IGI Logo

Gold

Gold prices declined by 0.37% to settle at 72,718 amid profit booking as markets anticipated the upcoming U.S. personal consumption expenditures (PCE) data, which could provide further insight into the Federal Reserve's potential interest rate cuts. This decline was also influenced by stronger-than-expected manufacturing growth in the U.S. Mid-Atlantic region for July, despite a rise in weekly jobless claims attributed to seasonal factors. Fed Chair Jerome Powell noted that recent inflation readings have added confidence that price increases are returning to the Fed's target sustainably. In addition, Swiss June gold exports fell to their lowest level since April 2022 due to reduced shipments to China and India, the largest consumer markets. These countries' demand for gold is highly sensitive to price fluctuations and seasonal factors. Additionally, comments from Fed Chair Powell at the conclusion of the Fed’s July 30-31 meeting are anticipated, with market participants fully pricing in a 25 bps Fed rate cut by September. In Asia, physical gold demand remains sluggish as high prices deter new purchases. In India, dealers offered record-high discounts of up to $65 an ounce over official domestic prices, their highest in 28 months. In China, discounts reached up to $6 an ounce, the lowest in more than two years, compared to premiums of $8-$19 the previous week. Technically, the market is under long liquidation with a 0.59% drop in open interest to settle at 10,672 contracts. Prices decreased by 272 rupees, with gold now finding support at 72,415. A move below this level could test 72,115. Resistance is likely at 73,100, and prices could test 73,485 if they move above this level.
 

Trading Ideas:
* Gold trading range for the day is 72115-73485.
* Gold prices dipped as the dollar firmed and some investors locked in profits
* Markets see a 98% chance of a Fed rate cut in September – CME
* Asian physical gold demand was sluggish, reflecting customers' reluctance to make new purchases despite deep discounts.
 
 

Silver
 
Silver prices dropped by 0.49% to settle at 89,203 as investors took profits following a recent surge driven by increasing expectations of U.S. interest rate cuts in September. The decline was further pressured by stronger-than-expected U.S. labor market and manufacturing data. In July, manufacturing activity in the U.S. Mid-Atlantic region expanded more than anticipated due to a surge in new orders. Additionally, the latest weekly jobless claims rose more than expected, but this did not alter perceptions of the labor market due to seasonal factors. San Francisco Fed President Mary Daly noted that despite recent improvements in inflation data, more evidence is needed to confirm that inflation is sustainably moving towards the central bank's 2% target. Meanwhile, the European Central Bank (ECB) held rates steady, with ECB President Christine Lagarde stating that the September decision remains "wide open." Fed Governor Christopher Waller mentioned that the U.S. central bank is "getting closer" to an interest rate cut, considering the improved trajectory of inflation and a more balanced labor market. Richmond Fed President Thomas Barkin expressed optimism about the broadening easing in inflation and emphasized the need for this trend to continue. Technically, the silver market witnessed fresh selling with a 0.65% gain in open interest to settle at 26,451 contracts, and prices fell by 443 rupees. Silver is currently finding support at 88,555, with a potential test of 87,905 levels if it moves below this point. Resistance is expected at 89,800, and prices could test 90,395 if they move above this level.
 

Trading Ideas:
* Silver trading range for the day is 87905-90395.
* Silver dropped as investors locked in profits following the metal's recent surge
* Pressure also seen stronger-than-expected data on the U.S. labour market and manufacturing.
* Manufacturing activity in the US Mid-Atlantic region expanded more than expected in July amid a surge in new orders.
 
 

Crude oil
 
Crude oil prices settled down by 0.79% at 6,560 amid a strong U.S. dollar and concerns over the economic outlook of China, the world's top oil importer. The U.S. dollar index strengthened following stronger-than-expected data on the U.S. labor market and manufacturing earlier in the week. The oil market received some support earlier in the week from the U.S. government’s report of a larger-than-expected decline in weekly oil stockpiles. Despite this, concerns over China's economic health weighed heavier. The OPEC+ group is not expected to change its output policy, including its plan to begin unwinding one layer of oil supply cuts from October, as per sources. Crude stocks at the Cushing, Oklahoma delivery hub fell by 875,000 barrels to 32.66 million barrels, marking the lowest level since April, according to the U.S. Energy Information Administration (EIA). Overall crude oil inventories in the U.S. fell by 4.87 million barrels in the week ended July 12, 2024, marking the third consecutive week of stockpile reductions and the longest stretch of decreases since September. Markets had predicted an increase of 0.8 million barrels. Technically, the crude oil market is under fresh selling pressure, evidenced by a 26.09% gain in open interest to settle at 5,925 contracts while prices dropped by 52 rupees. Crude oil is finding support at 6,495, with a potential test of 6,430 levels if prices move below this point. Resistance is likely to be seen at 6,629, and a move above this level could see prices testing 6,698.
 

Trading Ideas:
* Crudeoil trading range for the day is 6430-6698.
* Crude oil dropped amid a strong dollar and concern over the economy of China.
* WTI futures backwardation widens to 8 – month high as Cushing stocks fall
* Crude stocks at the Cushing hub, excluding SPR barrels fell by 875,000 barrels to 32.66 million in the week to July 12.
 
 Natural gas
 
Natural gas prices surged by 6.03% to 188.2, driven by increased gas flow to U.S. LNG export plants, particularly as Freeport LNG in Texas resumed exports after a shutdown due to Hurricane Beryl. Additionally, forecasts of the hottest weather of the summer enveloping much of the U.S. Lower 48 states in early August further supported the bullish sentiment. LSEG reported a rise in gas output in the Lower 48 states to an average of 102.1 bcfd in July, up from 100.2 bcfd in June, rebounding from a 17-month low of 99.4 bcfd in May. Meteorological projections indicate that after a near-normal temperature phase until July 28, hotter-than-normal conditions will prevail through at least August 6. This expected heat wave is likely to boost gas demand, including for exports, with LSEG forecasting average demand to rise from 104.7 bcfd this week to 105.9 bcfd next week. Gas flows to the seven major U.S. LNG export plants decreased to 11.5 bcfd in July due to Freeport LNG's temporary shutdown, down from 12.8 bcfd in June and a record high of 14.7 bcfd in December 2023. Meanwhile, U.S. utilities added 10 billion cubic feet of gas into storage during the week ending July 12, 2024, significantly below market expectations of a 28 billion cubic feet increase. Technically, the natural gas market is under short covering, indicated by a 30.01% drop in open interest to settle at 17,791 contracts, while prices climbed by 10.7 rupees. Support is seen at 180.6, with potential testing of 173.1 levels if breached. Resistance is anticipated at 192.8, with a move above possibly testing 197.5.
 

Trading Ideas:
* Naturalgas trading range for the day is 173.1-197.5.
* Natural gas jumped with an increase in the amount of gas flowing to U.S. LNG export plants.
* The hottest weather of the summer is forecast to blanket much of the U.S. Lower 48 states in early August.
* Gas output in the Lower 48 U.S. states rose to an average of 102.1 bcfd so far in July, up from an average of 100.2 bcfd in June
 
 
 Copper
 
Copper prices declined by 0.77% to 814 due to the lack of stimulus measures from China, which is grappling with economic challenges and struggling to sustain strong growth momentum. This disappointment from the world's largest consumer of metals has raised concerns about demand prospects. China's refined copper production in June rose by 3.6% from the previous year to 1.13 million metric tons, yet copper imports dropped to a 14-month low, highlighting weaker domestic demand. LME copper inventories rose to a 33-month high of 221,100 tons, indicating an increase in supply amidst declining demand. Copper inventories across various warehouses globally also increased in July, reinforcing the sentiment of weak demand. Speculative interest in copper saw an improvement, with fund managers holding a net long position of 43,403 contracts on the CME copper contract as of July 8, marking the first increase since May 20. However, the global refined copper market showed a surplus of 13,000 metric tons in April, down from a 123,000 metric tons surplus in March. For the first four months of the year, the market was in a 299,000 metric tons surplus, compared to 175,000 metric tons in the same period the previous year. The lack of Chinese stimulus, increased inventories, and rising supply amidst weak demand are significant factors contributing to the recent price decline. Technically, the copper market is under long liquidation, evidenced by a 16.73% drop in open interest to settle at 6971 contracts while prices decreased by 6.3 rupees. Copper is currently getting support at 809.1, and if it falls below this level, it could test 804.1 levels. Resistance is anticipated at 820.5, and a move above this level could see prices testing 826.9.
 

Trading Ideas:
* Copper trading range for the day is 804.1-826.9.
* Copper prices dropped due to the lack of Chinese stimulus measures.
* China's June imports of copper slipped to a 14-month low.
* Copper inventories in LME warehouses, meanwhile, have risen to a 33-month high of 221,100 tons, LME data showed.
 
 Zinc
 
Zinc prices rose by 1.07% to 263.75 due to MMG Ltd halting operations at its Dugald River zinc mine in Australia for about two months for repair work. The zinc concentrates market is already tight, and this closure is expected to exacerbate shortages. Despite the halt, MMG stated that the mill stoppage would have minimal impact on overall 2024 production. The rise in zinc prices comes amidst a backdrop of a lack of detailed stimulus measures from a key political meeting in China, despite the country's weaker-than-expected economic growth data for the second quarter. China's refined zinc production in June was 545,800 metric tons, up 1.81% month-on-month but down 1.2% year-on-year. The total output for the first half of the year was 3.182 million metric tons, slightly lower than last year. Zinc inventories in London Metal Exchange (LME) registered warehouses rebounded by 9% to their highest level in nearly three months, indicating a surplus of metal in the market. LME zinc stocks had previously touched their strongest levels since May 2021 at 276,100 tons in late February but had declined by 13% until recently. The global zinc market surplus decreased to 22,100 metric tons in April from 70,100 tons in March, and the surplus for the first four months of the year was 182,000 tons compared to 282,000 tons during the same period last year. Technically, the zinc market is under short covering, as indicated by a 13.9% drop in open interest to settle at 1233 while prices increased by 2.8 rupees. Zinc is currently finding support at 259.5, and a drop below this level could see it testing 255.1 levels. Resistance is anticipated at 266.7, and a move above this level could see prices testing 269.5.
 

Trading Ideas:
* Zinc trading range for the day is 255.1-269.5.
* Zinc gains as China's MMG Ltd has halted operations at a mill at its Dugald River zinc mine in Australia
* In June, China's refined zinc production was 545,800 mt, up 9,700 mt or 1.81% MoM
* Zinc inventories in warehouses registered with the London Metal Exchange rebounded 9% to their highest level in nearly three months
 
 
 Aluminium
 
Aluminium prices fell by 2.24% to settle at 215.75, primarily due to an increase in SHFE aluminium inventories, which rose to 262,200 tons, the highest level since April 2023. This surge in inventories indicates a potential oversupply in the market, putting downward pressure on prices. Additionally, China's imports of unwrought aluminium and products jumped 16% to 240,000 metric tons in June, and the imports for the first half of the year totaled 2.04 million tons, up 70.1% from the same period last year. The premium for aluminium shipments to Japanese buyers for the July to September period was set at $172 per metric ton, up 16%-19% from the previous quarter. This increase reflects tighter supplies in Asia, contributing to higher costs for buyers. Aluminium stocks at three major Japanese ports rose by about 3% from the previous month, standing at 317,860 metric tons at the end of June, suggesting a modest build-up in regional inventories. China's production of primary aluminium in June rose by 6.2% from a year earlier, reaching 3.67 million metric tons, the highest single month of production on record. This increase is attributed to producers ramping up production amid higher profits. For the first six months of the year, China produced 21.55 million metric tons, a 6.9% rise from the same period last year. Technically, the aluminium market is experiencing long liquidation, with a drop in open interest by 11.89% to settle at 2141 while prices declined by 4.95 rupees. Currently, aluminium is finding support at 213.5, and a drop below this level could see it testing 211. Resistance is likely at 219.9, and a move above this level could see prices testing 223.8.
 

Trading Ideas:
* Aluminium trading range for the day is 211-223.8.
* Aluminium dropped as SHFE inventories rose to 262,200 tons, the highest since April 2023.
* China's June aluminium imports up 16% on – year
* Japan buyers agree to pay higher Q3 aluminium premiums reflecting tighter supplies in Asia
 
 

Cotton candy
 
Cotton candy prices settled down by 0.11% at 56460 due to profit booking after previous gains. The price increase earlier was driven by a significant decline in cotton acreage in key states like Punjab, Haryana, and Rajasthan, which collectively reported a reduction to 10.23 lakh hectares from last year’s 16 lakh hectares. Specifically, Punjab’s cotton area fell to 97,000 hectares, while Rajasthan and Haryana saw reductions to 4.75 lakh hectares and 4.50 lakh hectares, respectively. Additionally, the delay in the arrival of shipments from the US and Brazil has spurred demand for Indian cotton from mills in neighboring countries, further supporting prices. The trade anticipates an increase in cotton acreage in Telangana, as some chili farmers are likely to shift to cotton due to weaker chili prices. The 2024/25 U.S. cotton projections show higher beginning and ending stocks compared to last month, with unchanged projected production, domestic use, and exports. Globally, the 2024/25 cotton balance sheet indicates increased beginning stocks, production, and consumption, with unchanged world trade. Consequently, world ending stocks are projected to be 480,000 bales higher than in May at 83.5 million. Adjustments to the 2023/24 world balance sheet include higher beginning stocks and production but reduced trade and consumption, raising ending stocks by approximately 500,000 bales. Technically, the market is under long liquidation, with a 4.38% drop in open interest to settle at 306 while prices fell by 60 rupees. Currently, cotton candy finds support at 56070, and a break below this level could test 55670. On the upside, resistance is expected at 56880, and a move above this level could see prices testing 57290.
 

Trading Ideas:
* Cottoncandy trading range for the day is 55670-57290.
* Cotton dropped  on profit booking after prices gained as area under cotton in North India drops
* 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  

The price of turmeric rose by 1.08% to settle at 16,048, as farmers withheld stocks in anticipation of higher prices. However, the potential for further price increases is limited due to reports of increased sowing. Farmers are motivated by favorable prices, leading to expectations of turmeric being sown in all producing states this year. Sowing on the Erode line has reportedly doubled compared to last year, with Maharashtra, Telangana, and Andhra Pradesh estimating a 30-35% increase in sowing. Last year, turmeric was sown in about 3-3.25 lakh hectares, projected to rise to 3.75-4 lakh hectares this year. In addition to increased sowing, last year's unfavorable weather conditions reduced turmeric production to an estimated 45-50 lakh bags, with an outstanding stock of 35-38 lakh bags. Despite the increased sowing this season, the upcoming turmeric crop is expected to be around 70-75 lakh bags, with zero outstanding stock, potentially leading to a supply shortage compared to consumption in 2025. Turmeric exports during April-May 2024 dropped by 20.03% to 31,523.94 tonnes compared to the same period in 2023. However, exports in May 2024 increased by 23.43% to 17,414.84 tonnes from April 2024, though they fell by 12.17% compared to May 2023. In the Nizamabad spot market, turmeric prices ended at 16,347.45 rupees, down by 0.14%. Technically, the market is experiencing short covering, indicated by a 0.81% drop in open interest, settling at 15,950 contracts, while prices increased by 172 rupees. Turmeric has support at 15,834, with a potential test of 15,620 if this level is breached. Resistance is likely at 16,364, and a move above this could see prices testing 16,680.
 

Trading Ideas:
* Turmeric trading range for the day is 15620-16680.
* Turmeric gains as farmers are holding back stocks in anticipation of a further rise..
* Turmeric sowing on the Erode line is reported to be double as compared to last year.
* Turmeric was sown in about 3/3.25 lakh hectares in the country last year, which is estimated to increase to 3.75/4 lakh hectares this year.
* In Nizamabad, a major spot market, the price ended at 16347.45 Rupees dropped by -0.14 percent.
 
 Jeera
 
The price of jeera declined by 1.43% to settle at 26,240, driven by expectations of higher production, which could weigh on prices. However, the downside is limited due to robust domestic and export demand, coupled with tight global supplies. Farmers are holding back stocks, anticipating better prices. This season, jeera production is expected to be 30% higher, reaching 8.5-9 lakh tonnes due to a substantial increase in the cultivation area. Globally, jeera production has increased significantly, with China's output rising to 55-60 thousand tons from the previous 28-30 thousand tons. High prices from the prior season incentivized increased production in Syria, Turkey, and Afghanistan, with new supplies entering the market expected to push prices down. Turkey anticipates producing 12-15 thousand tons, and Afghanistan's output could double, depending on weather conditions. Despite higher production expectations, prices are pressured at higher levels. In Gujarat, the total production of cumin is estimated to be a record 4.08 lakh tonnes, up from 2.15 lakh tonnes in 2022-23. Rajasthan's cumin production also increased by 53%. Overall, due to the increased sowing area and favorable weather, India's cumin production has doubled compared to last year. Jeera exports during April-May 2024 rose by 43.50% to 58,943.84 tonnes compared to the same period in 2023. Technically, the market is experiencing long liquidation, with a 1.11% drop in open interest, settling at 26,790 contracts. Prices fell by 380 rupees, and jeera is finding support at 25,890, with a potential test of 25,550 if this level is breached. Resistance is likely at 26,680, and a move above this level could see prices testing 27,130.
 

Trading Ideas:
* Jeera trading range for the day is 25550-27130.
* 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 26878.15 Rupees dropped by -0.31 percent.

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