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Gold

Gold experienced a notable surge of 2.05% yesterday, settling at 62454, following the U.S. Federal Reserve's signal to end its tightening cycle and anticipate lower borrowing costs in 2024. This announcement led to a decline in the dollar and Treasury yields. The majority of Fed officials foresee lower interest rates by the end of 2024, with markets now pricing in an 89% chance of a rate cut in March. The positive momentum in gold was further fueled by the upbeat monthly Retail Sales data for November reported by the United States Census Bureau. Despite market expectations of a contraction, U.S. consumer spending unexpectedly grew by 0.3%. The decision to maintain steady interest rates was expected, but the mention of lowering borrowing costs in 2024 spurred demand for risk-sensitive assets and bullion. Technically, the market shows signs of fresh buying, with a 2.99% increase in open interest, settling at 15031, and a price surge of 1255 rupees. Gold is currently finding support at 61600, with a potential test of 60750 if this level is breached. On the upside, resistance is expected at 63090, and a breakthrough could lead to a test of 63730.
 

Trading Ideas:
* Gold trading range for the day is 60750-63730.
* Gold gains after Fed signalled an end to its tightening cycle and lower borrowing costs in 2024
* The Fed is expected to achieve a ‘soft landing’ amid stable labor market projections.
* US Consumer spending surprisingly grew by 0.3% while market participants projected a contraction of 0.1.

Silver

Silver prices surged by 4.95% to reach 75076, driven by a weaker dollar and softened yields following the Fed's indication of three rate reductions in 2024, signaling a shift from previous forecasts. Fed Chair Jerome Powell's announcement of a potential interest rate cut in 2024, despite keeping rates steady at 5.25-5.50%, fueled demand for risk assets and bullions. The decision to maintain rates was expected, but the dovish stance on future rate reductions reflected a shift in the Fed's approach. Powell's remarks suggested the end of the rate-tightening campaign due to progress in inflation, projected to ease to 3.2% by the end of 2023 and further to 2.4% and 2.2% in 2024 and 2025, respectively. Interest rate projections also indicated a decrease to 4.6% in 2024 and 3.6% in 2025. Technically, the market showed signs of short covering with a notable -39.95% drop in open interest to 14037. Despite this, silver prices rose by 3544 rupees. Support is identified at 72910, with a potential test of 70745 if breached. Resistance is expected at 76280, and a breakthrough could push prices to test 77485.
 

Trading Ideas:
* Silver trading range for the day is 70745-77485.
* Silver gains driven by a retreat in dollar and yields as Fed officials struck a softer tone
* Jerome Powell discussed cutting interest rates in 2024 after keeping interest rates unchanged in the range of 5.25-5.50%
* Powell’s commentary indicated that the rate-tightening campaign by the Fed has come to an end amid progress in inflation declining towards 2%.

Crude oil

Crude oil experienced a significant 4.08% increase, closing at 6017, driven by a weaker dollar and an optimistic oil demand forecast from the International Energy Agency (IEA) for 2024. The IEA predicted a rise of 1.1 million barrels per day in global oil consumption, citing improved U.S. outlook and lower oil prices. However, the IEA cautioned on the "explosive growth" in Indian oil consumption, anticipating a slowdown to 2.5% growth in 2024 from 4.1% in 2023. The IEA's monthly report indicated a shift in India's oil demand growth, projecting a decrease to 110,000 bpd in the fourth quarter of 2023 and an annual gain of 140,000 bpd in 2024. Despite this, India's growth remains the second-highest globally, trailing China's robust 710,000 bpd growth. Oil prices were further supported by a larger-than-expected 4.3 million barrel draw from U.S. crude inventories, with energy firms pulling stockpiles down in the week ending Dec. 8. Technically, the market exhibited short covering as open interest dropped by -31.24% to 6851, coupled with a price increase of 236 rupees. Crude oil finds support at 5867, and a breach below could test 5717 levels, while resistance is anticipated at 6097, with a move above potentially leading to a test of 6177.
 

Trading Ideas:
* Crudeoil trading range for the day is 5717-6177.
* Crude oil prices rose on boosted by a weaker dollar and as IEA lifted its oil demand forecast for next year.
* Oil prices were also boosted by a larger-than-expected draw from the U.S. crude inventory
* World oil consumption will rise by 1.1 mbpd in 2024, the IEA said in a monthly report, up 130,000 bpd from its previous forecast

Naturalgas

The natural gas market experienced a marginal 0.15% uptick, settling at 196.6, driven by heightened demand projections and increased gas flow to LNG export facilities. This increase occurred despite record output levels, mild weather forecasts, and an anticipated decline in heating demand next week. U.S. utilities withdrew 55 billion cubic feet of natural gas from storage in line with expectations, bringing total stocks to 3.664 trillion cubic feet, surpassing the previous year by 245 billion cubic feet and the five-year average by 260 billion cubic feet. Despite a record gas output in December, meteorological forecasts indicate a prolonged period of warmer-than-normal weather until at least Dec. 28. Consequently, LSEG predicts a decline in U.S. gas demand from 125.0 bcfd this week to 122.2 bcfd next week. Notably, the forecast for this week exceeded Tuesday's outlook, while the forecast for the following week was revised downward. From a technical standpoint, the market is undergoing short covering, evidenced by a 1.69% drop in open interest to 26939. Simultaneously, prices increased by 0.3 rupees. Natural gas finds support at 193.7, and a breach below may lead to a test of 190.9 levels. On the upside, resistance is expected around 200, and a breakthrough could propel prices towards 203.5.
 

Trading Ideas:
* Naturalgas trading range for the day is 190.9-203.5.
* Natural gas edged up on raised demand forecasts for this week, and as record amounts of gas flowed to LNG export plants.
* US utilities pulled 55 billion cubic feet of natural gas from storages during the week
* The development brought US natural gas stocks to 3.664 trillion cubic feet, 245 billion cubic feet more than the corresponding period in the previous year


Copper

Copper exhibited a 1.88% surge, closing at 727.15, propelled by dovish Federal Reserve projections that weakened the dollar and bolstered industrial prospects. The central bank's increased rate cut projections for the next year, coupled with a downward revision in inflation estimates, ignited hopes of fostering manufacturing through lower borrowing costs. The sagging dollar also stimulated foreign demand for USD-priced base metals, further elevating copper prices. However, supply concerns emerged with Panama's decision to shutter First Quantum’s Cobre mine, a significant global source. Despite these positive factors, subdued demand expectations from China due to the absence of stimulus announcements tempered the overall upswing. China's November copper cathode output of 960,800 mt, reflecting a 3.3% monthly dip but a 6.8% yearly increase, fell short of the anticipated 1 million mt. Various factors contributed to this, including planned maintenance, equipment damage, and smelter upgrades. Technically, the market observed short covering as evidenced by an -8.91% drop in open interest to settle at 4200. Simultaneously, prices surged by 13.45 rupees. Current support for Copper stands at 720.6, with a potential dip to 714.1. On the upside, resistance is anticipated at 731.5, and a breakthrough could propel prices to test 735.9.
 

Trading Ideas:
* Copper trading range for the day is 714.1-735.9.
* Copper rose as dovish projections from Fed pressured the dollar and supported the outlook for industrial activity.
* Supply concerns also supported as Panama plans to shut down First Quantum’s Cobre mine, halting production from a key source of world supply.
* China's copper cathode output in November was 960,800 mt, a decrease of 33,000 mt or 3.3% month-on-month

Zinc

Zinc marked a 1.63% gain, closing at 221.75, influenced by a weaker dollar and expectations of future interest rate cuts, signaling potential economic growth and increased demand for metals. Fed Chair Jerome Powell's remarks on the end of historic monetary tightening, coupled with easing home purchase restrictions in China, boosted market sentiment. Boliden's plan to resume zinc operations in Ireland in Q2 2024 added to positive developments. In November, China's refined zinc output decreased by 4.23% MoM to 579,000 mt but showed a YoY increase of 10.62%, falling slightly below expectations. Total output for January-November reached around 6.03 million mt, a 10.62% YoY surge. Domestic zinc alloy output in November was 93,300 mt, reflecting a 4,800 mt decline from the previous month. Technically, the market saw short covering with an -11.67% drop in open interest to 3445, while prices rose by 3.55 rupees. Zinc's support is identified at 219.6, and a breach could test 217.3 levels. On the upside, resistance is anticipated at 223.5, with a potential breakthrough leading to a test of 225.1.
 

Trading Ideas:
* Zinc trading range for the day is 217.3-225.1.
* Zinc prices rose on a weaker dollar and expectations of interest rate cuts next year that would boost metals demand
* Smelters in Shaanxi, Hunan and Yunnan stopped production and overhauled, resulting in significant output reductions.
* Boliden plans to restart Europe's biggest zinc mine in second quarter of 2024


Aluminium

Aluminium experienced a 2.45% surge, closing at 200.45, attributed to Yunnan's output cuts diminishing China's daily aluminum production in November. Yunnan's shutdowns caused a 1,185 mt reduction in domestic daily output to 116,300, impacting the processing sector. China's aluminum installed capacity stands at 45.19 million mt, with operating capacity at 41.89 million mt, reflecting a 2.4% MoM drop in industry operating rates to 92.7%. Yunnan's current operating capacity, despite uncertain power supply, exceeds historical averages. December's output is projected at 3.56 million mt, up 3.5% YoY, contributing to a 2023 total estimate of 41.5 million mt, up 3.6% YoY. The World Bureau of Metal Statistics reported global primary aluminum production at 6.0325 million tons in October, with consumption at 5.9966 million tons, resulting in a 35,900-ton supply surplus. The ten-month cumulative data reveals a global surplus of 651,300 tons, emphasizing the demand-supply dynamics in the market. Technically, short covering was observed as open interest dropped by -20.1% to 3593, while prices rose by 4.8 rupees. Support for Aluminium is noted at 197.8, and a breach could test 195 levels. On the upside, resistance is anticipated at 202.7, with a potential breakthrough leading to a test of 204.8.
 

Trading Ideas:
* Aluminium trading range for the day is 195-204.8.
* Aluminium gains as Yunnan output cuts reduced China’s daily aluminum production in November
* China imported 108,900 mt of unwrought aluminium alloy in October, up 9.2% YoY and 17.5% MoM.
* Global primary aluminum market has surplus of 35,900 tons in Oct – WBMS

Cottoncandy

The cotton market exhibited a modest 0.25% gain, closing at 56760, driven by significant developments in global cotton production and demand. The CAI's downward revision of the 2023/2024 cotton production estimate to 29.4 million bales, citing issues in Haryana and north Maharashtra, has notably impacted prices. Pink bollworm infestation and weather-related challenges in these regions led to a 25% decline in production. Conversely, the USDA's report projected a rise in U.S. production, contributing to a 1.6 million bales increase in global ending stocks. Additionally, reports indicate a reduction in pink bollworm infestation in cotton crops across India. Certified cotton stocks saw a substantial drop from their recent peak, reflecting changing market dynamics. Brazilian cotton shipments increased in November, but the ICAC warns of a global surplus in cotton production for the second consecutive year. Sluggish demand, as evidenced by a 5-week low in global cotton bookings, exerted downward pressure on futures. In the U.S., the 2023/24 cotton balance sheet shows increased production and ending stocks, with Texas offsetting lower production elsewhere. Global balance sheets reflect higher production and stocks, with India contributing to a rise in beginning stocks. In Rajkot, a major spot market, cotton prices ended at 26365.4 Rupees, indicating a marginal gain of 0.02%. Technically, the market is witnessing fresh buying momentum, with a 3.3% increase in open interest to settle at 188. Despite a 140 Rupees uptick in prices, Cottoncandy finds support at 56660, and a breach below may test 56550 levels. On the upside, resistance is likely at 56840, and a move beyond could lead to testing 56910 levels.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56550-56910.
* Cotton gains as CAI has revised down its cotton production estimate for the current 2023/2024 season to 29.4 million bales
* According to ICE data, certified cotton stocks, dropped to 6,325 bales from their highest level in over two years.
* ICAC projected that global cotton production will likely outpace consumption for the second year in a row.
* In Rajkot, a major spot market, the price ended at 26365.4 Rupees gained by 0.02 percent.

Turmeric

Turmeric prices recorded a decline of -1.41% to settle at 14950, driven by sluggish buying activity ahead of the anticipated release of stocks in anticipation of new crops in January 2024. The market experienced pressure due to favorable weather conditions, resulting in improved crop conditions. Farmer concerns in Maharashtra arose over the location of PM Modi's Turmeric Board in Telangana. Crop conditions are reported as satisfactory, with harvest expected between January and March. The current subdued buying activity and declining supplies may contribute to price stability. However, the potential for yield losses due to unfavorable weather remains a limiting factor. Support is evident from enhanced export opportunities, with a 25% increase in exports, fueled by growing demand in both developed and emerging nations. Expectations of a 20–25% decline in turmeric seeding, particularly in Maharashtra, Tamil Nadu, Andhra Pradesh, and Telangana, reflect shifting priorities among farmers. Turmeric exports during Apr-Sep 2023 increased by 4.14% to 92,025.16 tonnes compared to the same period in 2022. In Nizamabad, a major spot market, turmeric prices closed at 13377.8 Rupees, marking a 1.09% gain. Technically, the market is witnessing fresh selling, indicated by a 3.31% increase in open interest to settle at 12010. Despite the gain in open interest, prices experienced a decline of -214 rupees. Turmeric's support is identified at 14760, and a breach below could lead to a test of 14568 levels. On the upside, resistance is anticipated at 15254, with a potential breakthrough signaling a test of 15556.
 

Trading Ideas:
* Turmeric trading range for the day is 14568-15556.
* Turmeric dropped as buying activities has been slower in expectation of release of stocks ahead of commencement of new crops
* In Sep 2023 around 9,085.81 tonnes exported as against 11,322.58 tonnes in Aug 2023 showing a drop of 19.75%.
* Expectations for a 20–25 percent decline in turmeric seeding this year
* In Nizamabad, a major spot market, the price ended at 13377.8 Rupees gained by 1.09 percent.

Jeera

Jeera (cumin) prices experienced a decline of -0.98% to settle at 38065, attributed to higher production expectations in key regions like Gujarat and Rajasthan. Aggressive sowing activities, particularly in Gujarat, saw a substantial increase of nearly 94%, reaching 433,754 hectares compared to 2022. Meanwhile, Rajasthan observed a 13% growth in cumin cultivation, totaling 6.32 lakh hectares. Despite the robust domestic production, the global demand for Indian jeera witnessed a decline due to the preference for alternative sources like Syria and Turkey, driven by comparatively higher prices in India. Consequently, Jeera exports during Apr-Sep 2023 plummeted by 29.79% compared to the same period in 2022, reaching 76,969.88 tonnes. September 2023 specifically recorded a notable drop of 60.27% in exports compared to the previous year. The Unjha spot market saw Jeera prices at 39314.2 Rupees, marking a 0.86% gain. However, the global competitiveness of Indian jeera remains a challenge for exporters, contributing to a subdued export market. Technically, the market is undergoing long liquidation, evident from a -3.83% drop in open interest to settle at 3387. Despite the decrease in open interest, prices experienced a decline of -375 rupees. The current support for Jeera is identified at 37790, and a breach below could lead to a test of 37500 levels. On the upside, resistance is anticipated at 38530, with a potential breakthrough signaling a test of 38980.
 

Trading Ideas:
* Jeera trading range for the day is 37500-38980.
* Jeera dropped due to higher production prospects in Gujarat and Rajasthan.
* An increase in sowing of about 13 percent has been recorded in the area of cumin in Rajasthan.
* Stockists are showing interest in buying on recent downfall in prices triggering short covering.
* In Unjha, a major spot market, the price ended at 39314.2 Rupees gained by 0.86 percent.