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Gold

Gold prices rose 0.66% to Rs.79,226, driven by growing expectations of Federal Reserve rate cuts. A slower-than-expected rise in U.S. retail sales for December and a sharp rebound in initial unemployment claims in January fueled bets on looser monetary policy to prevent an economic slowdown. This trend, coupled with softening core CPI data, reduced the opportunity cost of holding non-yielding assets like gold, supporting its rally. Similar rate expectations were echoed in the UK and the Eurozone amid softer GDP figures and lower energy prices. Demand patterns revealed mixed signals. Indian gold discounts increased to $17 per ounce as high local prices discouraged buyers, while gold buying surged in major Asian markets for the Lunar New Year. Premiums in China ranged from $2 to $9 per ounce, while Singapore and Hong Kong saw modest premiums and discounts. Japan's market showed a range of $0.5 discounts to $0.5 premiums. Central banks continued to bolster gold reserves, with November marking net purchases of 53 tonnes globally. Poland led with a 21-tonne addition, while the Reserve Bank of India raised its holdings by 8 tonnes in November, reaching 876 tonnes for 2024. China's central bank also added gold for a second consecutive month, increasing reserves to 73.29 million troy ounces by December. Gold experienced fresh buying, with open interest rising 6.02%. Support is seen at Rs.78,860, with a break below testing Rs.78,495. Resistance is anticipated at Rs.79,430, with potential to test ?79,635 if momentum persists.
 

Trading Ideas:
* Gold trading range for the day is 78495-79635.
* Gold rose amid growing expectations that the Fed will lower interest rates this year.
* US retail sales rose less than expected in December while initial unemployment claims rebounded sharply in January.
* Expectations of lower rates were also present in the UK following their softer monthly GDP print.

 

Silver
Silver prices edged lower by 0.06%, closing at Rs.92,803, as markets interpreted the latest U.S. economic data for clues on the Federal Reserve’s monetary policy trajectory. U.S. initial jobless claims rose by 14,000 to 217,000 for the week ending January 11, surpassing expectations of 210,000. Despite the increase, claims remain below 2024 averages, signaling resilience in the labor market. Meanwhile, retail sales growth slowed to 0.4% in December from 0.8% in November, falling short of the 0.6% forecast, though consumer spending remains robust. The Fed’s Beige Book highlighted moderate price increases and steady employment, reinforcing a cautiously optimistic economic outlook. On the supply-demand front, the global silver deficit is projected to narrow by 4% to 182 million ounces in 2024. Total supply is expected to rise by 2%, driven by increased mining in Mexico, Chile, and the U.S., alongside a 5% surge in recycled silver from western silverware scrap. Demand growth of 1% is fueled by record industrial use, a recovery in jewelry consumption, and strong application in solar panels and electric vehicles. Despite a 16% dip in physical investment, exchange-traded products (ETPs) are set for their first annual inflows in three years, buoyed by improved industrial demand and silver's 32% year-to-date price gain. Silver experienced long liquidation with open interest dropping by 1.14%. Support is at Rs.92,450, with a break below testing Rs.92,100. Resistance is at Rs.93,405, and a move above may lead to Rs.94,010.
 

Trading Ideas:
* Silver trading range for the day is 92100-94010.
* Silver settled flat as markets continued to assess the latest economic data for hints on Fed’s policy.
* Initial jobless claims in the US rose by 14,000 from the previous week to 217,000.
* Retail sales in the US increased 0.4% month-over-month in December 2024, the least in four months
 

Crude Oil
Crude oil prices dropped by 0.96%, settling at Rs.6,833, as geopolitical developments and robust U.S. retail data influenced the market. Yemen's Houthi militia signaled a halt to Red Sea attacks, alleviating supply concerns, while a ceasefire agreement between Israel and Hamas further reduced regional risks. Despite these easing tensions, U.S. retail sales growth bolstered expectations of the Federal Reserve maintaining cautious monetary policy, dampening crude prices. The latest EIA report indicated an eighth consecutive draw in U.S. crude inventories, falling by 1.961 million barrels, exceeding market expectations of 1.6 million barrels. However, Cushing, Oklahoma, reported a build of 0.765 million barrels. Gasoline inventories surged by 5.852 million barrels, and distillate stockpiles rose by 3.077 million barrels, both surpassing forecasts. The IEA projected a tighter oil market this year, with U.S. sanctions on Russia and Iran adding potential supply constraints. However, the U.S. EIA anticipates oil prices to face pressure as global production outpaces demand over the next two years. U.S. crude production is expected to reach a record 13.55 million barrels per day in 2024, with the Permian Basin contributing significantly. Crude oil is under long liquidation, with open interest dropping by 16.22%. Support is at Rs.6,734, and below this, Rs.6,635 could be tested. Resistance is at Rs.6,945, with further upside potential toward Rs.7,057.
 

Trading Ideas:
* Crudeoil trading range for the day is 6635-7057.
* Crude oil dropped with Yemen's Houthi militia expected to halt attacks on ships in the Red Sea.
* The IEA forecasts a slightly tighter oil market this year than previously expected.
* EIA data also showed an eighth consecutive weekly decline in commercial crude inventories, reaching their lowest level since April 2022.

 

Natural Gas
Natural gas prices surged by 2.18%, closing at Rs.356.3, driven by forecasts of colder-than-expected weather during the Martin Luther King Jr. Day weekend. This colder weather is anticipated to increase heating demand while simultaneously curbing gas production due to freeze-offs in wells and pipes. Spot market prices at the U.S. Henry Hub benchmark reached a one-year high, reflecting extreme cold across much of the country. According to LSEG data, gas production in the Lower 48 states dropped to 103.3 billion cubic feet per day (bcfd) in January, down from December’s record of 104.5 bcfd. Freeze-offs have historically reduced output significantly, with January 2024 witnessing a cut of 8.1 bcfd from January 9-16. Gas demand, including exports, is projected to rise from 145.3 bcfd this week to 153.8 bcfd next week, potentially peaking at 170.3 bcfd on January 20. U.S. utilities reported a withdrawal of 258 billion cubic feet of natural gas from storage in the week ending January 10, reducing total inventories to 3,115 bcf. This marked the ninth consecutive draw, narrowing the surplus over the five-year average to 2.5% and placing stocks 3.4% below last year’s levels. Natural gas prices are under fresh buying, with open interest increasing by 16.46%. Support is at Rs.348.7, and below this, Rs.341.2 could be tested. Resistance is at Rs.362.8, with further upside potential toward Rs.369.4.
 

Trading Ideas:
* Naturalgas trading range for the day is 341.2-369.4.
* Natural gas rose on forecasts for colder weather than previously expected over the weekend.
* Meteorologists expect coldest weather in years over US Martin Luther King Jr holiday weekend
* Cold expected to cut gas output by freezing wells over holiday weekend



Copper
Copper prices rose by 0.65%, closing at Rs.837.65, as a surprise decline in U.S. core inflation strengthened expectations for Federal Reserve interest rate cuts this year. Lower rates could bolster demand for commodities by supporting economic growth and weakening the dollar. Market sentiment was also lifted by hopes of aggressive economic support measures from China, including fiscal and monetary stimulus to boost consumption. On the supply side, Chile, the world's top copper producer, reduced its production forecasts due to challenges in discovering and developing new deposits. Antofagasta's copper output in 2024 rose by only 1% to 664,000 metric tons, below its guidance range of 670,000-710,000 tons. Meanwhile, the global refined copper market recorded a deficit of 41,000 metric tons in October, a significant improvement from the 136,000 metric tons deficit in September. However, for the first 10 months of the year, the market showed a surplus of 287,000 metric tons compared to just 9,000 metric tons in the same period a year earlier. China’s December imports of unwrought copper and copper products surged by 17.8% year-on-year to 559,000 metric tons, reflecting robust demand. This comes as refined copper consumption outpaced production globally, with October's output at 2.30 million metric tons versus consumption of 2.34 million metric tons. The copper market saw short covering, with open interest declining by 3.92%. Support is at Rs.832.1, with a potential test of Rs.826.5 if breached. Resistance is pegged at Rs.841.6, with further upside to Rs.845.5.
 

Trading Ideas:
* Copper trading range for the day is 826.5-845.5.
* Copper rose as a surprise decline in US core inflation supported bets on further interest rate cuts from Fed.
* Lower US rates could stimulate demand for commodities by supporting economic growth and weakening the dollar.
* Additionally, hopes that China will implement aggressive economic support measures, including fiscal and monetary stimulus, to boost consumption further.

 

Zinc
Zinc prices rose by 0.37% to settle at Rs.274.1, bolstered by China's commitment to aggressive economic support measures, including fiscal and monetary policies aimed at stimulating consumption. Zinc inventories in Shanghai Futures Exchange warehouses fell 10.80% week-on-week, reflecting tightening supply. December 2024 data showed China’s refined zinc production increased by over 1% MoM, driven by recovery from maintenance and incremental production in regions like Shanxi, Qinghai, and Inner Mongolia. Looking ahead, January 2025 refined zinc output is forecasted to grow by 15,000 mt MoM, with increases across various regions, although some production cuts are anticipated during the Chinese New Year holiday. Globally, the zinc market deficit widened to 69,100 metric tons in October from 47,000 metric tons in September, according to ILZSG. While refined zinc production fell 1.7% in the first 10 months of 2024 due to limited concentrate availability, mine production dropped 3.8%, driven by declines in Canada, China, South Africa, and Peru. For 2024, China's cumulative refined zinc production saw a YoY decline of more than 6%, despite exceeding expectations in December. Additionally, China's December factory activity showed growth but at a slower pace, with external demand weighed down by falling export orders. Eurozone factory activity also declined, adding pressure to the global zinc demand outlook. The zinc market witnessed short covering as open interest dropped by 2.81%. Support is at Rs.272.5, with further downside to Rs.270.8 if breached. Resistance is seen at Rs.275.3, with a potential test of Rs.276.4 on further gains.
 

Trading Ideas:
* Zinc trading range for the day is 270.8-276.4.
* Zinc gains as the Chinese government committed to aggressive economic support measures.
* Zinc inventories in warehouses monitored by the Shanghai Futures Exchange down 10.80% from last Friday.
* In December 2024, data showed that China's refined zinc production increased by nearly 10,000 mt MoM or over 1% MoM.



Aluminium
Aluminium prices increased by 1.1% to settle at Rs.252.55, driven by supply concerns stemming from potential EU sanctions on Russian aluminium imports. The European Commission is considering banning Russian primary aluminium as part of its 16th sanctions package related to the ongoing conflict in Ukraine. This has intensified worries about tightening supplies, particularly in the European market. Additionally, aluminium stocks in LME-registered warehouses have fallen 45% since May 2024, reaching just 619,375 tons. Cancelled warrants, at nearly 60%, indicate that more aluminium could leave LME warehouses in the coming weeks, further tightening supply. This supply reduction has narrowed the discount for the cash aluminium contract relative to the three-month contract, reducing the gap from over $40 in December to around $13. On the downside, aluminium stocks at three major Japanese ports rose 13.2% in December, reaching 323,600 metric tons, which could exert pressure on prices. Global aluminium production is also growing steadily, with China’s production up 4.13% YoY in December. China’s aluminium exports rose 17% in the first ten months of 2024 compared to last year, adding to global supply. Despite these concerns, global refined aluminium was in a supply deficit of 40,300 tons in October, highlighting the ongoing tightness in the market. Aluminium prices are currently under short covering, with open interest dropping 3.86%. Support is at Rs.249.8, with a potential test of Rs.246.9 if breached. Resistance is seen at Rs.254.7, and a break above this could push prices toward Rs.256.7.
 

Trading Ideas:
* Aluminium trading range for the day is 246.9-256.7.
* Aluminium rose due to worries about tightening supplies to EU if the bloc bans imports of the metal from Russia.
* Support also seen on concern over sliding stocks in LME, dropped 45% since May last year.
* However upside seen limited as aluminium stocks at Japanese ports rose, up about 13.2% from the previous month

 

Cottoncandy
Cottoncandy prices settled lower by 0.15% at Rs.54,220, driven by the latest WASDE report, which projected a rise in global cotton production and ending stocks for the 2024/25 crop year. Global cotton production is estimated to increase by over 1.2 million bales, reaching 117.4 million bales, primarily due to higher production in India and Argentina. However, concerns persist in India’s northern cotton-producing states (Punjab, Haryana, and Rajasthan), where kapas (unginned cotton) arrivals have dropped by 43% compared to last year. This reduction has caused supply chain issues, with some farmers holding back their produce in hopes of higher prices, while ginners and spinners are facing raw material shortages, particularly in Punjab. Cotton yarn prices in South India saw an uptick due to rising demand from the garment industry and strong export orders. For the 2024/25 season, the Cotton Association of India (CAI) has maintained cotton consumption at 313 lakh bales and pressing estimates at 302.25 lakh bales. Cotton imports into India are expected to rise to 25 lakh bales from 15.2 lakh bales last year, adding to the supply pressures. Additionally, U.S. cotton production has been revised upwards to nearly 14.3 million bales, further contributing to higher global stocks. Technically, Cottoncandy is experiencing long liquidation, with open interest dropping by 1.25%. Support is found at Rs.54,090, and a break below this level could lead to a test of Rs.53,970. Resistance is seen at Rs.54,340, with a move above this level potentially pushing prices to Rs.54,470.
 

Trading Ideas:
* Cottoncandy trading range for the day is 53970-54470.
* Cotton dropped as WASDE report projected higher production and ending stocks for the 2024/25 crop year.
* India's cotton production in 2024/25 is likely to fall by 7.4% from a year ago
* Cotton production is projected to increase in China, Brazil, and Argentina, more than offsetting reductions in the US and Spain – USDA
* In Rajkot, a major spot market, the price ended at 25758.15 Rupees dropped by -0.32 percent.

 

Turmeric
Turmeric prices rose by 0.34% to Rs.14,216, supported by concerns over low yield estimates and slow rhizome growth. Harvesting has commenced in Karnataka and Andhra Pradesh and is expected to follow in Telangana post-Makar Sankranti. Farmers have reported lower-than-expected yields, which warrants close monitoring of harvest progress. Supply is anticipated to increase with the arrival of the new crop, potentially influencing market trends. The supply chain remains constrained, with turmeric arrivals in the Erode and Warangal regions significantly reduced. Additionally, pending deliveries in the futures market are unmet due to limited stock availability. New turmeric is unlikely to arrive in significant volumes before April, with unfavorable weather, including El Niño effects, impacting production in both North and South India. Domestic consumption remains high, and international prices are elevated. Last year, turmeric production stood at approximately 68-70 lakh bags against a consumption demand of 128 lakh bags, indicating that old stock will likely be depleted before the new crop is available. Export demand remains robust, with turmeric exports from April to October 2024 rising by 6.57% year-on-year to 108,879.96 tonnes. October 2024 exports rose by 57.22% compared to October 2023, further highlighting strong demand. The market witnessed fresh buying, with a 0.17% increase in open interest, while prices gained Rs.48. Support is seen at Rs.14,092, with a potential test at Rs.13,966 if breached. Resistance is now at Rs.14,352, and a move above could push prices to Rs.14,486.
 

Trading Ideas:
* Turmeric trading range for the day is 13966-14486.
* Turmeric gains amid concerns over slow growth of rhizomes and low yield estimates persist.
* Harvesting has commenced in Karnataka and Andhra Pradesh and is expected to commence in Telangana.
* With the arrival of new crop likely to increase after Makar Sankranti, supply is expected to increase.
* In Nizamabad, a major spot market, the price ended at 13993.65 Rupees dropped by -0.92 percent.

 

Jeera
Jeera prices fell by 1.19% to Rs.22,355, pressured by low domestic demand and adequate stock availability. Farmers currently hold approximately 20 lakh bags of cumin, with an estimated 16 lakh bags likely to carry forward into the next season. Production levels for the current season are expected to match last year’s, supported by favorable crop conditions and robust sowing. However, the downside was capped by supply shortages and growing international demand. India's jeera production surged to 8.6 lakh tonnes in 2023-24, up from 5.77 lakh tonnes in the previous year, as per Spices Board data. The increased acreage, from 9.37 lakh hectares to 11.87 lakh hectares, contributed to the higher output. Indian cumin remains the most affordable globally, priced at $3,050 per tonne compared to Chinese cumin, which is $200-250 more expensive. This pricing advantage has positioned India as the go-to supplier for countries like China and others. Export demand remains a bright spot, with jeera exports from April to October 2024 increasing by 77.37% year-on-year to 135,450.64 tonnes. In October 2024, exports rose sharply by 161.04% compared to October 2023, reflecting robust global interest, particularly from Europe and the Middle East. Fresh selling was observed, with open interest rising by 2.95%, and prices declined by Rs.270. Support is seen at Rs.22,140, with a breach potentially testing Rs.21,930. Resistance lies at Rs.22,640, and a move above this level could push prices to Rs.22,930.
 

Trading Ideas:
* Jeera trading range for the day is 21930-22930.
* Jeera dropped as demand is low and the current export business is being met from the available stock.
* However downside seen limited amid shortage of stocks is contributing.
* The current season is expected to have similar production levels as last year due to better crop conditions and good sowing.
* In Unjha, a major spot market, the price ended at 23399.8 Rupees dropped by -0.1 percent.

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