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Gold

Gold experienced a notable decline of -1.16% yesterday, settling at 71138, as investors digested the Federal Reserve's updated interest rate projections. Despite softer-than-expected inflation data, indicating a drop in headline and core inflation, the Fed's dot-plot projections hinted at only one 25 basis points rate cut this year, with some members even predicting no cuts at all. This unexpected hawkish stance weighed on bullion prices, although they were partially supported by dovish moves from major central banks like the ECB and the BoC. In South Africa, gold production declined by 1.7% year-on-year in April 2024, marking the sixth consecutive month of decline but the softest since September 2023. Meanwhile, gold imports to China via Hong Kong saw a significant 38% drop in April compared to the previous month, signaling a shift in consumption patterns. In India, gold continued to trade at a discount for the fifth consecutive week, while China's central bank paused its gold buying spree after 18 months of consecutive purchases, which had fueled a record rally in gold prices. This pause in purchases, combined with Indian dealers offering discounts, influenced the global gold market. Technically, the market observed long liquidation, with open interest dropping by -2.58% to settle at 14,804. Prices plummeted by -832 rupees, finding support at 70830. A breach below this level could test 70515, while resistance is anticipated at 71605. A move above this resistance could potentially push prices to test 72065.

Trading Ideas:
* Gold trading range for the day is 70515-72065.
* Gold dropped as investors continued to assess the Federal Reserve’s updated interest rate projections.
* Dot-plot projections from FOMC members indicated that, on average, they expect only one 25bps rate cut this year.
*  Policymakers expressed reduced optimism about disinflation in the US economy, while growth expectations persisted.


Silver
Silver faced significant downward pressure, settling 2.72% lower at 87983, as investors digested the Federal Reserve's indication of a single 25bps rate cut this year despite softer inflation data. The decision reflected a cautious approach amid lingering uncertainties in the global economic landscape. However, dovish moves by major central banks, coupled with strong demand from the Chinese market, particularly in the solar panel industry, provided some support to silver prices, mitigating potential losses. The imposition of 50% tariffs on Chinese imports of solar cells by the US impacted a key sector for silver, raising concerns about demand. Nevertheless, the resilience of the Chinese market, exemplified by significant projects like the world's largest solar farm in Xinjiang, helped offset some of the negative impact on silver prices. In the US, policymakers expressed confidence in inflation cooling, with consumer prices remaining stagnant in May, aligning more closely with the Fed's 2% inflation target. The benign inflation report prompted a reassessment of market-based expectations, with increased anticipation for rate cuts as soon as September, potentially influencing silver's trajectory in the coming months. India's silver imports surged in the first four months of the year, surpassing the total for the entirety of 2023, driven by rising demand from the solar panel industry and investor interest. This uptick in imports, particularly from the United Arab Emirates, could provide support to global silver prices, which are currently trading near decade-high levels. Technically, the market witnessed fresh selling pressure, with open interest rising slightly by 0.42% to settle at 21071, accompanied by a significant decrease of -2462 rupees in prices. Silver is currently finding support at 87125, with potential downside to 86265, while resistance is anticipated at 89085, with a possible upside to 90185.

Trading Ideas:
* Silver trading range for the day is 86265-90185.
* Silver dropped as investors weighed the higher-for-longer Fed rate outlook.
* U.S. central bankers believe they’ll cut interest rates just once this year
* Fed’s policymakers have reason to feel more confident that inflation is cooling


Crude oil

Crude oil prices experienced a slight decline of -0.14% yesterday, closing at 6568, primarily due to unexpected data revealing a build in U.S. crude stockpiles. This unexpected increase in inventory levels added downward pressure on prices. Furthermore, IEA forecast of a surplus petroleum production of up to eight million barrels per day by 2030 contributed to bearish sentiment in the market. The IEA also projected that global oil demand would peak by 2029 and begin to decline thereafter, while oil supply capacity is expected to significantly exceed demand by the end of the decade. According to the IEA's annual oil report, supply capacity could reach nearly 114 million barrels per day by 2030, surpassing projected demand by eight million barrels per day. The IEA trimmed its 2024 oil demand growth forecast by 100,000 barrels per day to 960,000 barrels per day, citing sluggish consumption in developed countries. However, it anticipates a growth of one million barrels per day next year due to factors such as a muted economy and increased adoption of green energy. On the supply side, the EIA Petroleum Status Report revealed a significant increase in crude oil stocks in the United States, surpassing market expectations. Gasoline and distillate stockpiles also saw notable increases, further adding to bearish sentiment. From a technical perspective, the market observed long liquidation, as evidenced by a drop in open interest by -11.07% to settle at 5669. Despite a decrease in prices by -9 rupees, crude oil finds support at 6509. A breach below this level could test 6451, while resistance is anticipated at 6607. A move above this resistance level could potentially lead to prices testing 6647.

Trading Ideas:
* Crudeoil trading range for the day is 6451-6647.
* Crude oil dropped after data showed an unexpected build in U.S. crude stockpiles.
* Iraq's oil ministry said it is fully committed to compensating for any crude oil overproduction in 2024
* IEA trimmed its 2024 oil demand growth forecast by 100,000 bpd to 960,000 bpd citing sluggish consumption in developed countries

Natural gas

Natural gas prices experienced a decline of 1.94%, settling at 247.9, driven by expectations of increased supplies once the Mountain Valley gas pipeline becomes operational. Additionally, news of the nation's largest gas producer, EQT, ramping up output due to recent price and demand increases added further downward pressure. The U.S. Energy Information Administration (EIA) projected a drop in natural gas production this year, revising its estimates downwards from earlier forecasts. Despite record demand, production is expected to ease as producers scale back drilling activities in response to subdued gas prices earlier in the year. In June, natural gas output in the Lower 48 U.S. states declined slightly, highlighting the impact of reduced drilling activities. However, daily production showed signs of a marginal uptick, albeit from a recent low. Meanwhile, US utilities continued to build gas inventories, with a 74 billion cubic feet increase reported for the week ending June 7, 2024. While slightly below market expectations, this marks the tenth consecutive week of seasonal inventory growth, pushing stockpiles above both last year's levels and the five-year average. From a technical standpoint, the market witnessed long liquidation, with open interest decreasing by 1.16% to settle at 15369, coupled with a decrease of -4.9 rupees in prices. Natural gas is currently finding support at 240.9, with potential downside to 234, while resistance is anticipated at 256.5, with a possible upside to 265.2. These technical levels suggest a cautious outlook, with the market closely monitoring supply dynamics, demand trends, and inventory levels for further direction.

Trading Ideas:
* Naturalgas trading range for the day is 234-265.2.
* Natural gas dropped amid expectations supplies will soon rise
* Recent increases in prices and demand prompted EQT, to start boosting output.
* US utilities added 74 billion cubic feet of gas into storage


Copper

Copper experienced a decline of 1.33% yesterday, settling at 855.65, primarily influenced by the stability of the U.S. dollar following the Federal Reserve's indication that interest rate cuts would be postponed until the end of the year. This stabilization in the dollar pressured copper prices downward. Concurrently, a significant influx of copper to LME-registered warehouses in Taiwan and South Korea was observed as Chinese producers capitalized on high LME prices in May to export copper. As a result, LME copper inventory increased by 22% to 127,343 tonnes over the last month. The LME market structure, with cash to three-month spreads in contango, suggests no immediate shortages. Moreover, copper inventories in Shanghai Futures Exchange warehouses have reached a four-year high, while spot premiums in China are weak, evidenced by the negative Yangshan import premium. Despite 20.8% of global copper smelting capacity being inactive in May, largely for maintenance, prices have risen by 13% year-to-date, driven by speculative expectations of impending shortages. The global refined copper market showed a surplus of 125,000 metric tons in March, a decrease from February's 191,000 metric tons surplus. Notably, China's imports of unwrought copper in May surged by 15.8% year-on-year, defying market expectations of weak physical consumption. This uptick highlights robust import activity despite record high copper prices and weaker actual consumption during the same period. From a technical perspective, the copper market has entered a fresh selling phase, indicated by a 7.03% rise in open interest to 6,258 contracts, while prices fell by 11.55 rupees. Currently, copper finds support at 849.3, with a potential decline to 842.9 if this level is breached. Resistance is expected at 864.5, and a move above this level could push prices towards 873.3.

Trading Ideas:
* Copper trading range for the day is 842.9-873.3.
* Copper dropped as dollar steadied on Fed rate cut outlook
* LME copper inventory rose 22% to 127,343 tonnes over the past one month.
* Copper inventories in warehouses monitored by the SHFE are at more than four-year highs

Zinc

Zinc closed slightly lower by -0.12% yesterday at 259.9, influenced by China's significant decrease in imports of zinc concentrates during the first four months of the year. China's import of zinc concentrates fell by 24% compared to the same period last year, marking a stark reversal of the trend seen in 2022 and 2023, when raw material imports had increased by 13% and 14% respectively. The global zinc market also faced challenges on the supply side, with zinc mines experiencing a decline in production over the past few years. According to the International Lead and Zinc Study Group, zinc mine production fell by 2% in 2022, followed by another 1% decrease in 2023. Furthermore, the market witnessed restarts of idled smelter capacity in Europe, which reduced the availability of concentrates on the spot market. LME stocks, which had been depleted, saw significant rebuilding throughout 2023, and they have continued to increase in 2024. Despite some volatility in registered inventory, LME stocks have largely held within a range since the start of April. Data from the International Lead and Zinc Study Group indicated a decrease in the global zinc market surplus, which fell to 52,300 metric tons in March from 66,800 tons in February. However, the surplus for the first three months of the year was still lower than the same period last year. Technically, the market observed long liquidation, with a drop in open interest by -4.31% to settle at 2333. Despite a slight decline in prices by -0.3 rupees, zinc finds support at 257.6. A breach below this level could test 255.2, while resistance is anticipated at 262.1. A move above this resistance level could potentially lead to prices testing 264.2.

Trading Ideas:
* Zinc trading range for the day is 255.2-264.2.
* Zinc dropped as China's imports of zinc concentrates fell sharply.
* Zinc output sliding 3% year-on-year in the first quarter
* LME stocks are at 255,900 tons, up 15% since the start of January.


Aluminium

Aluminium prices faced downward pressure, closing 0.76% lower at 233.7 amid significant shifts in market dynamics and economic indicators. One notable factor contributing to the decline was the substantial increase in LME inventories, which more than doubled within a month to reach 1.1 million tons. This surge in inventories reflected increased supply and added bearish sentiment to the market. Furthermore, the widening discount between the LME cash and three-month aluminium contracts, reaching $62.44 per ton, the largest since August 2007, indicated weakening near-term demand compared to future expectations. The Federal Reserve's decision to hold interest rates steady and postpone potential rate cuts until possibly December also weighed on aluminium prices. Amidst these economic signals, China's trade data provided mixed signals: while exports surpassed expectations, suggesting resilient overseas demand, slower import growth underscored domestic consumption challenges. However, disruptions in alumina supply due to reduced output from China and Rio Tinto's force majeure on alumina shipments from Australia added supply-side concerns, potentially limiting further downside for aluminium prices. Despite these pressures, global primary aluminium production in April increased by 3.3% year-on-year, indicating ongoing supply resilience. China's robust import figures for unwrought aluminium and products, up 72.1% year-on-year in April, highlighted sustained demand despite broader economic uncertainties. From a technical standpoint, the aluminium market showed signs of long liquidation, marked by a 7.25% decrease in open interest alongside a decline in prices by 1.8 rupees. Currently, aluminium finds support at 231.9, with potential downside testing towards 229.9. On the upside, resistance levels are observed at 236.4, with a breakout potentially leading to a test of 238.9.

Trading Ideas:
* Aluminium trading range for the day is 229.9-238.9.
* Aluminium dropped as LME inventories more than doubled in just a month
* The discount of the LME cash aluminium contract to the three-month contract expanded to $62.44 a ton.
* China’s May trade data showed better-than-expected exports, suggesting factory owners were managing to find buyers overseas

Cotton

Cotton prices saw a slight decline of 0.18%, settling at 56,120, influenced by the latest USDA report indicating ample supply conditions against subdued demand. The report highlighted increased beginning and ending stocks for U.S. cotton in the 2024/25 season, with production, domestic use, and exports remaining unchanged. The projected farm price for the upcoming season decreased to 70 cents per pound due to a decline in new-crop cotton futures, with ending stocks now at 4.1 million bales, representing 28% of use. Globally, the 2024/25 cotton balance sheet also showed higher beginning stocks, production, and consumption, with world ending stocks projected at 83.5 million bales, up by 480,000 bales from May estimates. Production increases were noted in Burma, contributing to the upward revision, while consumption saw rises in Vietnam and Burma offsetting reductions elsewhere. The adjustments to the 2023/24 global balance sheet included higher beginning stocks and production, with reduced trade and consumption, leading to a rise in ending stocks by approximately 500,000 bales. Regionally, changes in planting dynamics were observed in India, with potential shifts in acreage due to monsoon patterns and economic factors affecting crop choices. In Southern India, where monsoon rains have commenced, cotton acreage is expected to rise as some chili farmers switch to cotton amid weak chili prices. Conversely, North India may see a reduction in cotton acreage due to increased pest issues and rising labor costs. Technically, the cotton market indicated fresh selling pressure with a slight increase in open interest by 0.83% while prices fell by 100 rupees. Currently, support levels for cotton are identified at 56,020, with potential downside targets at 55,910 if support is breached. Resistance stands at 56,220, and a breakout above this level could push prices towards 56,310.

Trading Ideas:
* Cottoncandy trading range for the day is 55910-56310.
* Cotton dropped as USDA showed more than enough cotton while demand remained subdued.
* China's agriculture ministry raised its forecast for cotton imports in the 2023/24 crop year by 200,000 metric tons
* The 2024/25 U.S. cotton projections show higher beginning 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 closed higher yesterday, gaining 1.14% to settle at 18,046 amid bullish sentiment driven by farmers withholding stocks in anticipation of further price increases. However, the upside was tempered by increased supplies marking the end of the harvesting season. The prevailing heat wave across India poses a threat to crop yields, exacerbating the supply crunch and providing additional support to prices. The India Meteorological Department's forecast suggests that the hot weather is likely to persist, with expectations of more heat wave days than usual in May, potentially impacting turmeric production adversely. The Ministry of Agriculture and Farmers’ Welfare’s initial estimates for 2023-24 project turmeric production at 10.74 lakh tonnes, down from 11.30 lakh tonnes in the previous year, indicating a decrease in output. This decline, coupled with demand destruction due to high prices, has led to a hand-to-mouth situation among consumers. Nevertheless, there is optimism in turmeric-growing regions like Sangli, Basmat, and Hingoli, where demand for quality turmeric remains robust, buoyed by expectations of increased sowing in the current year. In terms of trade dynamics, turmeric exports during April 2023 to March 2024 decreased by 4.75% to 162,018.50 tonnes compared to the previous year. However, there was a notable monthly increase in March 2024 compared to February 2024, indicating fluctuating export trends. Imports, on the other hand, declined by 12.71% during the same period, reflecting lower international procurement. Technically, the turmeric market witnessed fresh buying interest, as evidenced by a 9.72% increase in open interest to 21,110 contracts. Prices surged by 204 rupees, reinforcing the bullish momentum. Key support levels are identified at 17,786, with a potential downside test to 17,526. Resistance is expected at 18,200, and a breakthrough could lead to a test of 18,354.

Trading Ideas:
* Turmeric trading range for the day is 17526-18354.
* Turmeric gains as farmers are holding back stocks in anticipation of a further rise.
* The current heat wave could severely damage the crop yield, further contributing to the supply crunch.
* The Ministry of Agriculture first advance estimate for turmeric production in 2023-24 is estimated at 10.74 lakh tonnes
*  In Nizamabad, a major spot market, the price ended at 18138.4 Rupees gained by 0.1 percent.


Jeera

Jeera prices closed 0.56% higher at 27,670, driven by strong domestic and export demand coupled with tight global supplies. The market sentiment, however, remains cautious as expectations of increased production could potentially limit further upside. Farmers holding back stocks in anticipation of better prices also supported the upward trend in prices. This season, jeera production is projected to increase significantly by 30%, reaching between 8.5 to 9 lakh tonnes, largely due to expanded cultivation areas in key regions like Gujarat and Rajasthan. Gujarat saw a remarkable 104% increase in sowing area, while Rajasthan witnessed a 16% rise. The surge in global production, particularly in countries like China, Syria, Turkey, and Afghanistan, further adds to the supply outlook. China, for instance, has doubled its cumin output, significantly impacting global supply dynamics. Despite robust current demand and constrained supplies, the market anticipates downward pressure as new harvests enter the market, potentially easing prices. Additionally, reduced export volumes in recent months signal shifting market dynamics and a competitive global environment for cumin trade. Technically, the jeera market showed signs of short covering with a notable 9.08% decrease in open interest alongside a price increase of 155 rupees. Currently, jeera finds support at 27,360, with potential downside towards 27,050 on breach of this level. Resistance is observed at 28,020, and a breakout above this could lead prices towards 28,370.

Trading Ideas:
* Jeera trading range for the day is 27050-28370.
* Jeera gains amid robust domestic and export demand besides tight global supplies.
* China's cumin output soared to over 55-60 thousand tons from the previous 28-30 thousand tons.
* Turkey anticipates producing 12-15 thousand tons, while Afghanistan's output could double.
* In Unjha, a major spot market, the price ended at 28479.65 Rupees dropped by -0.19 percent

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