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Gold

Gold yesterday settled down by -0.56% at 59860 from a stronger dollar amid hopes that the US would avert a debt default and hawkish remarks from Federal Reserve officials. President Joe Biden and House Speaker Kevin McCarthy signaled cautious optimism that a deal to raise the debt ceiling would be reached, with Treasury Secretary Janet Yellen reaffirming that the US could be at risk of default by June 1. On the monetary policy front, Fed’s Bullard suggested the possibility of raising rates by another half-point this year, while Fed's Kashkari described the decision to pause or hike rates in June as a close call. While the bullion market in top hub China experienced muted activity, a drop in local gold prices from record highs enticed some buyers back to India and forced dealers to cut discounts to a 10-week low. Compared to the $11 reduction from last week, Indian merchants offered discounts of up to $5 per ounce off of official domestic rates. India's imports of gold in April fell by 45% from a year ago to 16 tonnes as the rise in domestic prices reduced demand during a significant holiday. Premiums of $2 to $4 were imposed in China. Technically market is under long liquidation as the market has witnessed a drop in open interest by -7.21% to settle at 7698 while prices are down -337 rupees, now Gold is getting support at 59593 and below same could see a test of 59327 levels, and resistance is now likely to be seen at 60257, a move above could see prices testing 60655.

Trading Ideas:

* Gold trading range for the day is 59327-60655.
* Gold prices remained under pressure from a stronger dollar
* President Joe Biden and House Speaker Kevin McCarthy signaled cautious optimism that a deal to raise the debt ceiling would be reached
* Fed’s Bullard suggested the possibility of raising rates by another half-point this year


Silver

Silver yesterday settled down by -1.49% at 71086 amid a stronger dollar as expectations grew that the Federal Reserve will keep interest rates higher for longer on stronger US data. Improved risk sentiment amid optimism about a U.S. debt ceiling deal also weighed on prices. Meanwhile, the Silver Institute predicts another substantial deficit in the market for 2023, following a record shortfall in 2022. Supply is expected to increase only slightly while demand is set to remain high, with industrial fabrication reaching another all-time high. Federal Reserve Bank of St. Louis President James Bullard backed two more interest-rate increases in 2023 and his Minneapolis colleague Neel Kashkari cautioned against reading too much into a June pause. The S&P Global Flash US Manufacturing PMI declined to 48.5 in May of 2023 from 50.2 in April, well below forecasts of 50, preliminary estimates showed. The reading pointed to the biggest contraction in the manufacturing sector in three months and a renewed deterioration in operating conditions. The S&P Global US Services PMI increased to 55.1 in May 2023, up from 53.6 the month before and well above market expectations of 52.6, a preliminary estimate showed. The rate of growth in activity was the fastest for just over a year, with firms linking the upturn to greater demand from new and existing clients. Technically market is under fresh selling as the market has witnessed a gain in open interest by 4.04% to settle at 14231 while prices are down -1078 rupees, now Silver is getting support at 70582 and below same could see a test of 70078 levels, and resistance is now likely to be seen at 71862, a move above could see prices testing 72638.

Trading Ideas:

* Silver trading range for the day is 70078-72638.
* Silver dropped as expectations grew that the Federal Reserve will keep interest rates higher
* Improved risk sentiment amid optimism about a U.S. debt ceiling deal also weighed on prices.
* Silver Institute predicts another substantial deficit in the market for 2023, following a record shortfall in 2022.

Crude oil

Crude oil yesterday settled up by 0.31% at 6111 as a warning from the Saudi energy minister stoked fears of further OPEC+ production cuts. Saudi Arabia’s Prince Abdulaziz bin Salman told speculators to “watch out,” in what analysts took as a signal that OPEC+ could consider further output cuts at a meeting on June 4. Meanwhile, industry data showed that US crude inventories declined by about 6.8 million barrels last week, defying forecasts for a 0.525 million increase. Gasoline inventories also dropped by about 6.4 million, while distillate inventories fell by about 1.8 million. Those data came ahead of the Memorial day holiday which traditionally marks the beginning of US peak summer travel. Elsewhere, investors continued to monitor debt ceiling negotiations in the US as there have been few indicators of progress being made even as the risk of default estimated in early June looms. U.S. oil output from the seven biggest shale basins is due to rise in June to the highest on record, data from the Energy Information Administration showed. Oil output is set to rise by 41,000 barrels per day (bpd) to 9.33 million bpd, the EIA said. Crude output in the Permian Basin in Texas and New Mexico, is expected to rise by 15,000 bpd to a record high 5.71 million bpd. Technically market is under short covering as the market has witnessed a drop in open interest by -5.71% to settle at 7608 while prices are up 19 rupees, now Crude oil is getting support at 6054 and below same could see a test of 5997 levels, and resistance is now likely to be seen at 6179, a move above could see prices testing 6247.
Trading Ideas:
# Crude oil trading range for the day is 5997-6247.
# Crude oil gains as warning from Saudi energy minister stoked fears of further OPEC+ cuts.
# US crude oil inventories declined by 12.456 million barrels, the most since November 2022
# Industry data showed that US crude inventories declined by about 6.8 million barrels last week - API

 

Natural Gas

Nat.Gas yesterday settled up by 1.83% at 211.6 on forecasts for cooler weather this week and warmer weather next week that should boost demand more than previously expected through early June. Gas prices also gained support from low amounts of wind power in recent weeks that have forced power generators to burn more gas to produce electricity. That price increase came despite record U.S. gas output and the return of Canadian exports to levels seen before wildfires in Alberta and other western provinces forced energy firms to shut-in some oil and gas production over the past three weeks. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 101.5 billion cubic feet per day (bcfd) so far in May, which would top April's monthly record of 101.4 bcfd. The amount of gas exported from Canada to the United States was on track to hold near a near three-week high of 8.1 bcfd for a second day in a row on Wednesday. Meteorologists projected the weather in the Lower 48 states would switch from cooler than normal from May 24-28 to warmer than normal from May 31-June 3 before returning to mostly near normal from June 4-8. Technically market is under short covering as the market has witnessed a drop in open interest by -7.25% to settle at 18665 while prices are up 3.8 rupees, now Natural gas is getting support at 208 and below same could see a test of 204.4 levels, and resistance is now likely to be seen at 214.4, a move above could see prices testing 217.2.

Trading Ideas:
* Natural gas trading range for the day is 204.4-217.2.
* Natural gas gained on forecasts for higher demand
* Gas prices also gained support from low amounts of wind power in recent weeks
* However, the return of Canadian exports to levels seen before wildfires in Alberta limited the upside.


Copper

Copper yesterday settled down by -2.43% at 698.35 due to supply outpacing demand and a gloomy demand outlook. Demand for the metal has been affected by the lackluster economic recovery, particularly in China. Unlike in previous slowdowns, the Chinese government has not implemented substantial infrastructure or property spending, depriving copper and other metals of a safety net. Moreover, copper inventories in the London Metal Exchange nearly doubled since mid-April, indicating weakness in demand on a global scale. This increase in supply relative to demand is evident in the wide contango spread between copper's spot price and three-month futures on the LME, the widest since 1994. The global refined copper market saw a 332,000 tonne surplus in the first quarter, compared with an 8,000 tonne surplus in the corresponding period last year, the International Copper Study Group (ICSG) said in its latest monthly bulletin on Tuesday. World refined copper output rose 7.5% in the quarter to 6.69 million tonnes while usage was estimated 2.3% higher at 6.35 million tonnes, the ICSG said. Preliminary official Chinese data showed refined production rose 13.5% and apparent demand in China grew by 5.5% in the first quarter, while refined usage in the rest of the world declined by 2%, the ICSG added. Technically market is under fresh selling as the market has witnessed a gain in open interest by 29.99% to settle at 6779 while prices are down -17.4 rupees, now Copper is getting support at 693.6 and below same could see a test of 688.8 levels, and resistance is now likely to be seen at 707.6, a move above could see prices testing 716.8.
 

Trading Ideas:
# Copper trading range for the day is 688.8-716.8.
# Copper losses due to supply outpacing demand and a gloomy demand outlook.
# Demand for the metal has been affected by the lackluster economic recovery, particularly in China.
# World refined copper market in 2,000 tonne surplus in March –ICSG

Zinc

Zinc yesterday settled down by -3.45% at 209.8 as signs of subdued Chinese demand expect to pressure prices over the coming days. Refined zinc prices are expected to be on a downward trend until 2025, as weak demand growth failed to match with a surge in production. Global refined zinc output is expected to increase by almost 1.3 million tonnes over the coming five years, with an increase of 800,000 tonnes in ex-China and around half a million tonnes in China. Demand of refined zinc globally this year is expected to grow 2.7% year-on-year, flipping from a sharp fall in 2022 of 4.1%, due to recovery in China and Europe, but not enough to meet with a 3.4% growth in supply. In China, the world's top zinc consumer, the refined zinc market could see a surplus of 245,000 tonnes this year and is likely to stay in surplus in 2024 and 2025. In the rest of the world, the surplus of refined zinc expected this year is even higher than in China, at 381,000 tonnes, before easing to 150,000 tonnes in 2024 and 50,000 tonnes in 2025. According to the General Administration of Customs on May 22, China imported 15,676.61 mt of refined zinc in April, an increase of 22.61% month-on-month and a sharp growth of 920.84% year-on-year. Technically market is under fresh selling as the market has witnessed a gain in open interest by 20.38% to settle at 3739 while prices are down -7.5 rupees, now Zinc is getting support at 207.6 and below same could see a test of 205.5 levels, and resistance is now likely to be seen at 213.7, a move above could see prices testing 217.7.

Trading Ideas:
* Zinc trading range for the day is 205.5-217.7.
* Zinc dropped on signs of subdued Chinese demand
* China refined zinc imports soared 921% in April
* Chinese zinc smelters are running at almost 100% operation rate


Aluminium

Aluminium yesterday settled down by -0.7% at 205.95 amid growing concerns over the performance of major economies and a strong U.S. dollar. Demand outlook has darkened for the metal used widely in construction, power and transportation sectors, as China's economic recovery falters. London Metal Exchange (LME) inventories of aluminium jumped by over 20,000 tonnes in Gwangyang, South Korea, a location that has seen large gains in recent months, data showed on Tuesday. The LME said its daily inventory report failed to show a delivery of 16,125 tonnes of aluminium T-bars into warehouses in Gwangyang, due to an error, but the totals were correct. The total showed aluminium inventories in Gwangyang in warehouses certified by the LME surged by 20,875 tonnes, bring the total in all global LME storage facilities to 575,875 tonnes. Gwangyang is a key location for aluminium storage, making up 41% of total LME inventories. Since March 1, aluminium stored in the port has jumped by 38%. It was unclear the source of the current arrivals into Gwangyang. Higher stocks of Russian aluminium, produced by Rusal, on the LME are a concern for producers as they could weigh on benchmark aluminium prices used as references in contracts between buyers and sellers. Technically market is under fresh selling as the market has witnessed a gain in open interest by 20.55% to settle at 2558 while prices are down -1.45 rupees, now Aluminium is getting support at 204.9 and below same could see a test of 203.9 levels, and resistance is now likely to be seen at 207.1, a move above could see prices testing 208.3.

Trading Ideas:
* Aluminium trading range for the day is 203.9-208.3.
* Aluminium dropped amid growing concerns over the performance of major economies
* LME aluminium stocks climb by over 20,000 T in South Korea
* Global aluminium output up 0.3% y/y to 5.6 mln T in April – IAI

Mentha oil

Mentha oil yesterday settled down by -0.77% at 967.4 on better sowing conditions in UP and Bihar and weak export demand. The recent period of rain in Uttar Pradesh and Bihar has been beneficial to planting efforts. The forecast of above-average rainfall in May would be beneficial to Mentha seeding efforts. Rising menthol imports, as well as China's limited purchasing, will put pressure on pricing. Mentha exports during Apr-Mar 2023, dropped by 10.39 percent to 2,430.49 tonnes as compared to 2,712.39 tonnes exported during Apr-Mar 2022. In March 2023 around 202.95 tonnes of Mentha was exported as against 210.78 tonnes in February 2023 showing a drop of 3.71%. In March 2023 around 202.95 tonnes of Mentha was exported as against 218.78 tonnes in March 2022 showing a drop of 7.24%. 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 1 Rupees to end at 1132 Rupees per 360 kgs.Technically market is under fresh selling as the market has witnessed a gain in open interest by 9.24% to settle at 532 while prices are down -7.5 rupees, now Mentha oil is getting support at 964.4 and below same could see a test of 961.3 levels, and resistance is now likely to be seen at 972.3, a move above could see prices testing 977.1.

Trading Ideas:
* Mentha oil trading range for the day is 961.3-977.1.
* In Sambhal spot market, Mentha oil gained  by 1 Rupees to end at 1132 Rupees per 360 kgs.
* Menthaoil dropped on better sowing conditions and weak export demand
* The forecast of above-average rainfall in May would be beneficial to Mentha seeding efforts.
* Rising menthol imports, as well as China's limited purchasing, will put pressure on prices.

Turmeric

Turmeric yesterday settled up by 4.38% at 8190 as there were report of some fall in crop yields in the Marathwada region of Maharashtra due to rain in the last week. Support also seen as the untimely rains that occurred in various places in the Andhra Pradesh damaged turmeric crops causing huge loss to the farmers. Turmeric stocks were soaked in rain water in Guntur, Krishna and NTR Districts due to the rainfall. Sowing in Tamil Nadu is expected to begin in the middle of June. In Maharashtra, Andhra Pradesh, and Telangana, farmers are awaiting rainfall before starting field preparation and sowing, which will commence after receiving two to three monsoon showers. Turmeric exports during Apr-Mar 2023, rose by 11.34 percent at 170,085.36 tonnes as compared to 152,757.59 tonnes exported during Apr- Mar 2022. In March 2023 around 18,810.47 tonnes of turmeric was exported as against 14,806.30 tonnes in February 2023 showing a rise of 27.04%. In March 2023 around 18,810.47 tonnes of turmeric was exported as against 15,740.36 tonnes in March 2022 showing a rise of 19.50%. 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 7453.8 Rupees gained 52.1 Rupees.Technically market is under short covering as the market has witnessed a drop in open interest by -4.6% to settle at 13265 while prices are up 344 rupees, now Turmeric is getting support at 7954 and below same could see a test of 7720 levels, and resistance is now likely to be seen at 8326, a move above could see prices testing 8464.

Trading Ideas:
* Turmeric trading range for the day is 7720-8464.
* Turmeric gains as there were report of some fall in crop yields due to rain.
* Support also seen as the untimely rains that occurred in various places in the Andhra Pradesh damaged turmeric crops.
* Maharashtra, Andhra Pradesh, and Telangana, farmers are awaiting rainfall before starting field preparation and sowing.
* In Nizamabad, a major spot market in AP, the price ended at 7453.8 Rupees gained 52.1 Rupees.

Jeera

Jeera yesterday settled up by 1.35% at 44695 due to good export demand and expectations of lower stocks end of the current marketing year. Prices rose on crop worries grow due to unseasonal rains and hailstorms in Rajasthan, the major producing state. The market is expecting a lower yield and quality of jeera this season, which has boosted the demand from domestic and export buyers. The jeera growing regions in southern and north-western parts of Rajasthan in the districts of Alwar, Jaisalmer, Jaipur, Bikaner, Bhilwara, and Barmer have received a fresh spell of unseasonal rains in the past week, triggering concerns on the crop condition. According to FISS forecasts, cumin demand is predicted to exceed 85 lakh bags this year, with a likely supply of 65 lakh bags. One bag holds 55kg. This will result in a demand-supply imbalance. Currently, at least 70% of the crop in Rajasthan and around 30% in Gujarat have yet to be harvested. Because of the rain in both states, the total yield will be reduced. The cumin crop was destroyed by two bouts of unseasonal rainfall during the harvest season. In comparison to the planned arrival of 70 lakh bags, the stock will be reduced to 60-65 lakh bags, with a carry-forward stock of 5 lakh bags from last year. In Unjha, a key spot market in Gujarat, jeera edged up by 297.4 Rupees to end at 46216.35 Rupees per 100 kg.Technically market is under short covering as the market has witnessed a drop in open interest by -3.73% to settle at 8139 while prices are up 595 rupees, now Jeera is getting support at 44130 and below same could see a test of 43570 levels, and resistance is now likely to be seen at 45020, a move above could see prices testing 45350.

Trading Ideas:
* Jeera trading range for the day is 43570-45350.
* Jeera gains due to good export demand and expectations of lower stocks
* Prices rose on crop worries grow due to unseasonal rains and hailstorms in Rajasthan.
* The market is expecting a lower yield and quality of jeera this season
* In Unjha, a key spot market in Gujarat, jeera edged up by 297.4 Rupees to end at 46216.35 Rupees per 100 kg.

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