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Gold

Gold yesterday settled up by 0.3% at 50375 after the European Central Bank raised interest rates by a bigger than expected 50 basis points, its first increase in more than a decade, to quell runaway inflation as it plays catch up with other central banks. The number of Americans filing new claims for unemployment benefits rose for a third straight week last week to the highest in eight months, suggesting some cooling in the labor market amid tighter monetary policy and financial conditions. Initial claims for state unemployment benefits rose 7,000 to a seasonally adjusted 251,000 for the week ended July 16 from an unrevised 244,000 a week earlier, the Labor Department said. The European Central Bank raised interest rates by a bigger than expected 50 basis points, confirming that concerns about runaway inflation now trump growth considerations. The ECB also approved a new bond purchase scheme called Transmission Protection Instrument (TPI) intended to cap the rise in more indebted members' borrowing costs and limit financial fragmentation. "What happens in September is going to depend on what data we have for September, but we are definitely on a normalization path in order to reach our medium-term objective of 2%. The U.S. Federal Reserve, too, is widely expected to raise rates by 75 basis points at its policy meeting next week. Technically market is under short covering as market has witnessed drop in open interest by -8.72% to settled at 5075 while prices up 150 rupees, now Gold is getting support at 49892 and below same could see a test of 49409 levels, and resistance is now likely to be seen at 50669, a move above could see prices testing 50963.

Trading Ideas:
* Gold trading range for the day is 49409-50963.
* Gold rose after the European Central Bank raised interest rates by a bigger than expected 50 basis points, its first increase in more than a decade
* The number of Americans filing new claims for unemployment benefits rose for a third straight week last week to the highest in eight months
* The U.S. Federal Reserve, too, is widely expected to raise rates by 75 basis points at its policy meeting next week.

Silver

Silver yesterday settled down by -0.37% at 55411 but reversing most of early losses helped by a falling dollar and a stronger euro, after the ECB made a jumbo rise in borrowing costs. The ECB raised rates by 50bps, which is twice the hike announced in the previous meeting. Still, gold hovers at low levels not seen since March last year and is likely to remain under pressure, as the dollar fundamentals hold and the greenback is set to remain strong as the Fed will continue its tightening plans, making greenback-priced bullion more expensive for buyers holding other currencies. The US dollar is set to hold strong as risk sentiment remains fragile around the world, with the energy crisis in Europe and Italy's political turmoil pressuring the common currency. More importantly, the Fed is set to continue its tightening plans and is expected to deliver a 75bps rate hike next week, a fourth straight increase, totalling 225bps so far. The number of Americans filing new claims for unemployment benefits jumped by 9 thousand to 251,000 the week that ended July 16th, the highest since November 2021 and well above market expectations of 240,000, pointing a cooler labor market. The Philadelphia Fed Manufacturing Index in the US decreased for the fourth consecutive month to -12.3 in July of 2022, the lowest since May 2020. Technically market is under fresh selling as market has witnessed gain in open interest by 0.31% to settled at 22117 while prices down -208 rupees, now Silver is getting support at 54541 and below same could see a test of 53672 levels, and resistance is now likely to be seen at 55889, a move above could see prices testing 56368.

Trading Ideas:
* Silver trading range for the day is 53672-56368.
* Silver prices reversed early losses helped by a falling dollar and a stronger euro, after the ECB made a jumbo rise in borrowing costs.
* The number of Americans filing new claims for unemployment benefits jumped by 9 thousand to 251,000
* The ECB raised rates by 50bps, which is twice the hike announced in the previous meeting.

Crude oil 
Crude oil yesterday settled down by -2.88% at 7778 after higher U.S. gasoline stockpiles and an ECB rate hike stoked demand worries and returning oil supply from Libya eased supply concerns. The European Central Bank joined many other central banks in raising interest rates, focusing on fighting runaway inflation rather than the economic downturn, which can weigh on oil demand. Libya's National Oil Corp (NOC) said that crude production had resumed at several oilfields after the lifting of force majeure on oil exports last week. U.S. crude oil in the Strategic Petroleum Reserve (SPR) dropped 5 million barrels last week to 480.1 million barrels, its lowest since July 1985, the U.S. Energy Information Administration (EIA) said. The EIA also said U.S. crude production fell by 100,000 barrels per day (bpd) to 11.9 million bpd in the week to July 15, its lowest since early June. U.S. crude stocks and distillate inventories fell while gasoline inventories rose, the Energy Information Administration said. Crude inventories fell by 446,000 barrels in the week to July 15 to 426.6 million barrels, compared with expectations for a 1.4 million-barrel rise. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.1 million barrels in the last week, EIA said. Technically market is under long liquidation as market has witnessed drop in open interest by -26.31% to settled at 3212 while prices down -231 rupees, now Crude oil is getting support at 7577 and below same could see a test of 7377 levels, and resistance is now likely to be seen at 7976, a move above could see prices testing 8175.

Trading Ideas:
* Crude oil trading range for the day is 7377-8175.
* Crude oil prices fell after higher U.S. gasoline stockpiles and and returning oil supply from Libya eased supply concerns.
* Libya's NOC restarts output at several oilfields
* U.S. SPR crude stockpiles hit lowest since July 1985, crude output down again – EIA

Natural gas 
Nat.Gas yesterday settled up by 2.3% at 639.6 as signs of stronger-than-expected demand more than offset fading fears over an energy crisis in Europe. The EIA’s weekly inventory report showed utilities injected just 34 billion cubic feet (bcf) of natural gas into underground storage last week, markedly below median market estimates of a 47 bcf build. Record-setting heat waves in the US have been boosting electricity demand to power air conditioning, which has prompted power plants to burn more natural gas. Capping the upside momentum, traders digested news that Gazprom restarted shipments to Germany through the key Nord Stream 1 pipeline on Thursday after ten days of a maintenance-related shutdown. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 96.1 bcfd so far in July from 95.3 bcfd in June. That compares with a monthly record high of 96.1 bcfd in December 2021. On a daily basis, however, output was on track to drop from a six-month high of 97.3 bcfd on Monday to a preliminary one-week low of 94.7 bcfd on Thursday. Refinitiv projected average U.S. gas demand including exports would slide from 101.1 bcfd this week to 99.7 bcfd next week as extreme heat starts to ease in some parts of the country. Technically market is under short covering as market has witnessed drop in open interest by -20.41% to settled at 5163 while prices up 14.4 rupees, now Natural gas is getting support at 613.6 and below same could see a test of 587.7 levels, and resistance is now likely to be seen at 658.8, a move above could see prices testing 678.1.

Trading Ideas:
* Natural gas trading range for the day is 587.7-678.1.
* Natural gas gained as signs of stronger-than-expected demand more than offset fading fears over an energy crisis in Europe.
* The EIA’s weekly inventory report showed utilities injected just 34 billion cubic feet (bcf) of natural gas into underground storage last week
* Average gas output in the U.S. Lower 48 states rose to 96.1 bcfd so far in July from 95.3 bcfd in June.

Copper

Copper yesterday settled down by -0.76% at 622.85 weighed down by concerns of a further slowdown in demand as U.S. housing data cemented fears about a global recession. U.S. housing starts in June fell to their lowest level since September 2021 amid decades-high inflation, as surging mortgage rates reduce affordability. Weak demand in China, the world's biggest consumer of metals, also weighed on prices. The country's strict COVID-19 restrictions have dampened market confidence about a quick recovery in metals demand. China's refined copper production in June 2022 rose 10.3% year on year to 932,000 tonnes, data from the National Bureau of Statistics showed. On a daily basis, average copper output stood at 31,067 tonnes over the June period, according to calculations based on the official data. China kept its monthly benchmark lending rates for corporate and household loans unchanged, matching market expectations. Investors now expect a 75-basis-point U.S. interest rate rise next week rather than a 100-basis-point increase that would have been more damaging to economic growth. China, the biggest metals consumer, does not face recession but COVID-19 restrictions have curtailed industry and property developers are struggling to stave of default. On the copper supply side, Chilean miner Antofagasta cut its full-year output target to 640,000-660,000 tonnes. Technically market is under long liquidation as market has witnessed drop in open interest by -20.24% to settled at 3815 while prices down -4.75 rupees, now Copper is getting support at 616.5 and below same could see a test of 610.1 levels, and resistance is now likely to be seen at 627.7, a move above could see prices testing 632.5.

Trading Ideas:
* Copper trading range for the day is 610.1-632.5.
* Copper retreated weighed down by concerns of a further slowdown in demand as U.S. housing data cemented fears about a global recession.
* U.S. housing starts in June fell to their lowest level since September 2021 amid decades-high inflation, as surging mortgage rates reduce affordability.
* China June refined copper output up 10.3%

Zinc

Zinc yesterday settled down by -0.87% at 274.4 weighed down by concerns of a further slowdown in demand and fears about a global recession. Weak demand in China, weighed on prices as the country's strict COVID-19 restrictions have dampened market confidence about a quick recovery in metals demand. The inventory level in Shanghai is relatively low, and the holders of the goods have a strong intention to support the price. PBOC stepped up cash injections through open market operations, snapping a 10-day streak of a minimal CNY 3 billion of daily offering. China's refined zinc output stood at 490,300 mt in June, down 24,900 mt or 4.84% MoM and 17,700 mt or 3.48% YoY. The Fed's move to raise interest rates in response to inflation has cooled the real estate market, and the dollar index has been falling recently. Data show that the annualised U.S. June home sales stood at 5.12 million, falling for the fifth consecutive month to the lowest level in two years. The global zinc market flipped to a deficit of 3,900 tonnes in May from a revised surplus of 31,000 tonnes a month earlier, data from the ILZSG showed. During the first five months of 2022, ILZSG data showed a surplus of 29,000 tonnes versus a surplus of 44,000 tonnes in the same period of 2021. Technically market is under fresh selling as market has witnessed gain in open interest by 8.12% to settled at 1225 while prices down -2.4 rupees, now Zinc is getting support at 271.1 and below same could see a test of 267.9 levels, and resistance is now likely to be seen at 276.6, a move above could see prices testing 278.9.

Trading Ideas:
* Zinc trading range for the day is 267.9-278.9.
* Zinc prices dropped weighed down by concerns of a further slowdown in demand and fears about a global recession.
* The global zinc market flipped to a deficit of 3,900 tonnes in May from a revised surplus of 31,000 tonnes a month earlier
* China's refined zinc output stood at 490,300 mt in June, down 24,900 mt or 4.84% MoM and 17,700 mt or 3.48% YoY.

Aluminium

Aluminium yesterday settled up by 0.5% at 210.5 as China aluminium ingot inventory stood at 668,000 mt as of Thursday July 21, down 29,000 mt from last Thursday and 161,000 mt from a year ago. The Premier of the State Council stressed that macro policy is both precise and powerful as well as reasonable and proper, and will not introduce super large-scale stimulus measures, over issue currency or overdraft the future for the sake of excessive growth targets. Global primary aluminium output in June rose 1.95% year on year to 5.65 million tonnes, data from the International Aluminium Institute (IAI) showed. Estimated Chinese production was 3.33 million tonnes in June, the IAI data showed. China's aluminium imports in June fell 36.3% from the same month a year earlier, government data showed, as domestic production ramp-up and persistently weak demand continued to weigh on import appetite. The country brought in 187,362 tonnes of unwrought aluminium and products -including primary metal and unwrought, alloyed aluminium – last month, according to data from the General Administration of Customs. Aluminium imports into China, the world's biggest producer and consumer of the metal, totalled 1.08 million tonnes in the first six months this year, down 25.9% from the same period a year ago. Technically market is under short covering as market has witnessed drop in open interest by -14.21% to settled at 1702 while prices up 1.05 rupees, now Aluminium is getting support at 208.4 and below same could see a test of 206.3 levels, and resistance is now likely to be seen at 211.8, a move above could see prices testing 213.1.

Trading Ideas:
* Aluminium trading range for the day is 206.3-213.1.
* Aluminium gained as China aluminium ingot inventory stood at 668,000 mt down 29,000 mt from last Thursday.
* Global aluminium output rises 1.95% y/y to 5.65 mln T in June – IAI
* China's aluminium imports in June fell 36.3% from the same month a year earlier, government data showed

Mentha oil 
Mentha oil yesterday settled down by -0.99% at 1001.3 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 dropped by -5.9 Rupees to end at 1116.6 Rupees per 360 kgs.Technically market is under long liquidation as market has witnessed drop in open interest by -21.08% to settled at 659 while prices down -10 rupees, now Mentha oil is getting support at 990.8 and below same could see a test of 980.4 levels, and resistance is now likely to be seen at 1011.3, a move above could see prices testing 1021.4.

Trading Ideas:
* Mentha oil trading range for the day is 980.4-1021.4.
* In Sambhal spot market, Mentha oil dropped  by -5.9 Rupees to end at 1116.6 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 0.36% at 7846 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 8018 Rupees dropped -54.2 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -0.96% to settled at 16035 while prices up 28 rupees, now Turmeric is getting support at 7790 and below same could see a test of 7732 levels, and resistance is now likely to be seen at 7888, a move above could see prices testing 7928.

Trading Ideas:
* Turmeric trading range for the day is 7732-7928.
* Turmeric prices gained 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 8018 Rupees dropped -54.2 Rupees.

Jeera

Jeera yesterday settled up by 1.29% at 23900 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 up by 152.2 Rupees to end at 23464.55 Rupees per 100 kg.Technically market is under short covering as market has witnessed drop in open interest by -2.53% to settled at 12261 while prices up 305 rupees, now Jeera is getting support at 23670 and below same could see a test of 23445 levels, and resistance is now likely to be seen at 24050, a move above could see prices testing 24205.

Trading Ideas:
* Jeera trading range for the day is 23445-24205.
* Jeera 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 up by 152.2 Rupees to end at 23464.55 Rupees per 100 kg.

Cotton

Cotton yesterday settled up by 1.52% at 43960 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. However, upside seen limited after 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 Punjab, area under cotton cultivation dips to lowest since 2010, also Cotton crop in Punjab is on radar for second straight year as attack of whitefly, pink bollworm seen, as per the report. China has decided to buy three to five lac tonnes of cotton from international markets for its state reserves. The U.S. 2022/23 cotton projections show lower production, exports, and ending stocks compared with last month. In spot market, Cotton dropped by -240 Rupees to end at 41050 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -13.18% to settled at 929 while prices up 660 rupees, now Cotton is getting support at 43340 and below same could see a test of 42720 levels, and resistance is now likely to be seen at 44340, a move above could see prices testing 44720.

Trading Ideas:
* Cotton trading range for the day is 42720-44720.
* Cotton gains as crop has been damaged as excessive rains continue to hit parts of the Maharashtra State.
* However, upside seen limited after CAI reports at least 10% higher sowing is expected compared to previous 12 million hectares.
* The U.S. 2022/23 cotton projections show lower production, exports, and ending stocks compared with last month.
* In spot market, Cotton dropped  by -240 Rupees to end at 41050 Rupees.
 

- www.kediaadvisory.com

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