IGI Logo

Gold

Gold prices climbed by 0.58% yesterday, settling at 77,107 as expectations of further interest rate cuts by the U.S. Federal Reserve and uncertainty over the U.S. presidential election boosted demand for the metal. Additionally, the European Central Bank (ECB) cut its main rates by 25bps, indicating progress in the disinflation process. Investor interest in bullion was further bolstered by risk aversion in Chinese capital markets, driven by concerns over Beijing’s lackluster response to the ongoing property crisis. Despite these supportive factors, strong economic data from the U.S. limited gold’s upward momentum, as it reduced the likelihood of a more dovish Federal Reserve. Raphael Bostic, President of the Atlanta Federal Reserve, indicated that he expected just one more rate reduction of 25bps this year, tempering hopes for significant easing. In India, physical gold dealers charged premiums for the first time in two months due to festival demand, with premiums reaching $3 per ounce compared to last week’s $21 discount. However, demand in China remained weak following the Golden Week holidays, with dealers offering discounts of $15 to $31 per ounce. Similarly, Hong Kong saw gold prices fluctuate between a $2 discount and a $1.50 premium. In Singapore and Japan, dealers offered premiums of up to $2.20 and $0.50, respectively According to the World Gold Council (WGC), global gold demand (excluding OTC trading) fell 6% year-on-year in Q2, primarily due to a 19% decline in jewelry consumption amid high prices. Technically, gold is in fresh buying mode, with open interest rising by 4.86% to 15,696. Support is at 76,750, with further downside testing at 76,390. Resistance is expected at 77,340, and a break above could see prices reaching 77,570.
 

Trading Ideas:
* Gold trading range for the day is 76390-77570.
* Gold hits record high as US rate cut bets and election jitters spur demand
* The ECB slashed its main rates by 25bps, as expected, and noted that the disinflation process is well underway.
* Fed's Bostic says his 'dot' was for 25 bp more in cuts in 2024


Silver
Silver prices settled down by -0.48% at 91,744, pressured by a stronger U.S. dollar, which traded at 11-week highs around 103.8 and was poised for a third consecutive weekly gain. The dollar's strength was driven by robust U.S. economic data, including higher-than-expected retail sales in September and lower-than-anticipated unemployment claims in October, which pointed to a resilient U.S. economy. These indicators reduced the urgency for aggressive rate cuts by the Federal Reserve, with market expectations now centered on 25bps cuts in the Fed’s remaining meetings this year. In the U.S., the so-called "Trump trade" further supported inflationary pressures, keeping the yield curve uninverted and limiting the need for rapid monetary easing. Meanwhile, China announced expanded credit support to assist troubled property developers, which has contributed to a sense of stabilization in its real estate market. India’s silver imports are set to nearly double this year, driven by strong demand from the solar panel and electronics sectors, as well as investor interest in silver as a better return asset compared to gold. India imported 4,554 tons of silver in the first half of 2024, a significant increase from 560 tons in the same period last year, driven by depleted inventories from 2023 and stockpiling by industrial buyers. On the technical front, the market experienced fresh selling, with a 1.06% increase in open interest, settling at 26,296 contracts while prices dropped by 439 rupees. Silver is finding support at 90,930, with a potential test of 90,115 levels if breached. On the upside, resistance is likely at 92,660, and a move above this level could see prices testing 93,575.
 

Trading Ideas:
* Silver trading range for the day is 90115-93575.
* Silver dropped as dollar traded at 11-week highs, underpinned by strong US economic data
* Fresh economic data supported the view that the US economy remains resilient to restrictive interest rates, limiting the urgency for aggressive cuts.
* Retail sales accelerated more than expected in September to underscore the strength of the US consumer.


Crudeoil
Crude oil prices settled down by -0.44% at 5,897, pressured by concerns over the demand outlook and a looming supply surplus. The International Energy Agency (IEA) recently lowered its demand forecasts, citing weaker demand from China and signaling the potential for a global oil glut. Similarly, OPEC cut its demand projections for the third consecutive month, further emphasizing the slowdown in China’s economy. Despite these bearish forecasts, geopolitical tensions remain high, with ongoing conflict between Israel and Hezbollah and concerns over Israel's airstrikes in Beirut. On the supply side, U.S. crude oil inventories fell by 2.192 million barrels in the week ending October 11, 2024, surpassing market expectations of a 2.3 million-barrel increase, according to the EIA Petroleum Status Report. Gasoline stocks also dropped by 2.201 million barrels, and distillate stockpiles, including diesel and heating oil, decreased by 3.534 million barrels. However, crude stocks at the Cushing, Oklahoma, delivery hub saw a slight increase of 0.108 million barrels. The U.S. Energy Information Administration (EIA) also revised down its global oil demand forecasts for 2024, citing weaker economic activity in China and North America. World oil demand is expected to grow by 1.2 million barrels per day (bpd) next year, a 300,000 bpd reduction from previous estimates. U.S. oil production is projected to hit 13.22 million bpd this year, slightly down from prior forecasts. Technically, crude oil is experiencing long liquidation, with open interest dropping by 8.09% to settle at 7,834 contracts while prices declined by 26 rupees. Support is now seen at 5,832, with a potential test of 5,768 levels if breached. Resistance is likely at 5,964, and a move above could push prices toward 6,032.
 

Trading Ideas:
* Crudeoil trading range for the day is 5768-6032.
* Crude oil dropped due to concerns over demand outlook and a looming surplus.
* The IEA lowered its demand forecasts, signaling the potential for a global glut
* Crude oil inventories in the US fell by 2.192 million barrels in the week ended October 11, 2024.


Naturalgas
Natural gas prices dropped by 1.4% yesterday, settling at 197.6, as forecasts for mild weather over the next two weeks signaled lower-than-normal heating demand. Meteorologists predicted that temperatures in the Lower 48 U.S. states would remain warmer than usual through November 1, reducing natural gas consumption. As a result, LSEG forecasts that average gas demand, including exports, will decline from 98.1 billion cubic feet per day (bcfd) this week to 96.4 bcfd next week. Additionally, U.S. natural gas production in October has slipped to 101.3 bcfd, down from 101.8 bcfd in September, well below the record of 105.5 bcfd set in December 2023. The U.S. Energy Information Administration (EIA) projected that natural gas production would decline slightly in 2024 to 103.5 bcfd, while demand is expected to rise to a record 90.1 bcfd, driven by exports and domestic consumption. EIA also forecast that U.S. liquefied natural gas (LNG) exports would reach 12.1 bcfd in 2024 and increase further to 13.8 bcfd in 2025. Additionally, U.S. utilities added 76 billion cubic feet of gas to storage for the week ending October 11, 2024, slightly below the market expectation of 78 billion cubic feet. This brought total natural gas storage to 3.075 trillion cubic feet, which is 3% higher than last year and 4.6% above the five-year average. From a technical perspective, the market is witnessing long liquidation as open interest fell by 5.14% to 44,531 contracts. Natural gas prices are supported at 195.3, with a potential test at 193.1 if this level breaks. On the upside, resistance is likely to be seen at 201.6, and a move above this could push prices towards 205.7.
 

Trading Ideas:
* Naturalgas trading range for the day is 193.1-205.7.
* Natural gas eased on forecasts for mild weather over the next two weeks
* US utilities added 76 billion cubic feet of gas into storage
* The increase lifted the total amount of natural gas storage in the lower 48 states to 3.075 trillion cubic feet.


Copper
Copper prices settled down by -0.85% at 814.1, pressured by a lack of forceful policy support for China's troubled property sector. In a special briefing, top Chinese officials announced plans to expand the “white list” of real estate projects and boost bank lending for these developments to 4 trillion yuan by the end of the year. However, the market was left disappointed, as investors had anticipated more aggressive stimulus measures, with Chinese authorities largely relying on existing policies. Further dampening sentiment were expectations that the U.S. Federal Reserve will take a cautious approach to cutting interest rates in upcoming meetings. In Peru, copper production rose by 10.7% year-on-year in August, reaching 246,568 metric tons. From January to August, copper production totaled 1.76 million metric tons, down 0.7% compared to the same period in 2023. The global refined copper market showed a 91,000 metric ton surplus in July, a slight decrease from the 113,000 metric ton surplus in June, according to the International Copper Study Group (ICSG). China's imports of unwrought copper rose by 15.4% in September, reaching 479,000 metric tons, reflecting seasonal demand improvements and a better consumption outlook. However, the figure was almost unchanged from September 2023, and year-to-date imports were up 2.6%. On the technical front, copper is experiencing long liquidation, with open interest dropping by 0.82%, settling at 7,255 contracts, while prices fell by 6.95 rupees. Copper is finding support at 808.8, with a potential test of 803.3 levels if breached. Resistance is likely at 820, and a move above this level could push prices to test 825.7.
 

Trading Ideas:
* Copper trading range for the day is 803.3-825.7.
* Copper slipped amid a lack of forceful policy support measures for the beleaguered property sector in China.
* Peru copper output up jumps 11% in August
* Chinese officials said that the country will expand a “white list” of real estate projects and increase bank lending for these developments


Zinc
Zinc prices settled down by -0.02% at 281.9 as investors shifted funds from industrial metals to gold, reducing exposure to China’s struggling economy. Pessimism about China's economic outlook persisted after a housing policy briefing left markets disappointed, causing Chinese and Hong Kong stocks to drop. The global zinc market is expected to face a significant supply deficit in 2024 due to a shortage of raw materials, leading to reduced production by smelters. The International Lead and Zinc Study Group (ILZSG) has revised its forecast, shifting from a projected 56,000-ton surplus to a 164,000-ton deficit. This change reflects zinc's exposure to China's struggling property sector, where demand is expected to rise by only 0.7% in 2024. On the production side, global mined zinc production is expected to increase by 6.6% in 2024, driven by restarts and the delayed ramp-up of Russia’s Ozernoye mine. However, global refined zinc production is expected to fall by 1.8% due to reduced output in Europe, China, and other key regions. This decline is mainly due to challenges such as heavy rains in Sichuan, power rationing, and raw material shortages in key zinc-producing regions of China. Technically, the zinc market experienced fresh selling, with a 1.3% increase in open interest, settling at 2,262 contracts, while prices dropped by 0.05 rupees. Zinc is currently finding support at 278.6, with a potential test of 275.1 levels if breached. On the upside, resistance is likely at 284.1, and a move above this level could push prices toward 286.1.
 

Trading Ideas:
* Zinc trading range for the day is 275.1-286.1.
* Zinc dropped as funds exited industrial metals and switched to gold to reduce exposure to China's struggling economy.
* The pessimism towards China, remained after a lack of fresh stimulus from a closely-watched housing policy briefing.
* Global zinc market is facing a sizeable supply deficit in 2024 as a raw materials squeeze forces smelters to reduce production


Aluminium
Aluminium prices declined by 1.03% yesterday, settling at 235.2, weighed down by the absence of aggressive stimulus measures from China to support its property market and the strengthening U.S. dollar. China announced credit support of CNY 4 trillion to assist property builders and ease purchase restrictions, which is expected to stabilize the housing market. Despite these efforts, the market remained cautious. China’s aluminum smelters have been producing at record levels, with output reaching 3.69 million tons in August, and production is expected to peak at 3.72 million tons by December 2024. The increased output has been supported by sufficient power supply, especially in Yunnan, where smelters avoided production cuts for the first time in four years. On the global front, the World Bureau of Metal Statistics (WBMS) reported a shortfall of 183,400 tons in primary aluminum supply in August, with global production at 6.08 million tons and consumption at 6.26 million tons. Additionally, China's August aluminum output rose 2.5% year-on-year, hitting the highest levels since 2002, driven by higher prices and strong demand. For the first eight months of 2024, China produced 28.91 million tons of aluminum, marking a 5.1% year-on-year increase. Technically, the market is experiencing long liquidation, with open interest dropping by 9.7% to 2,038 contracts. Aluminium prices are now supported at 234.1, with a potential test of 232.8 if this level is breached. On the upside, resistance is expected at 237, and a move above this level could push prices towards 238.6.
 

Trading Ideas:
* Aluminium trading range for the day is 232.8-238.6.
* Aluminium dropped weighed down by a lack of aggressive stimulus measures in China for the property market.
* China announced it will expand credit support to CNY 4 trillion to assist troubled property builders, ease purchase curbs
* China’s aluminum smelters not to be affected by power cuts due to sufficient rainfall


Cottoncandy
Cottoncandy prices declined by 0.37%, settling at 56,910 amid weak demand in the yarn markets and payment constraints. The USDA recently raised global cotton production estimates by over 200,000 bales, with increases expected in China, Brazil, and Argentina, offsetting reductions in the U.S. and Spain. However, the USDA also revised India's cotton production forecast for the 2024-25 season down to 30.72 million bales due to crop damage from excessive rains and pest infestations. Despite this, upside potential remains limited due to moderate demand and weak export activity, particularly to Bangladesh. Cotton acreage for the current kharif season is down by about 9% at 110.49 lakh hectares compared to last year. According to the Cotton Association of India (CAI), closing stocks for the 2023-24 season are estimated at 30.19 lakh bales, marginally higher than last year’s 28.90 lakh bales. Cotton consumption for the season was slightly higher at 313 lakh bales, while pressing estimates also increased to 325.29 lakh bales. Additionally, India’s cotton imports rose to 17.50 lakh bales in 2023-24, while exports grew 84% year-on-year, driven by demand from countries like Bangladesh and Vietnam. In the U.S., cotton production was reduced by 300,000 bales due to hurricane damage, with exports and mill use also lowered. Technically, the market is experiencing fresh selling pressure, with a 1.54% increase in open interest to 132 contracts. Prices are currently supported at 56,630, with a potential test of 56,360 if this level is breached. On the upside, resistance is expected at 57,300, and a move above this level could push prices towards 57,700.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56360-57700.
* Cotton dropped as yarn markets face weak demand and payment constraints.
* USDA has raised global cotton production estimates by over 200,000 bales.
* Cotton production is projected to increase in China, Brazil, and Argentina, more than offsetting reductions in the US and Spain.
* In the global 2024/25 cotton balance sheet, beginning stocks, production and consumption are increased.


Turmeric
Turmeric prices settled down by -0.29% at 13,596, pressured by lower demand and rising arrivals in the market. However, the downside was limited due to reports of significant crop damage from heavy rains in key growing areas like Nanded and Hingoli, where losses are expected to be much higher than initially estimated. Total arrivals were lower at 14,915 bags compared to the previous session's 16,975 bags, primarily driven by a sharp drop in arrivals at Sangli, which saw only 890 bags, down from 11,000 bags. Despite increased sowing in states like Maharashtra, Telangana, and Andhra Pradesh, unfavorable weather conditions and lower supply are likely to push prices higher in the coming weeks. In contrast, Indonesia’s turmeric harvesting has accelerated due to dry weather, and rising acreage coupled with low export demand could exert downward pressure on prices. In India, turmeric sowing has increased significantly this year, with estimates suggesting a rise to 3.75-4 lakh hectares compared to 3-3.25 lakh hectares last year. Although the current season’s sowing is higher, unfavorable weather in 2023 reduced production, leading to an anticipated lower availability of turmeric in 2025. Exports during April-July 2024 dropped by 13.97% compared to the same period last year, while imports surged by 429.58% during the same timeframe. Technically, the turmeric market is experiencing long liquidation, with open interest decreasing by 3.8% to settle at 12,770 contracts, while prices fell by 40 rupees. Support is now at 13,284, with a potential test of 12,974 if breached. Resistance is likely at 13,786, and a move above this level could push prices toward 13,978.
 

Trading Ideas:
* Turmeric trading range for the day is 12974-13978.
* Turmeric dropped due to lower demand amid a rise in arrivals.
* Turmeric exports during Apr- July 2024, dropped by 13.97 percent at 61,609.83 tonnes compared Apr- July 2023
* India’s festival season demand is expected to surge, particularly with CAIT forecasting 48 lakh marriages in the upcoming season.
* In Nizamabad, a major spot market, the price ended at 13861.7 Rupees dropped by -0.55 percent.


Jeera
Jeera prices declined by 0.36% yesterday, settling at 24,935 amid ample supply and pressure from ongoing arrivals. It is estimated that 30% of cumin stocks are still held by farmers. Daily arrivals in Unjha, a key cumin market, range from 12,000 to 17,000 bags, with around 60% coming from Rajasthan, and the remainder from local farmers, stockists, and traders. Despite the pressure on prices, the export market is active, with prices for export cumin quoted between $3,150 and $3,200 per tonne. Demand is particularly strong from Pakistan, which is purchasing Indian cumin via Dubai, where stocks remain limited. Additionally, India is benefiting from lower cumin prices compared to China, further boosting exports. Export trade has seen a surge, with about 100 to 125 containers of cumin exported over the past month. Among these, China accounted for 25 containers, Bangladesh for 35 to 40 containers, and other countries for the remainder. This strong export demand has been driven by tensions in the Middle East, boosting business for cumin exporters in Gujarat. Exports during July to September 2024 reached 52,022 metric tonnes, marking a 128% year-on-year increase. Technically, the market is experiencing long liquidation, with open interest dropping by 2.4% to 1,833 contracts. Jeera prices are currently supported at 24,640, with a potential test of 24,330 if this level is breached. On the upside, resistance is expected at 25,130, and a move above this level could push prices towards 25,310.
 

Trading Ideas:
* Jeera trading range for the day is 24330-25310.
* Jeera prices dropped as it is estimated that 30 percent of cumin is still available with the farmers.
* Tensions in the Middle East has resulted in good export business from Gujarat
* The arrival of Ramzan earlier this year will increase domestic consumption.
* In Unjha, a major spot market, the price ended at 25574 Rupees dropped by -0.08 percent.

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