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Gold

Gold yesterday settled down by -0.56% at 51874 as an encouraging U.S. jobs report eased recession worries and raised hopes the Federal Reserve will stick to its aggressive tightening path. The jobs data shows the U.S. economy is strong and this can prompt Fed to be more aggressive. U.S. employers hired far more workers than expected in July, with the unemployment rate falling to a pre-pandemic low of 3.5%. A positive employment picture gives the Fed further scope for future rate rises without risking tipping the economy into recession. St. Louis Fed President James Bullard said the Fed would be steadfast in raising interest rates to bring inflation, running at four-decade highs, back to the central bank's 2% target. Gold premiums in China rose on safe-haven demand driven by rising tensions with the United States over Taiwan, while higher domestic prices cooled buying activity in India. Chinese dealers charged premiums of $4 to $11 an ounce over benchmark spot gold prices, compared with $4 to $8.5 last week. In India, dealers offered discounts of about $14 an ounce over official domestic prices versus last week’s $6 discounts. Retail demand has slowed substantially, especially in rural areas. Prices need to correct by 3-4% to bring back buyers to jewellery stores. Technically market is under long liquidation as market has witnessed drop in open interest by -3.55% to settled at 15492 while prices down -291 rupees, now Gold is getting support at 51521 and below same could see a test of 51167 levels, and resistance is now likely to be seen at 52377, a move above could see prices testing 52879.

Trading Ideas:
* Gold trading range for the day is 51167-52879.
* Gold prices slide as an encouraging U.S. jobs report eased recession worries and raised hopes the Fed will stick to its aggressive tightening path.
* Unemployment rate falls to a pre-pandemic low of 3.5%
* Citi maintains H2 2022 average gold price forecast near $1,740/oz

Silver

Silver yesterday settled down by -1.07% at 57364 amid a combination of a stronger dollar and soaring Treasury yields. Fresh jobs data surpassed market expectations in multiple gauges, strengthening bets that the Fed will continue its aggressive hiking momentum. 528 thousand non-farm payrolls were added to the American economy in July, more than double of expectations, while the unemployment rate dropped to 3.5% and wages grew by 0.5% on the month. Stronger labor market figures add to recent hawkish comments by Fed policymakers, which remain fully committed to taming surging inflation. Market moves followed a stronger-than-expected payroll report, which paved the way for the Federal Reserve's aggressive stance to cool an overheating economy. Putting a floor under prices were lingering concerns about a global economic slowdown and heightened US-China tensions over Taiwan. The US unemployment rate decreased to 3.5% in July 2022, the lowest since February 2020, from 3.6% in the previous period, while analysts expected it to be unchanged. The number of unemployed persons edged down to 5.7 million. Meanwhile, the labor force participation rate, at 62.1 percent, and the employment-population ratio, at 60.0 percent, were little changed over the month. Technically market is under fresh selling as market has witnessed gain in open interest by 8.19% to settled at 17950 while prices down -618 rupees, now Silver is getting support at 56572 and below same could see a test of 55779 levels, and resistance is now likely to be seen at 58195, a move above could see prices testing 59025.

Trading Ideas:
* Silver trading range for the day is 55779-59025.
* Silver dropped amid a combination of a stronger dollar and soaring Treasury yields.
* Fresh jobs data surpassed market expectations in multiple gauges, strengthening bets that the Fed will continue its aggressive hiking momentum
* Putting a floor under prices were lingering concerns about a global economic slowdown and heightened US-China tensions over Taiwan.

Crude oil

Crude oil yesterday settled up by 0.74% at 7086 as some support comes from relatively tight supplies as indicated by lingering backwardation. Supply concerns are expected to ratchet up closer to winter, with European Union sanctions banning seaborne imports of Russian crude and oil products set to take effect on Dec. 5. U.S. shale oil producer EOG Resources said it expects to deliver roughly 4% oil and gas volume growth this year, and hold a similar trajectory in 2023, as inflation and supply chain problems continue to snarl the oil industry. OPEC leaders Saudi Arabia and the United Arab Emirates stand ready to deliver a "significant increase" in output should the world face a severe supply crisis this winter. For September, OPEC+ is set to raise its oil output goal by 100,000 barrels per day. The hike is one of the smallest since OPEC quotas were introduced in 1982, OPEC data shows. 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. Technically market is under short covering as market has witnessed drop in open interest by -21.32% to settled at 8556 while prices up 52 rupees, now Crude oil is getting support at 6946 and below same could see a test of 6805 levels, and resistance is now likely to be seen at 7226, a move above could see prices testing 7365.

Trading Ideas:
* Crude oil trading range for the day is 6805-7365.
* Crude oil gained as some support comes from relatively tight supplies as indicated by lingering backwardation
* U.S. crude oil in the SPR dropped 4.7 million barrels last week to 469.9 million barrels, its lowest since May 1985
* The EIA 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.

Nat.Gas

Nat.Gas yesterday settled down by -1.06% at 642.3 with output holding near record highs and forecasts for less hot weather and lower demand over the next two weeks than previously expected. Also weighing on prices was the ongoing outage at the Freeport liquefied natural gas (LNG) export plant in Texas, which has left more gas in the United States for utilities to rebuild extremely low stockpiles for next winter. The Energy Information Administration (EIA) reported a 41 Bcf injection into U.S. natural gas storage for the week ended July 29, an above-average build that also overshot pre-report estimates. Total Lower 48 working gas in underground storage stood at 2,457 Bcf for the week, a 337 Bcf (minus 12.1%) deficit to the five-year average, according to EIA. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 97.8 bcfd so far in August from a record 96.7 bcfd in July. With hotter weather expected, Refinitiv projected that average U.S. gas demand including exports would rise from 98.9 bcfd this week to 100.8 bcfd next week before sliding to 99.2 bcfd in two weeks as the heat starts to ease. The forecasts for this week and next were lower than Refinitiv's outlook on Thursday. Technically market is under long liquidation as market has witnessed drop in open interest by -2.05% to settled at 4295 while prices down -6.9 rupees, now Natural gas is getting support at 627.7 and below same could see a test of 613.2 levels, and resistance is now likely to be seen at 656.3, a move above could see prices testing 670.4.

Trading Ideas:
* Natural gas trading range for the day is 613.2-670.4.
* Natural gas eased with output holding near record highs and forecasts for less hot weather and lower demand over the next two weeks than previously expected.
* Also weighing on prices was the ongoing outage at the Freeport LNG plant, which has left more gas in the US for utilities to rebuild extremely low stockpiles
* EIA reported a 41 Bcf injection into U.S. natural gas storage for the week ended July 29

Copper

Copper yesterday settled up by 1.44% at 655.85 buoyed by weaker dollar as market sentiment improved and the orders of copper processing enterprises picked up. And with the acceleration of national infrastructure investment, the demand for cables has increased month-on-month. Copper price recorded a three-day loss earlier in week on weak global factory data and worries on flaring U.S.-China tensions with U.S. house speaker Nancy Pelosi's visit to Taiwan. While the recent rebound was primarily attributed to technical buying, overall sentiment remained bearish alongside concerns over the performance of global economy. The number of Americans filing new claims for unemployment benefits increased last week. Signs of softening labour market weighed on the dollar, with the greenback posting its biggest fall in two weeks. Weaker dollar means cheaper costs for commodity buyers of other currencies, which supports prices. China's current account surplus widened to USD 80.2 billion in the second quarter of 2022 from USD 45.5 billion in the same period of the previous year, a preliminary estimate showed. Heightened geopolitical tensions in the Asian region also kept markets on edge, with China reportedly firing a barrage of ballistic missiles into the waters around Taiwan as part of its large-scale military exercises following US House Speaker Nancy Pelosi’s visit to the island. Meanwhile, major copper producers have recently reported declining output and supply risks due to various disruptions, providing support to copper prices. Technically market is under short covering as market has witnessed drop in open interest by -3.44% to settled at 5298 while prices up 9.3 rupees, now Copper is getting support at 648.9 and below same could see a test of 642 levels, and resistance is now likely to be seen at 661.2, a move above could see prices testing 666.6.

Trading Ideas:
* Copper trading range for the day is 642-666.6.
* Copper prices gains buoyed by weaker dollar as market sentiment improved and the orders of copper processing enterprises picked up.
* China current account surplus widens in Q2
* Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 6.1 percent from last Friday.

Zinc

Zinc yesterday settled up by 0.5% at 309.85 as Glencore warned against potential production suspension amid aggravating energy crisis, fuelling bullish sentiment in the market. China's refined zinc output stood at 475,900 mt in July, down 12,600 mt or 2.57% on the month and 39,300 mt or 7.63% on the year. From January to July 2022, the combined refined zinc output is estimated to be 3.447 million mt, a decrease of 2.44% year on year. Survey showed that the output of domestic refined zinc decreased in July and was less than expected. Yet the output still saw some increments. Some smelters in Henan and Qinghai resumed the production in July. The output of some smelters in Yunnan increased due to the supplement of zinc concentrate. China's refined zinc output is expected to increase by 35,100 mt to 511,000 mt in August, an increase of 2,100 mt or 0.42% on the year. From January to August 2022, the combined refined zinc output is estimated to be 3.958 million mt, a decrease of 2.08% year on year. On the macro front, the Bank of England raised the interest rates by 50 basis points on Thursday, the largest increase in 27 years, and at the same time warned that a long-term recession was coming. Technically market is under short covering as market has witnessed drop in open interest by -8.78% to settled at 1589 while prices up 1.55 rupees, now Zinc is getting support at 303.6 and below same could see a test of 297.4 levels, and resistance is now likely to be seen at 314.6, a move above could see prices testing 319.4.

Trading Ideas:
* Zinc trading range for the day is 297.4-319.4.
* Zinc gains as Glencore warned against potential production suspension amid aggravating energy crisis, fuelling bullish sentiment
* China's refined zinc output decreased in July due to the maintenance
* LME zinc stocks have nearly halved in the past three months.

Aluminium

Aluminium yesterday settled up by 1% at 211.55 as SHFE aluminium warrants dropped to a low level and a potential short squeeze is possible amid the low inventory. Support also seen by the pessimism aroused by expected zinc production cuts due to high energy prices. China's current account surplus widened to USD 80.2 billion in the second quarter of 2022 from USD 45.5 billion in the same period of the previous year, a preliminary estimate showed. Considering the first half of the year, China recorded a current account surplus of USD 169.1 billion. Aluminium ingot social inventory stood at 678,000 mt as of Thursday August 4, up 7,000 mt from a week ago, and down 54,000 mt the same period last year. The inventory was down 56,000 mt compared with July 4. The inventory in Wuxi dropped to 220,000 mt amid limited arrivals. Gongyi saw a small increase compared with this Monday, but dropped from last Thursday as the arrivals have not yet been fully reflected in the inventory level. Aluminium billet social inventory dropped 1,000 mt from Monday August 1 to 116,400 mt, but added 8,800 mt compared with last Thursday. The inventory in Foshan rose 13,400 mt or 20.3% from last Thursday amid concentrated arrivals from Yunnan and sluggish downstream demand. Technically market is under short covering as market has witnessed drop in open interest by -11.65% to settled at 2951 while prices up 2.1 rupees, now Aluminium is getting support at 209.9 and below same could see a test of 208.1 levels, and resistance is now likely to be seen at 213.1, a move above could see prices testing 214.5.

Trading Ideas:
* Aluminium trading range for the day is 208.1-214.5.
* Aluminium gains as SHFE aluminium warrants dropped to a low level and a potential short squeeze is possible amid the low inventory
* China's current account surplus widened to USD 80.2 billion in the second quarter of 2022
* Aluminium ingot social inventory stood at 678,000 mt as of Thursday August 4, up 7,000 mt from a week ago

Mentha oil

Mentha oil yesterday settled down by -0.2% at 988.1 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 gained by 2.1 Rupees to end at 1109.1 Rupees per 360 kgs.Technically market is under long liquidation as market has witnessed drop in open interest by -0.37% to settled at 1607 while prices down -2 rupees, now Mentha oil is getting support at 982.2 and below same could see a test of 976.2 levels, and resistance is now likely to be seen at 994.5, a move above could see prices testing 1000.8.

Trading Ideas:
* Mentha oil trading range for the day is 976.2-1000.8.
* In Sambhal spot market, Mentha oil gained  by 2.1 Rupees to end at 1109.1 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 up by 0.13% at 7474 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 7693.45 Rupees dropped -21.15 Rupees.Technically market is under fresh buying as market has witnessed gain in open interest by 20.96% to settled at 7155 while prices up 10 rupees, now Turmeric is getting support at 7384 and below same could see a test of 7294 levels, and resistance is now likely to be seen at 7562, a move above could see prices testing 7650.

Trading Ideas:
* Turmeric trading range for the day is 7294-7650.
* Turmeric 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 7693.45 Rupees dropped -21.15 Rupees.

Jeera

Jeera yesterday settled down by -0.82% at 24315 on profit booking after prices seen supported 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 down by -68.35 Rupees to end at 23926.75 Rupees per 100 kg.Technically market is under fresh selling as market has witnessed gain in open interest by 8.2% to settled at 7920 while prices down -200 rupees, now Jeera is getting support at 24140 and below same could see a test of 23970 levels, and resistance is now likely to be seen at 24540, a move above could see prices testing 24770.

Trading Ideas:
* Jeera trading range for the day is 23970-24770.
* Jeera dropped on profit booking after 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 down by -68.35 Rupees to end at 23926.75 Rupees per 100 kg.

Cotton

Cotton yesterday settled up by 1.05% at 47310 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. The heavy rainfall has caused heavy losses to the cotton crop in Narnaund, Baas, Hansi and Barwala regions of the Hisar. The Agriculture Department report has revealed that 49,212 acres of cotton crop has suffered above 26 per cent losses, of which the crop on 18,700 acres has reported damage above 50 per cent. 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 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 spot market, Cotton remains unchanged at by 0 Rupees to end at 44600 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -1.58% to settled at 1185 while prices up 490 rupees, now Cotton is getting support at 46850 and below same could see a test of 46400 levels, and resistance is now likely to be seen at 47650, a move above could see prices testing 48000.

Trading Ideas:
* Cotton trading range for the day is 46400-48000.
* Cotton gained as crop has been damaged as excessive rains continue to hit parts of the Maharashtra State.
* India’s Cotton sowing gained by nearly 5.34% to 117.65 lakh hectares in 2022 against an area sown of 111.69 lakh hectares in 2021.
* In Rajasthan, Cotton sowing witnessed a gain of 7.99% with 647.1 thousand hectares as against 599.22 thousand hectares in 2021
* In spot market, Cotton remains unchanged at by 0 Rupees to end at 44600 Rupees.

- www.kediaadvisory.com

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