IGI Logo

Gold

Gold yesterday settled up by 1.15% at 51304 after Q2 GDP data showed that the US economy unexpectedly contracted for the second consecutive quarter. The figure added to a batch of economic data that pointed to a sharp decrease in economic activity and strengthened the demand for safe assets. Prices were also higher after Federal Reserve Chair Jerome Powell said that it will likely become appropriate to slow the pace of interest rate increases depending on the inflationary and economic picture. A sharp fall in purchases by investors pulled global gold demand down 8% in the second quarter compared to the same period in 2021, the World Gold Council said. Gold is typically seen as a safe place to park money in times of turmoil and investment demand surged early in the year as Russia invaded Ukraine and inflation rose rapidly. Exchange traded funds (ETFs) holding bullion for investors sold 38.8 tonnes of gold back into the market over April-June, the WGC said in its latest quarterly report. Global gold demand amounted to 948 tonnes in the second quarter, the WGC said. China's demand for gold jewellery, bars and coins is expected to fall year-on-year in the second half of 2022, a World Gold Council (WGC) official said, as lockdowns to contain coronavirus outbreaks cause uncertainties and cut consumer spending. Technically market is under short covering as market has witnessed drop in open interest by -51.68% to settled at 935 while prices up 584 rupees, now Gold is getting support at 50913 and below same could see a test of 50521 levels, and resistance is now likely to be seen at 51544, a move above could see prices testing 51783.

Trading Ideas:
* Gold trading range for the day is 50521-51783.
* Gold rose after Q2 GDP data showed that the US economy unexpectedly contracted for the second consecutive quarter.
* Fed’s Powell said that it will likely become appropriate to slow the pace of interest rate increases depending on the inflationary and economic picture.
* Global gold demand falls as investors shy away

Silver

Silver yesterday settled up by 5.06% at 57619 after the Federal Reserve extended its tightening path with a 75bps interest rate hike in its July meeting. The move furthered the tightening momentum by major central banks, as inflation in the world’s largest economies have shown no sign of peaking. The ECB raised policy rates by a larger than expected 50bps increase and the BoE is likely to follow the same path next week. Still, prices remain close to the two-year low of $18.1 touched earlier in the month as concerns of economic slowdown drove investors to the US dollar. The U.S. economy contracted again in the second quarter amid aggressive monetary policy tightening from the Federal Reserve to combat high inflation, which could fan financial market fears that the economy was already in recession. Gross domestic product fell at a 0.9% annualized rate last quarter, the Commerce Department said in its advance estimate of GDP. Estimates ranged from as low as a 2.1% rate of contraction to as high as a 2.0% growth pace. The economy contracted at a 1.6% pace in the first quarter. The second straight quarterly decline in GDP meets the standard definition of a recession. Technically market is under short covering as market has witnessed drop in open interest by -28.15% to settled at 16407 while prices up 2775 rupees, now Silver is getting support at 56064 and below same could see a test of 54510 levels, and resistance is now likely to be seen at 58453, a move above could see prices testing 59288.

Trading Ideas:

* Silver trading range for the day is 54510-59288.
* Silver rose after the Federal Reserve extended its tightening path with a 75bps interest rate hike in its July meeting.
* The move furthered the tightening momentum by major central banks, as inflation in the world’s largest economies have shown no sign of peaking.
* The ECB raised policy rates by a larger than expected 50bps increase and the BoE is likely to follow the same path next week.

Crude oil

Crude oil yesterday settled down by -1.37% at 7716 on concerns that a deep economic recession in the US will undercut fuel demand. The United States is optimistic that there could be some positive announcement when OPEC+ meets next week, a senior administration official said, adding that additional oil supplies would help further stabilise the market. OPEC and its allies will consider keeping oil output unchanged for September when they meet next week, despite calls from the United States for more supply, although a modest output increase is also likely to be discussed. The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, will by August have fully unwound record output cuts in place since the COVID-19 pandemic took hold in 2020. Any further supply increase by OPEC+ would be likely to fall short of pledged levels given that many producers have struggled to meet output targets following a lack of investment in oilfields. EIA data showed that US crude stockpiles fell by 4.52 million barrels last week, while exports rose to a record 4.55 million barrels a day. US gasoline demand also increased 8.5% week-on-week, with inventories declining by 3.3 million barrels. Technically market is under long liquidation as market has witnessed drop in open interest by -24.02% to settled at 3040 while prices down -107 rupees, now Crude oil is getting support at 7608 and below same could see a test of 7500 levels, and resistance is now likely to be seen at 7896, a move above could see prices testing 8076.

Trading Ideas:
* Crude oil trading range for the day is 7500-8076.
* Crude oil dropped on concerns that a deep economic recession in the US will undercut fuel demand.
* U.S. optimistic about next OPEC+ meet - administration official
* OPEC+ to weigh holding oil output steady or small hike, sources say

Nat.Gas

Nat.Gas yesterday settled down by -4.3% at 653.9 on forecasts for less hot weather through mid-August than previously expected and an increase in output to near-record highs. That small decline came despite a smaller-than-expected storage build last week when power generators burned lots of gas to keep air conditioners humming and forecasts for more gas demand next week than previously expected. Gas-fired power plants have provided over 40% of the United States' power this month, according to federal energy data, even though gas prices were up about 58% so far in July in part because coal prices were at record highs. That makes it uneconomic for some generators to use their coal-fired plants. The U.S. Energy Information Administration (EIA) said utilities added just 15 billion cubic feet (bcf) of gas to storage during the week ended July 22. That small expected storage build came despite 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 inject into low stockpiles. Data provider Refinitiv said average gas output in the U.S. Lower 48 states had risen to 96.2 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. Technically market is under long liquidation as market has witnessed drop in open interest by -16.66% to settled at 5182 while prices down -29.4 rupees, now Natural gas is getting support at 631.3 and below same could see a test of 608.8 levels, and resistance is now likely to be seen at 691, a move above could see prices testing 728.2.

Trading Ideas:
* Natural gas trading range for the day is 608.8-728.2.
* Natural gas eased on forecasts for less hot weather through mid-August than previously expected and an increase in output to near-record highs.
* Average gas output in the U.S. Lower 48 states had risen to 96.2 bcfd so far in July from 95.3 bcfd in June.
* The U.S. Energy Information Administration (EIA) said utilities added just 15 billion cubic feet (bcf) of gas to storage during the week ended July 22.

Copper

Copper yesterday settled up by 0.83% at 644.65 supported by lower production and stimulus measures in top consumer China. Mining firm MMG Ltd flagged supply risks as it suspended its copper production targets for the year following a 60% output drop due to a long protest at its Las Bambas mine in Peru, one of the world’s largest copper mines. On the demand side, analysts are also warning that there are not enough copper mines being built to meet the demand from the energy transition and growing electric vehicle adoption. Also, hopes for a less aggressive tightening by the Federal Reserve going forward offered a boost to copper bulls. Still, prices for the red metal remain more than 30% below their March peak as fears of a demand-sapping global recession continue to hang over the market. The global copper market moved to a surplus of 5,000 tonnes in May, from a deficit of 23,000 tonnes a month earlier, data from the International Copper Study Group (ICSG) showed. Previously, the ICSG had reported a surplus of 3,000 tonnes in April. During the first five months of 2022, ICSG data showed a surplus of 43,000 tonnes versus a deficit of 23,000 tonnes in the same period of 2021. Technically market is under fresh buying as market has witnessed gain in open interest by 4.04% to settled at 5820 while prices up 5.3 rupees, now Copper is getting support at 640.2 and below same could see a test of 635.6 levels, and resistance is now likely to be seen at 649.7, a move above could see prices testing 654.6.

Trading Ideas:
* Copper trading range for the day is 635.6-654.6.
* Copper prices rallied supported by lower production and stimulus measures in top consumer China.
* Mining firm MMG Ltd flagged supply risks as it suspended its copper production targets for the year following a 60% output drop
* The global copper market moved to a surplus of 5,000 tonnes in May, from a deficit of 23,000 tonnes a month earlier

Zinc

Zinc yesterday settled up by 3.34% at 285.8 as dollar index dropped sharply after the US Fed monetary resolution was announced, indicating materialised effect of rate hike. Concerns about energy supply made European natural gas and electricity prices rise again, and the energy crisis will continue to have big impact on zinc prices in the medium and long term. China will keep economic operations within a reasonable range and do its utmost to achieve the best possible results for the economy, state media said on Thursday, following a meeting of a high-level decision-making body of the Communist Party. China will also stick to its "dynamic" zero-COVID policy while seeking to stabilise employment and prices in the second half of 2022, state media reported, after the 25-member Politburo chaired by President Xi Jinping met to assess the economy. China is expected by analysts to miss its 2022 economic growth target, of around 5.5%, for the first time since 2015, with its $18 trillion economy battered this year by extensive COVID curbs including full lockdowns of cities like Shanghai. 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 International Lead and Zinc Study Group (ILZSG) showed. Previously, the ILZSG had reported a surplus of 10,900 tonnes in April. Technically market is under fresh buying as market has witnessed gain in open interest by 16.08% to settled at 1704 while prices up 9.25 rupees, now Zinc is getting support at 281 and below same could see a test of 276.2 levels, and resistance is now likely to be seen at 288.6, a move above could see prices testing 291.4.

Trading Ideas:
* Zinc trading range for the day is 276.2-291.4.
* Zinc gained as dollar index dropped sharply after the US Fed monetary resolution was announced, indicating materialised effect of rate hike.
* China says it will do 'utmost' to achieve best possible economic results
* Global zinc market moved to deficit of 3,900 T in May, says ILZSG

Aluminium

Aluminium yesterday settled up by 1.38% at 213.5 as investors anticipated slower U.S. interest rate rises and improved demand from top consumer China. Market sentiment eased after US Fed Chairman Powell delivered a dovish speech following the announced 75bps rate hike. Comments from Fed Chair Jerome Powell after the policy statement were seen as less hawkish, therefore, sparking hopes of a slower interest rate hike for the remaining time this year. The market also hopes to see more stimulus on infrastructure projects that could strengthen metals demand after China's Politburo meeting at the end of this month, where the country's top decision-making body gathers to discuss economic policies for the rest of the year. Aluminium ingot social inventory stood at 671,000 mt as of Thursday July 28, up 3,000 mt from last Thursday, and down 88,000 mt from the same period last year. The weekly inventory was stable as a whole, with different dynamics in different regions. Aluminium billet social inventory rose 12,200 mt from a week ago to 107,600 mt as of Thursday July 28. The inventory in Foshan rose significantly by 12,800 mt amid intensive arrivals of cargos shipped from Yunnan, and sluggish downstream demand also resulted in higher inventory. Technically market is under short covering as market has witnessed drop in open interest by -3.6% to settled at 2787 while prices up 2.9 rupees, now Aluminium is getting support at 211.4 and below same could see a test of 209.3 levels, and resistance is now likely to be seen at 215.7, a move above could see prices testing 217.9.

Trading Ideas:
* Aluminium trading range for the day is 209.3-217.9.
* Aluminium rose as investors anticipated slower U.S. interest rate rises and improved demand from top consumer China.
* Market sentiment eased after US Fed Chairman Powell delivered a dovish speech following the announced 75bps rate hike.
* Aluminium ingot social inventory stood at 671,000 mt as of Thursday July 28, up 3,000 mt from last Thursday

Mentha oil

Mentha oil yesterday settled down by -0.36% at 1016.7 on profit booking 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 -3.1 Rupees to end at 1118.4 Rupees per 360 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 1.22% to settled at 1580 while prices down -3.7 rupees, now Mentha oil is getting support at 1012.7 and below same could see a test of 1008.6 levels, and resistance is now likely to be seen at 1020.9, a move above could see prices testing 1025.

Trading Ideas:
* Mentha oil trading range for the day is 1008.6-1025.
* In Sambhal spot market, Mentha oil dropped  by -3.1 Rupees to end at 1118.4 Rupees per 360 kgs.
* Mentha oil dropped on profit booking 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 7756 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 7945.85 Rupees dropped -116.65 Rupees.Technically market is under fresh buying as market has witnessed gain in open interest by 0.68% to settled at 14900 while prices up 10 rupees, now Turmeric is getting support at 7712 and below same could see a test of 7666 levels, and resistance is now likely to be seen at 7808, a move above could see prices testing 7858.

Trading Ideas:
* Turmeric trading range for the day is 7666-7858.
* 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 7945.85 Rupees dropped -116.65 Rupees.

Jeera

Jeera yesterday settled up by 0.23% at 23735 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 114.7 Rupees to end at 23527.3 Rupees per 100 kg.Technically market is under short covering as market has witnessed drop in open interest by -2.82% to settled at 10017 while prices up 55 rupees, now Jeera is getting support at 23570 and below same could see a test of 23400 levels, and resistance is now likely to be seen at 23875, a move above could see prices testing 24010.

Trading Ideas:
* Jeera trading range for the day is 23400-24010.
* Jeera prices remained 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 114.7 Rupees to end at 23527.3 Rupees per 100 kg.

Cotton

Cotton yesterday settled down by -0.24% at 45490 on profit booking after prices seen supported 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 gained by 370 Rupees to end at 42760 Rupees.Technically market is under fresh selling as market has witnessed gain in open interest by 15.13% to settled at 1240 while prices down -110 rupees, now Cotton is getting support at 44860 and below same could see a test of 44220 levels, and resistance is now likely to be seen at 46120, a move above could see prices testing 46740.

Trading Ideas:
* Cotton trading range for the day is 44220-46740.
* Cotton dropped on profit booking after prices seen supported as crop has been damaged as excessive rains continue to hit parts of the Maharashtra State
* 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 gained  by 370 Rupees to end at 42760 Rupees.

- www.kediaadvisory.com

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