the government said in a notification. The world's biggest producer of the fibre also removed the Agriculture Infrastructure and Development Cess (AIDC) on the imports, the government said. In spot market, Cotton gained by 590 Rupees to end at 46000 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -1.23% to settled at 3699 while prices up 300 rupees, now Cotton is getting support at 46300 and below same could see a test of 46060 levels, and resistance is now likely to be seen at 46920, a move above could see prices testing 47300.

Trading Ideas: 

Cotton trading range for the day is 46060-47300.

Cotton prices rose due to concerns over production, slow arrivals, better domestic and exports demand.

India allowed duty-free imports of cotton until Sept. 30 as prices in the local market jumped to a record high because of a drop in the production.

India's cotton output is likely to fall to 33.51 million bales in the current year from last year's 35.3 million bales, estimates CAI.

In spot market, Cotton gained  by 590 Rupees to end at 46000 Rupees.

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