IGI Logo

Gold

Gold yesterday settled down by -0.29% at 59248 as the dollar climbed after weaker Chinese trade data, while caution in the run-up to U.S. inflation readings this week also kept appetite for zero-yield bullion subdued. Fed Governor Michelle Bowman outlined the likely need for additional rate hikes to lower inflation to the Fed's 2% target, while New York Fed chief John C. Williams expected that rates could begin to come down next year. A hotter-than-expected CPI number could raise the possibility of another rate hike in September. Reflecting sentiment, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to a five-month low. After three months of net selling, central banks once again became net buyers of gold in June as the central bank of Turkey again played a pivotal role, according to data from the World Gold Council. In its latest report, the WGC said six central banks bought gold in June, with only two sellers in the marketplace. Net purchases totaled 55 tonnes, the report said. Along with Turkey, The People's Bank of China also dominates the marketplace after buying 21 tonnes of gold in June, extending its buying spree to eight straight months. Technically market is under long liquidation as the market has witnessed a drop in open interest by -0.76% to settle at 14144 while prices are down -172 rupees, now Gold is getting support at 59126 and below same could see a test of 59004 levels, and resistance is now likely to be seen at 59422, a move above could see prices testing 59596.
Trading Ideas:
* Gold trading range for the day is 59004-59596.
* Gold dropped as dollar gains after weak China trade data
* Fed's Bowman: more rate hikes may be needed
*Central banks become net gold buyers in June, ending three-month selling streak

Silver

Silver yesterday settled down by -1.48% at 70216 as dollar stood tall ahead of key inflation readings. Federal Reserve governor Michelle Bowman said at a Fed Listens event that more interest rate rises 'will likely be needed' despite softer reports on jobs and inflation recently. Wholesale inventories in the United States were down 0.5% from a month earlier in June 2023, compared to the preliminary estimate of a 0.3% decrease and following an upwardly revised 0.4% fall in the prior month. It marks the fourth consecutive month of decreases in wholesale inventories. The US trade deficit narrowed to a three-month low of $65.5 billion in June 2023 from a downwardly revised $68.3 billion in May, and roughly in line with market expectations of a $65 billion gap. Imports declined 1% to $313 billion, the lowest level since November of 2021, led by falls in purchases of computers, finished metal shapes, crude oil, artwork and other collectibles. The U.S. consumer price inflation report for July is slated to be released on Thursday and the producer price inflation report, as investors seek further clarity on the path of inflation and the health of the world's largest economy. Technically market is under fresh selling as the market has witnessed a gain in open interest by 9.42% to settle at 19773 while prices are down -1052 rupees, now Silver is getting support at 69710 and below same could see a test of 69205 levels, and resistance is now likely to be seen at 71010, a move above could see prices testing 71805.
Trading Ideas:
* Silver trading range for the day is 69205-71805.
* Silver dropped as dollar stood tall ahead of key inflation readings.
* Fed’s Bowman said at a Fed Listens event that more interest rate rises 'will likely be needed'
* Wholesale inventories in the United States were down 0.5% from a month earlier in June 2023

Crude oil

Crude oil yesterday settled up by 0.5% at 6840 after a monthly report from the U.S. Energy Information Administration projected a rosier outlook for the US economy. China's imports and exports fell much more than expected in July in yet another sign of a sluggish post-COVID rebound for the world's largest oil importer. Saudi Arabia's cabinet said that it reaffirms its support for precautionary measures by the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, to stabilise the oil market. UBS maintains a positive perspective on oil prices and predicts that by the conclusion of 2023, Brent crude will rise to $90 per barrel. According to UBS, oil demand is poised to exceed 103 million barrels per day in August, marking the first instance of such an achievement. This surge is attributed to the growth in consumption from China, India, Brazil, and the Middle East. UBS anticipates a continued tightness in oil supply over the upcoming weeks due to the extension of production and export reductions led by Saudi Arabia and Russia. China's crude oil imports in July rose 17% year on year, customs data showed, as domestic inventories continued to build and overseas fuel exports surged. Technically market is under fresh buying as the market has witnessed a gain in open interest by 4.98% to settle at 8576 while prices are up 34 rupees, now Crude oil is getting support at 6695 and below same could see a test of 6551 levels, and resistance is now likely to be seen at 6917, a move above could see prices testing 6995.
Trading Ideas:
* Crude oil trading range for the day is 6551-6995.
* Crudeoil gains after report from EIA projected a rosier outlook for US economy.
* Saudi cabinet reaffirms support for OPEC+ precautionary measures to stabilise oil market
* China's July crude imports rise 17% year on year
 

Nat.Gas

Nat.Gas yesterday settled up by 1.54% at 231.3 as hotter than normal weather kept air conditioning demand high, especially in Texas, offsetting pressure from rising output. Warmer than normal temperatures in the densely populated states, continued heat in Texas, and indications that LNG export facilities are ramping up in anticipation of higher winter demand – are all providing a more stable and supportive market for prices. Meteorologists forecast the weather in the Lower 48 states will remain hotter than normal through at least Aug. 23. Data provider Refinitiv forecast U.S. gas demand, including exports, would rise from 101.8 billion cubic feet per day (bcfd) this week to 105.2 bcfd next week as power generators burn more of the fuel and exports rise. Refinitiv said average gas output in the U.S. lower 48 states was 102.1 bcfd so far in August, up from 101.8 bcfd in July. That compares with a monthly record of 102.2 bcfd in May. Gas flows to the seven big U.S. LNG export plants have fallen from an average of 12.7 bcfd in July to 12.2 bcfd so far in August due mostly to a reduction at Cheniere Energy's Sabine Pass in Louisiana. Technically market is under short covering as the market has witnessed a drop in open interest by -1.79% to settle at 24081 while prices are up 3.5 rupees, now Natural gas is getting support at 226.2 and below same could see a test of 221 levels, and resistance is now likely to be seen at 234.2, a move above could see prices testing 237.
Trading Ideas:
* Natural gas trading range for the day is 221-237.
* Natural gas edged higher amid hotter than normal weather
* Meteorologists forecast the weather in the Lower 48 states will remain hotter than normal through at least Aug. 23.
* Data provider Refinitiv forecast U.S. gas demand, including exports, would rise from 101.8 bcfd this week to 105.2 bcfd next week

Copper

Copper yesterday settled down by -1.1% at 729.35 as the dollar continued to strengthen and new data magnified concerns over China's economic recovery, hampering the outlook for base metal demand. Both Chinese imports and exports contracted more than expected in July, while year-to-date copper imports slid by 10.7% to reflect a sharp downturn in demand for industrial inputs. The results follow contractionary manufacturing PMI readings and fresh signs of stress in property developers' financial stability, further clouding industrial activity. Still, the decline was limited by concerns that lower supply will coincide with higher demand for copper-intensive sustainable infrastructure in coming years, risking wide shortages. State-owned Chilean miner Codelco raised its output projections by 70,000 tonnes to 1.31-1.35 million tonnes this year, shortly after the giant reported that production in the first half of 2023 tanked by 14%. China's copper imports slid 2.7% in July from a year earlier, customs data showed, weighed down by soft demand in the faltering economy and high global prices. Imports of unwrought copper and copper products totalled 451,159 metric tons in July, data from the General Administration of Customs showed. In the first seven months of 2023, China's copper imports fell 20.7% to 3.3 million metric tons, compared with a year-earlier, the customs data showed. Technically market is under fresh selling as the market has witnessed a gain in open interest by 12.26% to settle at 6008 while prices are down -8.1 rupees, now Copper is getting support at 723.1 and below same could see a test of 716.7 levels, and resistance is now likely to be seen at 737.3, a move above could see prices testing 745.1.
Trading Ideas:
* Copper trading range for the day is 716.7-745.1.
* Copper falls as dollar strengthens; new data raises China recovery worries
* Both Chinese imports and exports contracted more than expected in July
* China July copper imports slide on slow demand, high prices

Zinc

Zinc yesterday settled down by -0.9% at 221.45 as demand was slow amid disappointing economic recovery and a traditional summer trade lull. The dollar index strengthened after Federal Reserve officials said additional interest rate hikes are likely given that inflation remains persistently high and the labor market is still tight. The off-season of downstream consumption continues, and domestic social inventory continues to accumulate slightly. LME inventory continues to rebound, and fundamental weakness has become a foregone conclusion. The dollar strengthened after a survey from the Federal Reserve showed U.S. banks reported tighter credit standards and weaker loan demand during the second quarter, a sign rising interest rates are having an impact on the economy. Looking ahead, S&P Global predicts a modest 1.4% growth in global refined zinc demand for 2023, as both the US and Europe continue to grapple with inflation and tight monetary policies. Simultaneously, global refined zinc supply is expected to increase by 1.9%, considering a low base year and as energy costs in Europe ease, while power curbs in China limit zinc smelter production. The global zinc market surplus slipped to 53,000 metric tons in May, down from 64,000 tons a month earlier, data from the International Lead and Zinc Study Group (ILZSG) showed. Technically market is under long liquidation as the market has witnessed a drop in open interest by -4.19% to settle at 3382 while prices are down -2 rupees, now Zinc is getting support at 219.2 and below same could see a test of 216.8 levels, and resistance is now likely to be seen at 223.7, a move above could see prices testing 225.8.
Trading Ideas:
* Zinc trading range for the day is 216.8-225.8.
* Zinc dropped as demand was slow amid disappointing economic recovery
* Pressure also seen weak manufacturing data and a struggling property sector in China soured sentiment.
* LME inventory continues to rebound, and fundamental weakness has become a foregone conclusion.

Aluminium

Aluminium yesterday settled down by -0.92% at 200.3 after weak trade data from China. Data from China showed imports and exports fell much faster than expected in July, threatening growth prospects in the world's second-largest economy. Supply in Yunnan increased rapidly, aluminium supply pressure may gradually emerge. Due to floods and other factors in the north during the week, fewer aluminium ingot arrivals were reported, and aluminium social stocks shrank. In order to boost demand, there may be more favorable policies to be poured out in China in the future. China’s favorable policies have promoted real estate, automobile, and other related consumption to gradually pick up. However, the resumption of aluminium production in Yunnan is speeding up, and it is expected that some large smelters in the region will be able to produce at full capacity by the end of August, potentially fueling the total domestic operating capacity to a record high. At present, the amount of resumed production is mainly liquid aluminum, and there is no large aluminum ingot oversupply pressure. The premium for aluminium shipments to Japanese buyers for July to September was set at $127.5 per metric ton, near the previous quarter's levels, as local demand remained sluggish with ample stocks. Technically market is under fresh selling as the market has witnessed a gain in open interest by 5.41% to settle at 3877 while prices are down -1.85 rupees, now Aluminium is getting support at 199.3 and below same could see a test of 198.2 levels, and resistance is now likely to be seen at 201.8, a move above could see prices testing 203.2.
Trading Ideas:
* Aluminium trading range for the day is 198.2-203.2.
* Aluminium dropped after weak trade data from China.
* Data from China showed imports and exports fell much faster than expected in July
* Supply in Yunnan increased rapidly, aluminium supply pressure may gradually emerge.


Mentha oil

Mentha oil yesterday settled up by 0.2% at 879.9 on low level buying after prices dropped amid rise in supplies of new crop. Supplies have increased in Uttar Pradesh and Bihar as harvesting activities has picked up. Production prospects have improved with rising yield supported by favorable weather condition. Moreover, reports of slack export of menthol will put pressure on prices. Rising menthol imports, as well as China's limited purchasing, will put pressure on pricing. Mentha exports during Apr-May 2023, dropped by 51.60 percent to 183.98 tonnes as compared to 380.12 tonnes exported during Apr-May 2022. In May 2023 around 86.13 tonnes of Mentha was exported as against 97.85 tonnes in April 2023 showing a drop of 13.60%. In May 2023 around 86.13 tonnes of Mentha was exported as against 209.90 tonnes in May 2022 showing a drop of 58.96%. 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. Technically market is under fresh buying as the market has witnessed a gain in open interest by 1.75% to settle at 931 while prices are up 1.8 rupees, now Mentha oil is getting support at 877.1 and below same could see a test of 874.2 levels, and resistance is now likely to be seen at 882.9, a move above could see prices testing 885.8.
Trading Ideas:
* Mentha oil trading range for the day is 874.2-885.8.
* Menthaoil gained on low level buying after prices dropped amid rise in supplies of new crop.
* Supplies have increased in Uttar Pradesh and Bihar as harvesting activities has picked up.
* Production prospects have improved with rising yield supported by favorable weather condition.


Turmeric

Turmeric yesterday settled up by 4.91% at 17346 due to lower sowing acreage and lower ending stocks. Delayed monsoons and inadequate initial rainfall have hampered turmeric cultivation, potentially leading to higher prices shortly. A shortage in present market supply further contributes to this upward trend, with prices witnessing a staggering 60 percent increase over the past two months. Regions like Maharashtra and Andhra Pradesh, known for their robust turmeric production, have experienced heavy rain-induced crop damage. This unfortunate combination of factors raises concerns about a potential decrease in turmeric production, leading to escalated prices. The looming threat of El Nino casts a shadow over the upcoming turmeric crop. Meteorological predictions suggest the activation of El Nino in July, potentially resulting in reduced rainfall and drought conditions. Such conditions could particularly impact yields, like turmeric, that heavily rely on monsoon irrigation. Farmers shift in focus has led to expectations of a 20-25 percent decrease in turmeric sowing this year, notably in states like Maharashtra, Tamil Nadu, Andhra Pradesh, and Telangana. Turmeric exports during Apr-May 2023, rose by 27.55 percent at 39,418.73 tonnes as compared to 30,903.38 tonnes exported during Apr-May 2022. In Nizamabad, a major spot market in AP, the price ended at 14295.2 Rupees gained 243.1 Rupees.Technically market is under fresh buying as the market has witnessed a gain in open interest by 18.42% to settle at 13405 while prices are up 812 rupees, now Turmeric is getting support at 16498 and below same could see a test of 15652 levels, and resistance is now likely to be seen at 17858, a move above could see prices testing 18372.
Trading Ideas:
* Turmeric trading range for the day is 15652-18372.
* Turmeric gains due to lower sowing acreage and lower ending stocks.
* Farmers and stockists are holding onto their stocks in anticipation of price increases due to lower sowing acreage
* In May 2023 around 19,827.86 tonnes of turmeric was exported as against 19,590.87 tonnes in April 2023 showing a rise of 1.21%.
* In Nizamabad, a major spot market in AP, the price ended at 14295.2 Rupees gained 243.1 Rupees.


Jeera

Jeera yesterday settled down by -1.38% at 62245 on profit booking after prices gained as supply is limited due to the rainy environment. However, the cumin market is currently facing slow export and domestic demand. Due to heavy rains impacting cumin quality, there have been disruptions in the cumin business across Gujarat, Rajasthan, and other regions. China’s cumin imports and exports have caused temporary corrections in cumin prices, with a recent $200 decrease in the international market. The possibility of China purchasing Indian cumin in October-November before the arrival of new cumin adds further uncertainty to the market dynamics. Cumin imports in May 2023 reached 210 metric tons, showing a substantial increase of 227.73% compared to the previous month's import volume of 64 metric tons. According to FISS forecasts, cumin demand is predicted to exceed 85 lakh bags this year, with a likely supply of 65 lakh bags. Jeera exports during Apr-May 2023, rose by 67.90 percent at 42,988.50 tonnes as compared to 25,603.35 tonnes exported during Apr-May 2022. In May 2023 around 25,903.63 tonnes of jeera was exported as against 17,084.87 tonnes in April 2023 showing a rise of 51.52%. In May 2023 around 25,903.63 tonnes of jeera was exported as against 14,894.62 tonnes in May 2022 showing a rise of 73.91%. In Unjha, a key spot market in Gujarat, jeera edged down by -643.4 Rupees to end at 61400.9 Rupees per 100 kg.Technically market is under fresh selling as the market has witnessed a gain in open interest by 8.34% to settle at 5106 while prices are down -870 rupees, now Jeera is getting support at 61855 and below same could see a test of 61465 levels, and resistance is now likely to be seen at 62910, a move above could see prices testing 63575.
Trading Ideas:
*Jeera trading range for the day is 61465-63575.
* Jeera dropped on profit booking after prices gained as supply is limited due to the rainy environment.
* However, the cumin market is currently facing slow export and domestic demand.
* The market is expecting a lower yield and quality of jeera this season
* In Unjha, a key spot market in Gujarat, jeera edged down by -643.4 Rupees to end at 61400.9 Rupees per 100 kg.

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