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Gold

Gold prices rose by 0.12% to 71,438 as traders focused on the upcoming Federal Open Market Committee (FOMC) monetary policy decision and the key US Consumer Price Index (CPI) reading to gauge the timing of potential interest rate cuts. The anticipation follows last week’s decline in gold prices triggered by stronger-than-expected US jobs data, which reduced expectations for an early rate cut by the Federal Reserve. The US economy added 272,000 jobs in May, significantly above the median market forecast, highlighting the labor market's strength and decreasing the probability of a rate cut in September to around 50%, down from 70% before the data release. Adding to the bearish sentiment for gold, China's central bank paused its gold purchases in May after an 18-month streak of consecutive buying. This pause comes as gold imports to China via Hong Kong fell by 38% in April compared to the previous month, totaling 34.6 metric tons, down from 55.8 metric tons in March. This contrasts with the first quarter, where China's gold consumption rose by 5.94% year-over-year, with 308.91 metric tons consumed. In India, gold continued to trade at a discount for the fifth consecutive week, with dealers offering up to $14 an ounce below official domestic prices, compared to a $9 discount the previous week. Meanwhile, Chinese dealers charged premiums of $27-$32 per ounce over benchmark prices. Technically, the gold market is experiencing short covering, evidenced by a 3.94% drop in open interest to 15,406 while prices rose by 85 rupees. Gold is currently supported at 70,960, with further support likely at 70,485 if this level is breached. Resistance is expected at 71,700, with a potential move above this level pushing prices to test 71,965.

Trading Ideas:
* Gold trading range for the day is 70485-71965.
* Gold settled flat as traders are closely watching the upcoming FOMC monetary policy decision
* The US economy added 272K jobs in May, indicating the labor market's resilience.
* China's central bank paused gold purchases in May after an 18-month streak of consecutive buying.



Silver

Silver prices surged by 1.05% to settle at 90,022, primarily driven by short covering following a drop triggered by a stronger-than-expected US jobs report, which tempered expectations for a September rate cut by the Federal Reserve. Attention now shifts to the US consumer inflation report scheduled for Wednesday, coinciding with the Fed's policy decision. The US economy added a robust 272,000 jobs in May, surpassing expectations and accompanied by a notable increase in wages. However, the unexpected uptick in the unemployment rate to 4% added a note of caution. The imposition of 50% tariffs on Chinese imports of solar cells, a significant industry for silver, initially posed challenges, but strong demand in China's domestic markets and expectations of rate cuts by major central banks have supported silver prices. The Fed is not anticipated to alter its policy this week, with focus instead on comments from Fed Chair Jerome Powell and any changes to economic projections from policymakers. The probability of a September rate cut has reduced to 50% from around 70% before the release of the jobs data. Meanwhile, India's silver imports in the first four months of the year have surpassed the total for the entire previous year, driven by rising demand from the solar panel industry and investor preference for silver over gold. Increased imports from the world's largest silver consumer could bolster global prices, which are near their highest level in over a decade. Technically, the silver market experienced short covering, with a 6.61% drop in open interest to settle at 21,293 contracts, while prices surged by 933 rupees. Silver now finds support at 89,220, with a potential test of 88,420 below, while resistance is expected at 90,500, with prices possibly testing 90,980 if this level is surpassed.

Trading Ideas:
* Silver trading range for the day is 88420-90980.
* Silver rose on short covering after prices dropped amid a stronger-than-expected U.S. jobs report
* Market focus has shifted to the U.S. consumer inflation report, due on Wednesday, the same day as the Fed's policy decision.
* Bets of the Fed cutting rates in September fell to 50% from around 70% before the jobs data.


Crude oil

Crude oil surged by 2.58% to settle at 6486, propelled by expectations of increased fuel demand during the summer season. However, gains were tempered by the strengthening dollar amid reduced expectations of immediate U.S. interest rate cuts. Goldman Sachs forecasts Brent crude to reach $86 a barrel in the third quarter, citing robust summer transport demand which is anticipated to push the oil market into a deficit of 1.3 million barrels per day. Despite these optimistic projections, oil experienced a third consecutive weekly loss due to concerns surrounding OPEC+’s plan to unwind production cuts from October, potentially adding to rising supply. Meanwhile, U.S. energy firms reduced the number of operating oil and gas rigs to the lowest level since January 2022, according to Baker Hughes' report, indicating potential future output adjustments. Furthermore, portfolio investors sold record volumes of petroleum following OPEC+'s surprise announcement to increase production starting from the fourth quarter of 2024. This decision likely contributed to market uncertainty and amplified selling pressure. On the inventory front, crude oil stocks in the United States unexpectedly rose by 1.233 million barrels in the week ending May 31, contrary to market consensus of a decline. Gasoline and distillate stockpiles also saw significant increases, further complicating the supply-demand dynamics. From a technical standpoint, the market witnessed short covering, with a notable drop in open interest by -13.01% to settle at 7418, coupled with a price increase of 163 rupees. Currently, crude oil is supported at 6355, with a potential test of 6225 levels if this support is breached. Resistance is expected at 6554, with a move above indicating potential testing of 6623.

Trading Ideas:
* Crudeoil trading range for the day is 6225-6623.
* Crude oil prices rose buoyed by hopes of rising fuel demand this summer.
* Though gains were capped by a strengthening of the dollar on receding expectations of imminent cuts to U.S. interest rates.
* U.S. jobs data dampens hope for near-term interest rate cuts

Natural gas

Natural gas prices experienced a decline of 1.62%, settling at 242.5, driven by profit booking after recent gains fueled by a decrease in daily output and forecasts of hotter-than-normal weather in late June. The resurgence of gas flow to LNG export facilities, particularly with the Freeport LNG plant in Texas resuming operations, contributed to the market dynamics. However, exports remain below the December 2023 peak due to ongoing maintenance at various facilities. Despite a slight dip in June's gas output in the Lower 48 US states, production remains significantly lower than the record set in December 2023, primarily due to delayed well completions and reduced drilling activities earlier in the year. Meteorologists anticipate warmer-than-average weather across the Lower 48 states until June 21, supporting gas demand. LSEG forecasts a slight easing in gas demand from 93.7 bcfd this week to 93.1 bcfd next week. Meanwhile, US utilities injected 98 billion cubic feet of gas into storage during the week ending May 31, 2024, exceeding market expectations and marking the ninth consecutive week of seasonal inventory buildup. Total working gas in storage stands at 2,893 Bcf, significantly higher than last year and above the five-year average, indicating ample supply. Technically, the natural gas market saw long liquidation, with a 3.71% drop in open interest to settle at 15,853 contracts, coupled with a price decline of 4 rupees. Current support is at 236, with a potential test of 229.4 below, while resistance is expected at 253.9, with prices possibly testing 265.2 if this level is breached.

Trading Ideas:
* Naturalgas trading range for the day is 229.4-265.2.
* Natural gas fell on profit booking after prices rose amid a recent drop in daily output
* Additionally, gas flow to LNG export facilities has been on the rise.
* US utilities added 98 billion cubic feet of gas into storage



Copper

Copper prices rose by 1.09% to settle at 862.95 as market focus shifted towards demand potential amidst a sell-off triggered by fund and trader reversals on higher price bets. Strong U.S. jobs data in May suggested a potential delay in U.S. Federal Reserve interest rate cuts, impacting market sentiment. Surveys of purchasing managers in China, the top consumer, indicated an uptick in factory activity, particularly among smaller companies. However, concerns lingered over Chinese demand due to rising inventories monitored by the Shanghai Futures Exchange, reaching four-year highs at 336,964 tons. Furthermore, the Yangshan copper premium, reflecting China's import demand, remained at or below zero since May, signaling weakness. Traders awaited loans and social financing data for insights into Chinese demand prospects. Despite better-than-expected exports in China, imports increased at a slower pace, indicating domestic consumption fragility. Chile, the world's largest copper producer, witnessed a 28.1% increase in copper exports to $4.36 billion in May, according to the central bank. Additionally, the International Copper Study Group reported a surplus of 125,000 metric tons in the global refined copper market in March, with refined copper output at 2.33 million metric tons and consumption at 2.20 million metric tons. Technically, the market experienced short covering with a drop in open interest by -5.96% to settle at 6410, coupled with a price increase of 9.3 rupees. Currently, copper is supported at 853.9, with potential testing of 844.9 levels if this support is breached. Resistance is anticipated at 868.6, with a move above indicating potential testing of 874.3.

Trading Ideas:
* Copper trading range for the day is 844.9-874.3.
* Copper bounced from lows as the focus shifted to demand potential after a sell-off.
* Surveys of purchasing managers in China show factory activity picking up, particularly at smaller companies.
* SHFE stocks have reached four-year highs of 336,964 tons, compared with about 30,000 tons in January


Zinc

Zinc prices saw a notable uptick of 2.26%, settling at 256.15, driven by short covering following a previous drop attributed to evidence of low near-term demand. Concerns over China's manufacturing activity, indicated by a below-expectation PMI figure, contributed to dampened demand in the world's largest metal consumer. Additionally, soft US economic data has bolstered expectations for earlier rate cuts by the Federal Reserve, prompting a rebound in the dollar from mid-March lows. In April 2024, China's refined zinc output experienced a decline both month-on-month and year-on-year, largely influenced by routine maintenance in key smelting regions such as Xinjiang, Yunnan, and Gansu. Despite these challenges, domestic zinc alloy production increased in April. Chinese authorities introduced significant support measures, including lowering minimum mortgage interest rates, which, coupled with expectations for interest rate cuts, enhanced the commodity's industrial outlook. The global zinc market surplus reduced to 52,300 metric tons in March from 66,800 tons in February, according to data from the International Lead and Zinc Study Group (ILZSG). Despite this decrease, the surplus for the first three months of the year remained higher compared to the same period last year, indicating ongoing market stability. Technically, zinc market witnessed short covering, with a substantial 18.14% drop in open interest to settle at 3,010 contracts, accompanied by a price increase of 5.65 rupees. Current support stands at 249.9, with a potential test of 243.6 below, while resistance is expected at 259.6, with prices possibly testing 263 upon breaching this level.

Trading Ideas:
* Zinc trading range for the day is 243.6-263.
* Zinc gains on short covering after prices dropped amid evidence of low demand in the near term.
* China’s manufacturing PMI came in below market expectations, pointing to a contraction in manufacturing activity
* China's refined zinc output was 504,600 mt, a month-on-month decrease of 20,900 mt or 3.99%


Aluminium

Aluminium prices saw a modest uptick of 0.08% to settle at 235.8, influenced by a stronger dollar, robust U.S. employment data, and mixed trade figures from China. The dollar strengthened following better-than-expected U.S. job creation data, signaling potential delays in the Federal Reserve's easing cycle. In China, despite favorable export figures indicating overseas demand, imports grew at a slower pace, underscoring domestic consumption fragility. Notably, shortages of alumina, a crucial intermediary product, emerged due to reduced output from China and disruptions to Rio Tinto's Australian exports. Rio Tinto's declaration of force majeure on alumina cargoes from its Australian refineries raised concerns about supply from the world's second-largest producer. In response to these market dynamics, a global aluminium producer offered Japanese buyers a premium of $175 per metric ton for July-September, reflecting an 18% to 21% quarterly increase and demonstrating confidence in demand outlook. According to data from the International Aluminium Institute, global primary aluminium output in April rose by 3.3% year-on-year to 5.898 million tonnes. China's unwrought aluminium and products imports surged by 72.1% year-on-year to 380,000 metric tons in April, contributing to a total of 1.49 million tons in the first four months, an 86.6% increase from the previous year. Russian imports also saw a significant uptick, totaling 392,775 tons in the first quarter, marking a 127.7% increase from the corresponding period last year. From a technical perspective, the market experienced short covering, with a drop in open interest by -3.34% to settle at 3269, accompanied by a slight price increase of 0.2 rupees. Aluminium currently finds support at 233.8, with potential testing of 231.7 levels if this support is breached. Resistance is expected at 237.2, with a move above indicating potential testing of 238.5.

Trading Ideas:
* Aluminium trading range for the day is 231.7-238.5.
* Aluminium settled flat amid stronger-than-expected U.S. employment data.
* China’s trade data showed better-than-expected exports, suggesting factory owners were managing to find buyers overseas.
* Global primary aluminium output in April rose 3.3% year on year to 5.898 million tonnes


Cotton candy

Cotton candy prices experienced a decline of -1.23%, settling at 56140, primarily due to sluggish milling demand amidst muted global yarn demand. However, the downside was limited as India's cotton continued to witness strong demand from countries like Bangladesh and Vietnam. Additionally, prospects of improved crops in countries like Australia contributed to the market sentiment. The International Cotton Advisory Committee (ICAC) projected increases in cotton production, consumption, and trade for the next season, 2024-25, indicating optimism in the market outlook. India, the world's second-largest producer, is expected to witness a significant reduction in cotton stocks by nearly 31% in 2023/24, reaching their lowest level in over three decades. Lower stockpiles are anticipated to limit exports from India in the current marketing year, supporting global prices while potentially impacting domestic textile companies' margins. Looking ahead, for the marketing year 2024/25, India's cotton production is estimated to decrease by two percent due to farmers shifting acreage to higher return crops. However, mill consumption is expected to rise by two percent, driven by improving yarn and textile demand in major international markets. Additionally, with the import duty recension on extra-long staple (ELS) cotton, imports are projected to increase by 20%. Meanwhile, China's cotton imports for MY 2024/25 are forecasted to increase to 2.4 million metric tons due to higher demand for textile and apparel products domestically and internationally. Technically, the market observed long liquidation, with a drop in open interest by -1.66% and a price decrease of -700 rupees. Currently, cotton candy is supported at 55860, with potential testing of 55590 levels if this support is breached. Resistance is expected at 56600, with a move above indicating potential testing of 57070.

Trading Ideas:
* Cottoncandy trading range for the day is 55590-57070.
* Cotton dropped as sluggish milling demand is still concerns amid muted demand of yarn
* U.S. ending stocks projected 1.3 million bales above 2023/24 level
* Global supplies in 2024/25 projected to be higher than previous year
* In Rajkot, a major spot market, the price ended at 26779.95 Rupees dropped by -0.27 percent.


Turmeric

Turmeric prices registered a decline of 1.33%, settling at 17,676, driven by an increase in supplies marking the end of the harvesting season. However, the downside was limited as farmers held back stocks in anticipation of further price rises. The prevailing heat wave across the country poses a threat to crop yields, exacerbating the supply crunch and providing support to prices. The India Meteorological Department's forecast of continued heat wave conditions suggests little respite in the near future, with rainfall in southern India significantly below normal levels. The Ministry of Agriculture and Farmers’ Welfare's estimate for turmeric production in 2023-24 stands at 10.74 lakh tonnes, lower than the previous year, indicating a decrease in supply. Additionally, demand destruction has occurred due to price surges, with consumers adopting a hand-to-mouth approach. However, regions such as Sangli, Basmat, and Hingoli are experiencing robust demand for quality turmeric, driven by expectations of increased sowing area in the current year. Turmeric exports during Apr-Mar 2024 witnessed a decline of 4.75% compared to the previous year, while imports dropped by 12.71% during the same period. Although there was a slight increase in exports in March 2024 compared to February 2024, imports decreased in the same period, contributing to a marginal decline in spot market prices in Nizamabad. Technically, the turmeric market observed fresh selling, with a 9.53% increase in open interest to settle at 17,180 contracts, accompanied by a price drop of 238 rupees. Current support is at 17,434, with a potential test of 17,192 below, while resistance is expected at 18,034, with prices possibly testing 18,392 upon surpassing this level.

Trading Ideas:
* Turmeric trading range for the day is 17192-18392.
* Turmeric prices dropped amid increase in supplies at the end of harvesting season.
* 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 18079.6 Rupees dropped by -0.09 percent.


Jeera

Jeera prices witnessed a significant decline of -2.75%, settling at 27405, primarily due to market expectations of higher production, which could potentially weigh on prices. However, the downside was limited by robust domestic and export demand alongside tight global supplies. Farmers withholding their stocks in anticipation of better prices also supported the market. This season, jeera production is projected to be 30% higher at 8.5-9 lakh tonnes, driven by a substantial increase in cultivation area, particularly in Gujarat and Rajasthan. Globally, cumin production has seen significant increases, with China leading the surge. Additionally, Syria, Turkey, and Afghanistan are expected to increase production due to favorable prices, potentially contributing to oversupply in the market. Despite the increase in production, reduced export trade in cumin and declining international prices have exerted pressure on prices. India's jeera exports during Apr-Mar 2024 dropped by 13.53% compared to the previous year, with fluctuations observed month-on-month. Technically, the market is under fresh selling pressure, with a notable increase in open interest by 23.49% alongside a decrease in prices by -775 rupees. Currently, jeera finds support at 26950, with potential testing of 26500 levels if this support is breached. Resistance is expected at 27830, with a move above indicating potential testing of 28260. Traders will closely monitor market dynamics and production trends to gauge future price movements.

Trading Ideas:
* Jeera trading range for the day is 26500-28260.
* Jeera dropped as the expectation of higher production could weigh on the prices.
* 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 28133.45 Rupees dropped by -0.65 percent.

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