IGI Logo

Gold

Gold yesterday settled down by -0.13% at 54674 as investors stayed on the sidelines ahead of the US Federal Reserve’s interest rate decision, where it is expected to moderate its aggressive tightening campaign but point to a higher peak for rates. Other major central banks including the European Central Bank, Bank of England and Swiss National Bank are also scheduled to decide on monetary policy this week. The annual inflation rate in the US slowed to 7.1% in November 2022, compared to 7.7% in October and below market expectations of 7.3%. Gold premiums in China rose as demand picked up after the top consumer eased COVID restrictions, while high prices muted activity in India. Premiums in China rose to $10-$25 an ounce over benchmark spot prices from last week's $2-$12. Dealers offered discounts of up to $20 an ounce over official domestic prices versus last week's $18 discounts. Money markets are currently pricing a 50bps rate hike in the funds rate after four successive 75bps rate increases but investors will look for any changes on the peak rate or whether policymakers think there will be a need to become more hawkish. Technically market is under long liquidation as the market has witnessed a drop in open interest by -1.45% to settle at 15761 while prices are down -69 rupees, now Gold is getting support at 54540 and below same could see a test of 54405 levels, and resistance is now likely to be seen at 54850, a move above could see prices testing 55025.

Trading Ideas:
* Gold trading range for the day is 54405-55025.
* Gold steadied as investors stayed on the sidelines ahead of the US Federal Reserve’s interest rate decision
* The annual inflation rate in the US slowed to 7.1% in November 2022, compared to 7.7% in October.
* Premiums in China rose to $10-$25 an ounce over benchmark spot prices from last week's $2-$12.
 

Silver

Silver yesterday settled up by 0.77% at 69302 after cooler-than-expected inflation in the US ramped up hopes that the Federal Reserve could end its tightening cycle at a lower interest rate. Expectations of higher demand and lower supply supported silver prices to rise by 26% since the start of Q4. Hopes of softer rate hikes in the US and a cut in the reserve ratio by the PBoC lifted demand for industrial silver usage as electricity conductors, tracking the rebound for copper. Signs of low supply also supported prices, as New York’s COMEX inventories fell 70% in the last 18 months to just over 1 million tonnes. Also, the London Bullion Market Association stockpiles fell for the 10th straight month to a record-low 27.1 thousand tonnes in November. US export prices fell by 0.3 percent from a month earlier in November of 2022, slightly below expectations of a 0.4 percent drop and following an upwardly revised 0.4 percent retreat in the prior month. US import prices dropped 0.6 percent from a month earlier in November 2022, following a revised 0.4 percent decrease in the previous month and compared with market consensus of a 0.5 percent fall. Technically market is under fresh buying as the market has witnessed a gain in open interest by 2.35% to settle at 21841 while prices are up 527 rupees, now Silver is getting support at 68888 and below same could see a test of 68474 levels, and resistance is now likely to be seen at 69553, a move above could see prices testing 69804.

Trading Ideas:
* Silver trading range for the day is 68474-69804.
* Silver rose after cooler-than-expected inflation in the US ramped up hopes that Fed could end its tightening cycle at a lower interest rate.
* Expectations of higher demand and lower supply supported silver prices to rise by 26% since the start of Q4.
* Hopes of softer rate hikes in the US and a cut in the reserve ratio by the PBoC lifted demand for industrial silver usage
 

Crude oil

Crude oil yesterday settled up by 2.37% at 6402 amid growing optimism about China's reopening and persistent supply disruptions. China has signaled a softening stance in the fight against the coronavirus, raising hopes for a swifter rebound in economic activity and crude demand. At the same time, the Keystone Pipeline that connects fields in Canada to refiners in the US Gulf Coast remained shut. Adding to the bullish tone were softer-than-expected US inflation data, reinforcing the narrative that the Federal Reserve will be less aggressive while lifting the growth outlook. OPEC said it expected to see robust global oil demand growth in 2023 with potential economic upside coming from a relaxation of China's zero-COVID policies, which this year have pushed the country's oil use into contraction for the first time in years. World oil demand in 2023 will rise by 2.25 million barrels per day (bpd), or about 2.3%, the Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report. The forecast was steady from November, after a series of downgrades. Stocks of crude oil in the United States rose by 7.819 million barrels in the week ended December 9th, 2022, following a 6.426 million barrels draw in the previous week. Technically market is under short covering as the market has witnessed a drop in open interest by -21.17% to settle at 7079 while prices are up 148 rupees, now Crude oil is getting support at 6266 and below same could see a test of 6129 levels, and resistance is now likely to be seen at 6479, a move above could see prices testing 6555.

Trading Ideas:
* Crude oil trading range for the day is 6129-6555.
* Crude oil rose amid growing optimism about China's reopening and persistent supply disruptions.
* OPEC sees robust global oil demand growth in 2023 after 2022 Chinese contraction
* World oil demand in 2023 will rise by 2.25 million barrels per day (bpd), or about 2.3% - OPEC
 

Nat.Gas

Nat.Gas yesterday settled down by -6.82% at 532.6 on forecasts for less cold weather than previously expected in late December and after failing to break through a key level of technical price resistance for a third day in a row. Frigid temperatures and heavy precipitation on the West Coast have fueled natural gas demand at a time when storage inventories are below average. Meanwhile, the Freeport LNG export plant in Texas, forced to go offline in June following a fire, expects to begin bringing operations back online by year's end, in another delay due to pending regulatory approval. Still, prices remain subdued for this time of the year, as milder weather in most of October and November delayed the winter heating season while record production levels added to the bearish sentiment. EIA reported that US production of dry natural gas, used primarily in homes and businesses for heating, cooking, and electricity, is set to break an annual record of 98.0 Bcf/d in 2022. With colder weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise from 123.4 billion cubic feet per day (bcfd) this week to 145.8 bcfd next week. Technically market is under fresh selling as the market has witnessed a gain in open interest by 0.71% to settle at 6480 while prices are down -39 rupees, now Natural gas is getting support at 517.2 and below same could see a test of 501.8 levels, and resistance is now likely to be seen at 555.5, a move above could see prices testing 578.4.

Trading Ideas:
* Natural gas trading range for the day is 501.8-578.4.
* Natural gas dropped on forecasts for less cold weather than previously expected in late December
* Frigid temperatures and heavy precipitation on the West Coast have fueled natural gas demand at a time when storage inventories are below average.
* The Freeport LNG export plant in Texas, expects to begin bringing operations back online by year's end
 

Copper

Copper yesterday settled up by 0.81% at 712.65 supported by a weaker U.S. dollar, with further gains stymied by concerns over surging COVID-19 infections in Beijing. Copper prices were also lifted by looming supply concerns. Meanwhile, Chinese leaders reportedly delayed a key economic policy meeting amid growing signs that COVID-19 infections are surging in Beijing nearly a week after the government jettisoned some of the world's toughest anti-virus restrictions. The dollar weakened after data showed U.S. consumer price inflation rose less than expected last month, strengthening the view that the Federal Reserve will slow its pace of rate hikes after its two-day meeting. Lower production in South America continued to drive concerns of shortages in the near future, as output from top producer Chile slid 6.7% in the first three quarters of the year and mine protests in Peru hamper activity. Commodity trader Trafigura warned that global copper stocks have fallen to record lows with current inventories enough to supply world consumption for just 4.9 days, and mining giant Glencore estimates a supply shortfall of 50 million tonnes in 2023. Still, the slowing economy in top consumer China limited the metal’s rally, underscored by NBS PMI data pointing to the fastest contraction in factory activity in seven months. Technically market is under fresh buying as the market has witnessed a gain in open interest by 5.52% to settle at 5375 while prices are up 5.7 rupees, now Copper is getting support at 708.1 and below same could see a test of 703.4 levels, and resistance is now likely to be seen at 715.6, a move above could see prices testing 718.4.
 

Trading Ideas:
* Copper trading range for the day is 703.4-718.4.
* Copper rose supported by a weaker U.S. dollar, with further gains stymied by concerns over surging COVID-19 infections in Beijing.
* Copper prices were also lifted by looming supply concerns.
* Lower production in South America continued to drive concerns of shortages in the near future.
 

Zinc

Zinc yesterday settled down by -1.31% at 286.15 as China's refined zinc output stood at 524,700 mt in November, up 10,600 mt or 2.06% MoM and 5,200 mt or 0.99% YoY. LME zinc inventory has entered a downward track since early September, and continued to fall last week, standing at 39,750 mt, its lowest in more than 32 years. Nyrstar has completed scheduled maintenance work at its Auby operation in Northern France, but the smelter will not resume zinc production due to challenging market conditions. "This period will be used to bring forward future planned investments to improve operational stability and efficiency of the Auby smelter once operations are able to restart." Nyrstar put its zinc smelting operations at Budel in the Netherlands on care and maintenance in September. Metal industry sources say Nyrstar has the capacity to produce 720,000 tonnes of zinc in Europe, with 315,000 of that at Budel. The global zinc market deficit rose to 103,000 tonnes in September from a revised deficit of 90,200 tonnes a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a deficit of 101,100 tonnes in August. Technically market is under long liquidation as the market has witnessed a drop in open interest by -14.56% to settle at 2987 while prices are down -3.8 rupees, now Zinc is getting support at 283.3 and below same could see a test of 280.4 levels, and resistance is now likely to be seen at 290.5, a move above could see prices testing 294.8.
 

Trading Ideas:
* Zinc trading range for the day is 280.4-294.8.
* Zinc dropped as China's refined zinc output stood at 524,700 mt in November, up 2.06% MoM
* LME zinc inventory has entered a downward track since early September, and continued to fall last week
* Nyrstar has completed scheduled maintenance work at its Auby operation in Northern France, but the smelter will not resume zinc production
 

Aluminium

Aluminium yesterday settled down by -0.02% at 212.85 as China produced around 3.34 million mt aluminium in November, up 8.7% YoY. The daily output rose 1,055 mt MoM to 111,200 mt. The output totalled 36.64 million mt from January to November, an increase of 3.7% on the year. The US Department of Labor announced that the November inflation data was significantly lower than the previous reading. The market expected the Fed to take a less hawkish stance, causing the US dollar index to fall sharply while lifting commodities. On the supply side, smelters in Guizhou may face production cuts of nearly 30%. Some aluminium processing plants plan to close early for the Chinese New Year. Global aluminium producers have offered Japanese buyers premiums of $95-$105 per tonne for January-March primary metal shipments, down 4% to up 6% from the current quarter, three sources directly involved in quarterly pricing talks said. Japan is Asia's biggest importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region. For the October-December quarter, Japanese buyers agreed to pay a premium of $99 per tonne , down 33% from the prior quarter.
Technically market is under long liquidation as the market has witnessed a drop in open interest by -3.03% to settle at 5063 while prices are down -0.05 rupees, now Aluminium is getting support at 211.8 and below same could see a test of 210.6 levels, and resistance is now likely to be seen at 213.9, a move above could see prices testing 214.8."
 

Trading Ideas:
* Aluminium trading range for the day is 210.6-214.8.
* Aluminum dropped as China produced around 3.34 million mt aluminium in November, up 8.7% YoY.
* On the supply side, smelters in Guizhou may face production cuts of nearly 30%.
* Some aluminium processing plants plan to close early for the Chinese New Year.
 

Mentha oil

Mentha oil yesterday settled up by 0.62% at 1004.5 on low level buying after prices dropped as Mentha exports during Apr-Oct 2022 has dropped by 20.15 percent at 1,249.02 tonnes as compared to 1,564.12 tonnes exported during Apr- Oct 2021. In the month of October 2022 around 141.82 tonnes Mentha was exported as against 220.67 tonnes in September 2022 showing a drop of 35.73%. In the month of October 2022 around 141.82 tonnes of Mentha was exported as against 279.00 tonnes in October 2021 showing a drop of 49.17%. Synthetic Mentha supply remains uninterrupted. Support also seen 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 production of Mentha oil was historically high in 2020-21, the area remained almost similar last year but the yields were lower which affected the production. In the current year, production to fall to around 46,238 MT due to sharp fall in area and loss in yields following severe summer heat. which will come closed 14% down in the year 20-21. In Sambhal spot market, Mentha oil gained by 24.1 Rupees to end at 1155.5 Rupees per 360 kgs.Technically market is under short covering as the market has witnessed a drop in open interest by -5.59% to settle at 642 while prices are up 6.2 rupees, now Mentha oil is getting support at 997 and below same could see a test of 989.4 levels, and resistance is now likely to be seen at 1011.1, a move above could see prices testing 1017.6.
 

Trading Ideas:
* Mentha oil trading range for the day is 989.4-1017.6.
* In Sambhal spot market, Mentha oil gained  by 24.1 Rupees to end at 1155.5 Rupees per 360 kgs.
* Mentha gained on low level buying after prices dropped as exports during Apr-Oct 2022 has dropped by 20.15 percent
* In the month of September 2022 around 220.67 tonnes Mentha was exported showing a drop of 7.30%.
* However, Synthetic Mentha supply remains uninterrupted.
 

Turmeric

Turmeric yesterday settled up by 1.27% at 8148 on low level buying after prices dropped amid lower demand from domestic spice-makers and stockists amid availability of Turmeric supply form Marathwada region. Marathwada region has been serving as a round-the-year supply centre for Turmeric since past couple of years. Agriculture Minister Narendra Singh Tomar said unseasonal rains in some parts of the country have affected the crops. As per Andhra Pradesh agricultural department, Turmeric sowing activity completed around 16,921 hectares as compared to last year same period 19,376 hectares, down by 12.67%. Turmeric exports during Apr- Oct 2022 has rose by 11.09 percent at 99,569.88 tonnes as compared to 89,626.39 tonnes exported during Apr- Oct 2021. In the month of October 2022 around 11,178.11 tonnes turmeric was exported as against 13,990.65 tonnes in September 2022 showing a fall of 20.10%. In the month of October 2022 around 11,178.11 tonnes of turmeric was exported as against 12,534.87 tonnes in October 2021 showing a fall of 10.82%. Production of spices in India is likely to have declined 1.5% on year to 10.9 mln tn in 2021-22 (Jul-Jun), according to data from Spices Board India. The country had produced 11.0 mln tn of spices in the previous year. The Spices Board has pegged turmeric production at 1.33 mln tn, up 18.4% on year. In Nizamabad, a major spot market in AP, the price ended at 7301.8 Rupees dropped -48.05 Rupees.Technically market is under fresh buying as the market has witnessed a gain in open interest by 8.88% to settle at 7850 while prices are up 102 rupees, now Turmeric is getting support at 8046 and below same could see a test of 7942 levels, and resistance is now likely to be seen at 8212, a move above could see prices testing 8274.
 

Trading Ideas:
* Turmeric trading range for the day is 7942-8274.
* Turmeric gained on low level buying after prices dropped amid lower demand from domestic spice-makers and stockists amid availability of supply.
* As per Andhra Pradesh agricultural department, turmeric sowing activity completed around 16,921 hectares, down by 12.67% till date from last year.
* Marathwada region has been serving as a round-the-year supply centre for Turmeric since past couple of years.
* In Nizamabad, a major spot market in AP, the price ended at 7301.8 Rupees dropped -48.05 Rupees.
 

Jeera

Jeera yesterday settled up by 1.35% at 27685 amid higher demand for the fresh crop and supply tightness in the physical market. Good demand expected from China in December-January and Ramzan demand during January-February from gulf & other countries. Jeera sowing around 75% to 80% sowing has been completed in Rajasthan Jeera growing regions, last year till date sowing completed around 85% to 90%. Jeera exports during Apr- Oct 2022 has dropped by 18.92 percent at 1,22,015.13 tonnes as compared to 1,50,479.11 tonnes exported during Apr- Oct 2021. In the month of October 2022 around 12,427.86 tonnes jeera was exported as against 18,081.78 tonnes in September 2022 showing a drop of 31.27%. In the month of October 2022 around 12,427.86 tonnes of jeera was exported as against 11,260.72 tonnes in October 2021 showing a rise of 10.36%. Production of spices in India is likely to have declined 1.5% on year to 10.9 mln tn in 2021-22 (Jul-Jun), according to data from Spices Board India. The country had produced 11.0 mln tn of spices in the previous year. Jeera production was seen at 725,651 tn, down 8.8% on year due to lower acreage in Rajasthan and Gujarat, the key producer, according to data from Spices Board India. According to fourth advanced estimates by Gujarat government, jeera production is seen fall by 44.5 per cent to 221500 tonnes in 2021-22 on yoy basis. In Unjha, a key spot market in Gujarat, jeera edged up by 131.05 Rupees to end at 26578.5 Rupees per 100 kg.Technically market is under fresh buying as the market has witnessed a gain in open interest by 15.54% to settle at 7584 while prices are up 370 rupees, now Jeera is getting support at 27280 and below same could see a test of 26880 levels, and resistance is now likely to be seen at 27920, a move above could see prices testing 28160.
 

Trading Ideas:
* Jeera trading range for the day is 26880-28160.
* Jeera gained amid higher demand for the fresh crop and supply tightness in the physical market.
* Current year sowing area likely to increase in Rajasthan and Gujarat growing regions.
* 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 131.05 Rupees to end at 26578.5 Rupees per 100 kg.
 

Cotton

Cotton yesterday settled down by -1.07% at 31330 as India’s domestic cotton demand for the 2022-23 season up to September is estimated to be lower by about 18 lakh bales (170 kg each) at 300 lakh bales or nearly 6 per cent less than last year’s 318 lakh bales. According to the Punjab Mandi Board data, cotton crop has seen the slowest arrival in the last five years even as the average rate is the highest since 2018. Punjab is expected to have produced 20 lakh quintals against 29 lakh quintals produced in the 2021-22 season. China's agriculture ministry lowered its outlook for cotton consumption, as slowing global economic growth continues to hurt demand for textiles. China's cotton consumption in the 2022/23 crop year that began in September is seen at 7.5 million tonnes, 200,000 tonnes lower than in last month's forecast, the ministry said in its monthly Chinese Agricultural Supply and Demand Estimates (CASDE) report. According to USDA, World Cotton and Market Report, Global cotton production is estimated down by 700,000 bales from the previous month to 115.7 million, largely owing to lower production in Pakistan. Pakistan production has fallen due to floods and poor weather. Global stocks are forecasted higher with consumption projected lower more than 3.0 million bales. This is the seventh consecutive monthly decline for global consumption. In spot market, Cotton dropped by -30 Rupees to end at 31920 Rupees.Technically market is under long liquidation as the market has witnessed a drop in open interest by -3.2% to settle at 1999 while prices are down -340 rupees, now Cotton is getting support at 31120 and below same could see a test of 30910 levels, and resistance is now likely to be seen at 31620, a move above could see prices testing 31910.
 

Trading Ideas:
* Cotton trading range for the day is 30910-31910.
* Cotton dropped as India’s domestic cotton demand for the 2022-23 season estimated to be lower by about 18 lakh bales at 300 lakh bales
* China cuts cotton demand outlook on slowing global growth
* USDA cotton projections for 2022/23 indicated a slight increase from 2021/22 for world cotton
* In spot market, Cotton dropped  by -30 Rupees to end at 31920 Rupees.

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer