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Gold

Gold prices settled up by 0.52% at Rs.73,438 as markets digested the Federal Reserve's decision to implement a significant 50 basis point interest rate cut, its first since early 2020. This larger-than-expected reduction was aimed at tackling softening inflation and a potential slowdown in the labor market. Fed officials have indicated the possibility of another half-percentage point cut by the end of the year. Chair Jerome Powell emphasized that the projected interest rate path is not a definitive policy plan, stressing a cautious approach toward monetary easing. Interestingly, Federal Reserve Governor Michelle Bowman voted against the rate cut, favoring a more modest 25bps reduction, marking the first dissent by a Fed governor since 2005. In key Asian markets, gold demand weakened due to high prices, forcing dealers in India and China to offer substantial discounts. Indian dealers provided up to $22 per ounce discounts, the highest in two months, while Chinese dealers offered discounts of $8.6 to $10 over global spot prices. However, despite weak demand, prices are expected to rise, potentially spurring purchases by October-November. The World Gold Council (WGC) noted that India's gold demand in the June quarter dropped by 5% year-over-year, but consumption is expected to recover in the second half of 2024, supported by a steep reduction in import taxes and favorable monsoon rains. Technically, the market is under short covering as open interest fell by 4.83%, settling at 12,635, while prices rose by Rs.383. Gold is currently supported at Rs.72,940, with further downside testing likely at Rs.72,445. Resistance is seen at Rs.73,775, and a break above this level could push prices toward Rs.74,115.
 

Trading Ideas:
* Gold trading range for the day is 72445-74115.
* Gold rose as markets continued to assess the Federal Reserve's decision.
* The Fed implemented its first interest rate cut since early 2020
* BofA now expects Fed to go for 0.75-percentage-point cut in fourth quarter


Silver
Silver surged by 1.89% to settle at 89,968 as the U.S. Federal Reserve initiated an easing cycle with a larger-than-expected half-percentage-point interest rate cut. This marked the beginning of a series of anticipated rate reductions, as the Fed expressed growing confidence in its control over inflation. Policymakers projected an additional half-percentage-point cut by the end of 2024, followed by a full percentage point decrease in 2025 and another half percentage point cut in 2026. The U.S. labor market showed strength, with unemployment claims dropping to a four-month low, indicating solid job growth in September, confirming continued economic expansion in Q3 2024. In the housing market, existing home sales fell by 2.5% in August, marking the fourth decline this year despite a dip in mortgage rates. The median home price also saw a decrease of $10,200 to $416,900, reflecting a cooling housing market. On the global front, India's silver imports are expected to nearly double this year, driven by demand from solar panel and electronics manufacturers. India, the world’s largest silver consumer, imported 4,554 metric tons of silver in the first half of 2024, compared to just 560 tons a year ago. This surge is attributed to stockpiling by industrial buyers anticipating rising prices. Technically, silver remains under fresh buying momentum, with a 1.44% increase in open interest, settling at 25,068 contracts. Prices have risen by 1,669 rupees, with support at 88,620 and potential further downside to 87,265. On the upside, resistance is likely at 90,965, with a potential test of 91,955 if resistance is breached.
 

Trading Ideas:
* Silver trading range for the day is 87265-91955.
* Silver gains after the U.S. Fed embarked on an easing cycle by slashing interest rates.
* The U.S. central bank kicked off an anticipated series of interest rate cuts with a larger-than-usual half-percentage-point reduction.
* Fed policymakers projected the benchmark interest rate would fall by another half of a percentage point by the end of this year.


Crudeoil
Crude oil prices surged by 2.11%, settling at Rs.5,963 as markets weighed the impact of rising tensions in the Middle East. Explosions in southern Lebanon, involving Hezbollah radios, stoked fears of a broader regional conflict, raising concerns about potential supply disruptions. Meanwhile, the US Federal Reserve implemented a 50 basis point interest rate cut, its first since early 2020, aimed at bolstering economic activity and possibly increasing oil demand. However, Fed Chair Jerome Powell cautioned that the central bank is not in a rush to ease monetary policy, tempering optimism. Supply concerns eased slightly after the Bureau of Safety and Environmental Enforcement (BSEE) reported that 12% of crude production in the Gulf of Mexico remained offline, a significant improvement from the over 40% shutdown during Hurricane Francine. Major producers like ExxonMobil and Chevron have begun to restart operations. Crude oil inventories in the US dropped by 1.63 million barrels, exceeding expectations of a 0.1 million barrel decrease. Stockpiles at Cushing, Oklahoma, fell by 1.979 million barrels, further supporting the bullish sentiment. However, gasoline stocks rose modestly by 0.069 million barrels, and distillate inventories, including diesel and heating oil, increased by only 0.125 million barrels, both below forecasts. China's crude oil imports in August declined 7% year-on-year but showed a slight recovery from July's low, signaling weaker demand amid sluggish refining margins. Technically, crude oil is under short covering, with open interest dropping by 0.24% to settle at 13,819 as prices gained Rs.123. Support is seen at Rs.5,878, with further downside testing at Rs.5,792. Resistance is expected at Rs.6,023, and a break above could push prices toward Rs.6,082.
 

Trading Ideas:
* Crudeoil trading range for the day is 5792-6082.
* Crude oil gains as markets assessed potential supply disruptions amid rising tensions in the Middle East.
* Saudi Arabia's crude oil exports in July fell to their lowest level in nearly a year
* OPEC+ oil producers agreed to delay a planned production increase for October and November


Naturalgas
Natural gas prices rose by 1.35%, settling at 195.9, driven by forecasts for lower cooling demand due to milder-than-expected weather. Despite this, natural gas producers are expected to reduce output later in 2024, following a steep 40% price decline over the past two months. LSEG forecasts show gas demand in the Lower 48 U.S. states, including exports, is expected to average 99.8 billion cubic feet per day (bcfd) this week and 100.1 bcfd next week, down from earlier predictions of 100.5 bcfd. Gas supply is projected to rise from 101.7 bcfd this week to 102.0 bcfd next week. According to the U.S. Energy Information Administration (EIA), natural gas production is expected to decline in 2024, dropping to 103.4 bcfd from the record 103.8 bcfd set in 2023. This is due to reduced drilling activity after spot prices at the Henry Hub hit 25-year lows in March. However, production is expected to rise again to 104.8 bcfd in 2025. The EIA also predicts a record-high domestic gas consumption in 2024 at 89.9 bcfd, up from 89.1 bcfd in 2023, before slightly declining to 89.5 bcfd in 2025. U.S. utilities added 58 billion cubic feet (bcf) of gas to storage during the week ending September 13, surpassing market expectations of 53 bcf. This brought total stockpiles to 3,445 bcf, 194 bcf higher than last year and 274 bcf above the five-year average. Technically, the market is seeing short covering, with a 25.58% drop in open interest. Prices are supported at 189.1, with further support at 182.3, while resistance is seen at 199.8, with potential to test 203.7.
 

Trading Ideas:
* Naturalgas trading range for the day is 182.3-203.7.
* Natural gas gains on warmer-than-normal weather forecasts that could boost cooling demand
* US utilities added 58 billion cubic feet of gas into storage during the week
* The report showed storage levels were 8.6% above the five-year average, reflecting an ongoing supply surplus.


Copper
Copper prices rose by 0.67% to settle at Rs.814.4, driven by hopes of stronger demand and supply uncertainties. The Federal Reserve's 50 basis point rate cut, which matched the higher end of market expectations, bolstered optimism for industrial metals like copper. This move is seen as a response to the softening manufacturing sector in the U.S., with recent contractionary ISM and S&P manufacturing PMIs highlighting poor factory momentum. Additionally, the market is awaiting potential economic stimulus from China, the top consumer of copper, following weaker-than-expected industrial output, retail sales, and fixed-asset investment data. In terms of supply, energy shortages in Zambia, a major copper ore supplier, have pressured production, adding to supply concerns. Chinese President Xi Jinping's call for achieving the country's economic goals adds to the anticipation of policy support. Copper inventories in Shanghai Futures Exchange warehouses fell 13.9% from the previous Friday, and over the last three months, they dropped by 45%, reflecting tighter supply. Meanwhile, global copper production remains relatively steady, but the International Copper Study Group (ICSG) reported a 95,000 metric ton surplus in June, higher than the 63,000 metric ton surplus in May. On the technical front, the copper market is experiencing short covering, with open interest dropping by 15.89% to 6,029 as prices rose Rs.5.45. Immediate support for copper is at Rs.808.5, and a further decline could test Rs.802.6. Resistance is seen at Rs.819.8, and a move above this level could push prices toward Rs.825.2.
 

Trading Ideas:
* Copper trading range for the day is 802.6-825.2.
* Copper rose amid and hopes of more robust demand, in addition to uncertain supply.
* Fed delivered a 50bps rate cut in the month’s meeting, matching the upper range of divided market bets.
* On the supply front, energy shortages in Zambia pressured output from one of the world’s main copper ore suppliers.


Zinc
Zinc prices rose by 1.13% to settle at 269.55, driven by optimism surrounding potential stimulus measures in China. President Xi Jinping's call to meet economic targets raised expectations for increased demand, further boosting market sentiment. On the supply side, delays in Swedish miner Boliden's Odda zinc smelter expansion, now postponed to 2025, may tighten future supply. Additionally, global zinc market conditions improved, with the surplus narrowing to 8,700 metric tons in June from 44,000 in May, indicating a tighter market. China's refined zinc output dropped by 10.3% in July due to heavy rainfall and maintenance disruptions, adding to the supply concerns. However, LME zinc inventories rose by 2.6% to 217,575 tonnes in August, slightly alleviating some supply pressures. Meanwhile, China's exports increased by 4.6% year-on-year in August, marking the softest growth in outbound shipments since April, while imports rose by 2.5%, beating market estimates but significantly easing from the previous month. The global zinc market surplus also narrowed, declining to 14,000 metric tons in July from 36,400 tons in June, according to the International Lead and Zinc Study Group (ILZSG). For the first seven months of 2024, the global surplus was 254,000 tons, down from 466,000 tons in the same period last year. Technically, the market is under short covering as open interest dropped by 3.41% to 1,953 contracts, while prices increased by 3 rupees. Zinc is currently supported at 267.4, with a potential test of 265.2 if support is broken. Resistance is now expected at 271.1, with prices possibly testing 272.6 if resistance levels are breached.
 

Trading Ideas:
* Zinc trading range for the day is 265.2-272.6.
* Zinc gains driven by optimism for potential stimulus measures in China
* Swedish miner Boliden delayed its Odda zinc smelter expansion in Norway, now expected to be completed in 2025
* The global zinc market surplus declined to 14,000 metric tons in July from 36,400 tons in June - ILZSG


Aluminium
Aluminium prices rose by 0.43% to settle at Rs.231.75, supported by the U.S. Federal Reserve's interest rate cut, which weakened the dollar and provided a boost to metals. The Fed's half-percentage-point reduction signaled a commitment to maintaining low unemployment as inflation eases. Additionally, supply constraints contributed to the upward price momentum, with aluminium inventories falling to an 18-week low. China, the world's largest aluminium producer, saw its August imports of unwrought aluminium and aluminium products increase by 1.9% year-on-year to 280,000 metric tons, while cumulative imports for the first eight months surged by 51% to 2.58 million tons. China's aluminium output reached its highest level since 2002, producing 3.73 million metric tons in August, a 2.5% year-on-year increase, driven by strong prices and steady profits. Smelters, particularly in Yunnan province, benefited from ample hydropower supply. Despite this, global primary aluminium output rose by 2.4% year-on-year to 6.194 million metric tons in July, with China contributing significantly to this rise. Aluminium stocks in LME-registered warehouses fell 18% over the last three months to 820,850 tons, while inventories at three major Japanese ports increased by 9.2% to 327,300 metric tons in August. From a technical standpoint, the aluminium market saw short covering, as open interest dropped by 16.06% to 1,694 contracts while prices rose Rs.1. Immediate support is at Rs.230.1, with further downside testing at Rs.228.2. Resistance is expected at Rs.233.9, and a break above this level could push prices towards Rs.235.8.
Trading Ideas:
* Aluminium trading range for the day is 228.2-235.8.
* Aluminium gains after Fed’s interest rate cut weakened the dollar and gave support to prices.
* Prices have been boosted by a shrinking aluminium supply that has fallen to its lowest in 18 weeks.
* China's imports of unwrought aluminium and aluminium products increased 1.9% in August to 280,000 metric tons year-on-year


Cotton
Cotton prices rose by 0.22%, settling at Rs.58,410 as the USDA lowered India's cotton production forecast for the 2024-25 season to 30.72 million bales due to crop damage from excessive rains and pest infestations. Ending stocks were also reduced to 12.38 million bales. Additionally, India's cotton acreage for the current kharif season is down 9% compared to last year. However, the upside in prices was limited by the arrival of raw cotton in Punjab mandis. On the export front, cotton exports for the 2023-24 season are estimated to be 80% higher at 28 lakh bales, driven by demand from countries like Bangladesh and Vietnam, compared to 15.50 lakh bales in the previous year. Imports have also increased, reaching 16.40 lakh bales, up from 12.50 lakh bales in 2022-23. Closing stocks as of September 30, 2024, are estimated at 23.32 lakh bales, lower than the previous year's 28.90 lakh bales. Globally, the USDA reported reduced cotton production, consumption, and ending stocks for 2024/25. U.S. production was revised down to 14.5 million bales, mainly due to lower yields in upland cotton. Global production was cut by 1.2 million bales, primarily due to smaller crops in India, Pakistan, and the U.S., while world consumption was reduced by 460,000 bales. Technically, the market is under short covering, with open interest dropping by 5.56% to 102, while prices rose Rs.130. Immediate support for cotton is at Rs.58,280, with further downside testing at Rs.58,150. Resistance is expected at Rs.58,520, and a break above could push prices toward Rs.58,630.
 

Trading Ideas:
* Cottoncandy trading range for the day is 58150-58630.
* Cotton gains as USDA has lowered India's cotton production forecast for the 2024-25 to 30.72 million bales
* Cotton exports for the 2023-24 crop year or season ending September are estimated at about 80 per cent at 28 lakh bales
* The U.S. cotton balance sheet for 2024/25 shows lower production, exports, and ending stocks compared to last month.
* In the global 2024/25 cotton balance sheet, beginning stocks, production and consumption are increased.


Turmeric
Turmeric prices fell by 2.74% to settle at 14,172 amid reports of increased sowing, particularly in India and Indonesia. In Indonesia, dry weather has accelerated harvesting, which is currently at its peak, contributing to the downward pressure on prices. However, the downside was limited by tight supplies in the market and emerging buying interest from stockists. Some support also came from farmers holding back their stocks, anticipating higher prices in the future. Despite this, the combination of rising acreage and weak export demand could lead to further price declines. Turmeric sowing in the Erode region has reportedly doubled compared to last year, and in key states like Maharashtra, Telangana, and Andhra Pradesh, sowing is estimated to be 30-35% higher. Last year, turmeric was sown in about 3-3.25 lakh hectares, and this year it is expected to increase to 3.75-4 lakh hectares. Despite higher sowing, weather conditions last year were unfavorable, which reduced production to 45-50 lakh bags. While the upcoming crop is expected to be around 70-75 lakh bags, the outstanding stock from last year is projected to be zero, which could tighten availability in 2025. Turmeric exports dropped by 19.52% during April-June 2024 compared to the same period in 2023, while imports surged by 485.40%. In Nizamabad, a key spot market, prices rose by 0.85%, ending at 14,607.5 rupees. Technically, the market is under long liquidation, with open interest dropping by 0.97%. Turmeric prices are supported at 13,888, with further downside possible at 13,604. Resistance is seen at 14,558, with prices potentially testing 14,944 if resistance is breached.
 

Trading Ideas:
* Turmeric trading range for the day is 13604-14944.
* Turmeric dropped on profit booking amid news of increased sowing.
* In Indonesia, dry weather has accelerated harvesting, which is currently at peak levels.
* However downside seen limited amid tighter supplies in the market and emerging buying from stockists.
* In Nizamabad, a major spot market, the price ended at 14607.5 Rupees gained by 0.85 percent.


Jeera
Jeera prices rose by 0.95%, settling at Rs.26,170, supported by robust domestic and export demand alongside tight global supplies. Farmers are holding back their stocks, anticipating better prices, which is providing additional support. However, the upside was limited by expectations of higher production. Sowing areas in Gujarat and Rajasthan have increased by 104% and 16%, respectively, leading to an expected 30% rise in jeera production this season, estimated at 8.5-9 lakh tonnes.Globally, jeera production has surged, with China leading the way, doubling its output to 55-60 thousand tons. Increased production is also anticipated in Syria, Turkey, and Afghanistan, as favorable weather conditions and high prices incentivized more cultivation. As new supplies enter the market, prices are likely to face downward pressure. Additionally, reduced export trade in recent months contributed to price moderation. In India, the cumin sowing area in Gujarat and Rajasthan has increased significantly, with production in Gujarat estimated to hit a record 4.08 lakh tonnes. Trade analysts forecast a significant increase in exports, projected to reach 14-15 thousand tonnes by February 2024. Despite the volatility in 2023 due to high domestic prices, exports are expected to improve, driven by increased sowing areas and falling international prices Technically, the market is under fresh buying as open interest increased by 3.43%, settling at 2,535 contracts while prices rose Rs.245. Immediate support is at Rs.25,890, with further downside testing possible at Rs.25,600. Resistance is expected at Rs.26,380, and a break above this could push prices towards Rs.26,580.
 

Trading Ideas:
*  Jeera trading range for the day is 25600-26580.
* Jeera gains amid robust domestic and export demand besides tight global supplies.
* Farmers holding back their stocks on expectation of better prices too bolstered prices.
* Turkey anticipates producing 12-15 thousand tons, while Afghanistan's output could double.
* In Unjha, a major spot market, the price ended at 25926.7 Rupees gained by 0.28 percent.

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