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Gold

Gold exhibited a notable uptick yesterday, settling up by 0.62% at 72297, propelled by a slight decline in the dollar index as traders assessed fresh Producer Price Index (PPI) data and its implications for the Federal Reserve's monetary policy stance. While April's producer prices surged beyond expectations, a sharp downward revision in March's reading offered investors some relief. Consequently, the likelihood of a Fed rate cut initially wavered but ultimately returned to pre-release levels, standing at 65% for September and 78% for November. Amidst these market dynamics, American consumers brace for higher inflation pressures over the coming years, as reflected in the Federal Reserve Bank of New York's Survey of Consumer Expectations. Projections indicate an uptick in inflation expectations, with respondents foreseeing a 3.3% increase in inflation a year from now, while expectations for inflation three years hence moderating slightly to a 2.8% rise. Additionally, the gold market contended with news of declining production in South Africa, with March 2024 marking the fifth consecutive month of decline. This downturn, highlighted by a 4.5% year-on-year decrease, adversely impacts mining production volume by 0.7 percentage points. However, on a seasonally adjusted basis, gold output saw a modest uptick of 1.5%, albeit a slowdown from the previous month's rise. From a technical standpoint, the market experienced short covering, with a drop in open interest by -3.87% to settle at 12184, concomitant with a significant price increase of 442 rupees. Presently, Gold finds support at 71975, potentially testing 71650 levels if breached, while resistance is anticipated at 72480. A breakthrough above resistance could propel prices towards 72660.

Trading Ideas:
* Gold trading range for the day is 71650-72660.
* Gold gains as dollar index fell slightly as traders digest fresh PPI data
* Producer prices rose much more than expected in April, but the March reading was revised sharply lower
* Americans last month braced for generally higher inflation pressures over the next few years and accelerating home price increases.


Silver
Silver displayed resilience in yesterday's trading session, closing up by 0.63% at 85417, as investors brushed aside concerns regarding a potential delay in Fed interest rate cuts. Despite the latest US Producer Price Index (PPI) data signaling persistent inflationary pressures, demand for silver remained robust, driven by its status as an inflation hedge. Moreover, escalating geopolitical tensions, including Israeli advances into Gaza and Russia's expanded front in Ukraine, spurred a flight to the safety of bullion, further supporting silver prices. Looking ahead, market focus will turn to the US Consumer Price Index (CPI) release for insights into the Federal Reserve's rate trajectory. The expectation is for more clues regarding the Fed's stance on monetary policy amidst lingering inflation concerns. Meanwhile, the global silver market is projected to face a deficit of 215.3 million troy ounces in 2024, marking a 17% increase compared to the previous year. This deficit is attributed to a 2% growth in demand, driven by robust industrial consumption, and a 1% decline in total supply. Despite facing its fourth consecutive year of structural deficit, the silver market witnessed a significant reduction in deficit last year, albeit still remaining substantial at 184.3 million ounces. Technically, silver is experiencing fresh buying momentum, evidenced by a 1.55% increase in open interest alongside a notable price surge of 531 rupees. The metal finds support at 84890, with potential downside towards 84365. Conversely, resistance is anticipated at 85845, with a breakthrough potentially leading to further gains towards 86275. Traders will closely monitor upcoming economic data releases and geopolitical developments for further cues on silver price movements.

Trading Ideas:
* Silver trading range for the day is 84365-86275.
* Silver rose as investors shrugged off concerns about a potential delay in Fed interest rate cuts.
* Escalating geopolitical tensions triggered a flight to the safety of bullion after Israeli forces advanced deeper into the northern edge of Gaza
* US PPI data indicated persistent inflationary pressures, dampening market expectations of monetary easing by the Fed this year.


Crude oil
Crude oil experienced a decline of -1.24% yesterday, settling at 6512, as U.S. data indicated persistent inflationary pressures, offsetting optimism from OPEC's maintenance of its demand forecast for the year. OPEC's steadfast prediction of robust global oil demand growth in 2024, coupled with a possibility of outperformance in the world economy, provided a backdrop of stability in the market. With world oil demand expected to increase by 2.25 million barrels per day in 2024 and by 1.85 million barrels per day in 2025, OPEC's projections remained unchanged from the previous month, setting the stage for the upcoming OPEC+ meeting on June 1 to determine output policy. Azerbaijan's Energy Minister Parviz Shahbazov disclosed the country's oil and gas production figures, highlighting stability in output and significant exports to Europe. Meanwhile, the U.S. Energy Information Administration (EIA) reported an anticipated rise in oil output from the top shale-producing regions in June, reaching its highest level in six months. Improved well productivity, particularly in the Permian basin, is contributing to the uptick in shale production, with expectations of production per new rig surpassing 1,400 barrels per day next month. Technically, the crude oil market witnessed fresh selling pressure, evidenced by a substantial increase in open interest by 38.92% to settle at 9145, coinciding with a decline in prices by -82 rupees. Presently, crude oil finds support at 6466, with a potential test of 6421 levels if support is breached, while resistance is expected at 6591. A breakthrough above resistance could lead to testing 6671.
 

Trading Ideas:
* Crudeoil trading range for the day is 6421-6671.
* Crude oil dropped after U.S. data suggested inflation remains sticky.
* OPEC stuck to its forecast for relatively strong growth in global oil demand in 2024
*  Azerbaijan oil output at 9.6 mln metric tons in Jan – April


Natural gas
Natural gas prices showed resilience in yesterday's trading session, closing up by 0.56% at 197.7, driven by a significant reduction in output in recent months and increased gas flows to liquefied natural gas (LNG) export plants. The return to near full service of Freeport LNG's plant in Texas after a maintenance outage contributed to heightened demand for natural gas. However, upside potential was limited by forecasts indicating lower demand over the next two weeks and concerns regarding oversupply in gas storage. Output in the Lower 48 U.S. states experienced a notable decline to an average of 97.2 billion cubic feet per day (bcfd) so far in May, down from 98.2 bcfd in April and significantly lower than the monthly record high of 105.5 bcfd in December 2023. This decline reflects a broader trend of reduced production, down approximately 9% in 2024, as energy firms responded to low prices by delaying well completions and cutting back on drilling activities. Meteorological projections indicate mostly normal weather patterns across the Lower 48 states through May 29, with some warmer-than-normal days expected from May 17-24. Despite this, LSEG forecasts a slight increase in gas demand from 91.5 bcfd this week to 92.6 bcfd next week, indicating continued resilience in demand dynamics. Technically, the natural gas market is witnessing fresh buying momentum, as evidenced by a 2.09% increase in open interest alongside a price appreciation of 1.1 rupees. The commodity finds support at 193.7, with potential downside towards 189.7. Conversely, resistance is anticipated at 201, with a breakthrough possibly leading to further gains towards 204.3. Traders will closely monitor production trends, weather forecasts, and storage levels for further insights into market movements.

Trading Ideas:
*  Naturalgas trading range for the day is 189.7-204.3.
*  Natural gas gains amid an increase in gas flows to LNG export plants
* However upside seen limited  due to lower demand and concerns about a large oversupply in storage.
* Gas output in the Lower 48 U.S. states fell to an average of 97.2 billion cubic feet per day (bcfd) so far in May


Copper
Copper closed marginally higher yesterday, up by 0.08% at 884.2, fueled by ongoing concerns surrounding strong demand and constrained supply. The metal's pivotal role in various industries, particularly in electrification for electric vehicle infrastructure and energy storage, underscores its long-term utility and contributes to bullish forecasts. Despite soaring prices, China increased its copper ore imports, reflecting sustained demand from manufacturers, particularly in light of Beijing's infrastructure plans and issuance of long-maturity bonds. However, the limited availability of material has squeezed margins for Chinese smelters, who contribute significantly to global supply, thereby putting pressure on their output. Expectations of additional mine supply remain subdued, as escalating costs associated with new projects have prompted major miners to prioritize mergers and acquisitions over new ventures, exemplified by BHP's recent bid for Anglo American. Furthermore, copper producers and traders are capitalizing on the price differentials between CME futures and LME, redirecting more metal to the United States where CME copper futures for July have surged above $10,800 per metric ton, substantially higher than the LME price. This trend has led to a significant drop in copper stocks in CME warehouses in the United States, down 30% in the past month, indicative of heightened end-user demand for the industrial metal. From a technical standpoint, the copper market witnessed short covering, with a decline in open interest by -2.35% to settle at 6533, coupled with a modest price increase of 0.7 rupees. Currently, copper finds support at 874.4, with potential downside testing towards 864.7 levels if support is breached, while resistance is anticipated at 892.4. A breakout above resistance could propel prices towards 900.7.
 

Trading Ideas:
* Copper trading range for the day is 864.7-900.7.
* Copper rose as strong demand and tight supply continued to raise concerns of shortages.
* China imported more copper ore inputs despite the sharp increase in prices, underpinning demand from manufacturers.
* The low availability of material hampered margins for smelters in China, responsible for over half of global supply


Zinc
Zinc experienced a slight decline yesterday, settling down by -0.45% at 264, influenced by Swedish mining giant Boliden's decision to resume production at its Tara zinc mine. The reopening of the mine, slated for the fourth quarter of this year with full capacity expected by January 2025, introduced expectations of increased zinc supply to the market. This announcement weighed on zinc prices, reflecting concerns about potential oversupply dynamics. Meanwhile, China's economic indicators provided mixed signals for the zinc market. Although both imports and exports rose in April, signaling a recovery in domestic and foreign demand, data from the International Lead and Zinc Study Group (ILZSG) revealed a widening global zinc market surplus. The surplus expanded to 40,100 metric tons in February, contrasting sharply with the deficit recorded during the same period last year. Additionally, social inventories of zinc ingots in China showed fluctuations, with total inventories across major markets increasing slightly but with notable decreases in specific regions like Shanghai, Tianjin, and Guangdong. On the macroeconomic front, China's current account surplus contracted to USD 39.2 billion in the first quarter of 2024, marking the smallest surplus since experiencing a deficit in the first quarter of 2020. This shift in the current account surplus could signal changing economic dynamics in China, potentially impacting zinc demand and prices. Technically, the zinc market is undergoing long liquidation, characterized by a decline in open interest by -6.08% alongside a decrease in prices by -1.2 rupees. Currently, zinc finds support at 262.7, with a potential downside towards 261.4. Conversely, resistance is anticipated at 265.6, with a potential breakthrough leading to further gains towards 267.2.
 

Trading Ideas:
* Zinc trading range for the day is 261.4-267.2.
* Zinc dropped amid decision by Swedish mining giant Boliden to resume production at its Tara zinc mine.
* The global zinc market surplus widened to 40,100 metric tons in February from 12,300 tons in January.
* Social inventories of zinc ingots across seven major markets in China totalled 212,900 mt, up 1,300 mt


Aluminium
Aluminium saw a modest uptick yesterday, rising by 0.54% to settle at 233.95, driven by short covering activities following a recent drop in prices triggered by a surge in inventories registered by the London Metal Exchange (LME). Data revealed a significant influx of aluminium into LME warehouses, with inventories soaring to their highest level in over 2-1/2 years, more than doubling in less than a week. Commodity trader Trafigura's delivery of 424,000 metric tons of aluminium to LME warehouses last week for financial deals contributed to this surge. Fresh inflows into storage facilities in Port Klang, Malaysia mirrored the location of last week's inventories, suggesting continued activity in rent deals arranged by Trafigura. However, amidst the surge in inventories, the share of available aluminium stocks of Russian origin in LME-approved warehouses decreased slightly, reflecting ongoing shifts in the market dynamics following the LME's ban on Russian aluminium, copper, and nickel from its system. The ban, implemented in April to comply with new U.S. and UK sanctions imposed over Russia's 2022 invasion of Ukraine, aimed to address concerns regarding the dominance of Russian-origin metal in LME inventories. From a technical perspective, aluminium market witnessed short covering, with a decline in open interest by -15.58% to settle at 3082, alongside a price increase of 1.25 rupees. Presently, aluminium finds support at 232.4, with potential downside testing towards 230.6 levels if support is breached, while resistance is anticipated at 235.1. A breakout above resistance could lead to testing 236. Traders will closely monitor inventory levels and geopolitical developments for cues on future price movements.

Trading Ideas:
* Aluminium trading range for the day is 230.6-236.
* Aluminium gains on short covering after prices dropped as LME stocks surge to highest since October 2021
* Aluminium stocks jumped by a further 131,075 tons to 1,033,625, their highest level since October 2021 and a gain of 115% since last week.
* The fresh inflows moved into storage facilities in Port Klang in Malaysia, the same location where last week's inventories arrived.


Cottoncandy
Cottoncandy faced downward pressure yesterday, settling down by -0.95% at 56600, primarily due to concerns surrounding sluggish milling demand amidst muted global demand for yarn. Additionally, prospects of a better crop in countries like Australia added to the bearish sentiment. However, the downside was somewhat mitigated by robust demand for Indian cotton from key importing countries such as Bangladesh and Vietnam. The International Cotton Advisory Committee (ICAC) has projected an increase in cotton-producing areas, production, consumption, and trade for the upcoming season, 2024-25. India, the world's second-largest cotton producer, is expected to witness a significant decline in cotton stocks by nearly 31% in 2023/24, reaching their lowest level in over three decades. This reduction in stockpiles is attributed to lower production and rising domestic consumption. Consequently, lower stock levels are anticipated to constrain exports, supporting global prices while potentially impacting the margins of local textile companies. Looking ahead to the 2024/25 marketing year, India's cotton production is estimated to decrease by two percent, with farmers potentially shifting acreage to higher-return crops. However, mill consumption is projected to rise by two percent, driven by improving yarn and textile demand in major international markets. Moreover, the recent notification of import duty recension on extra-long staple (ELS) cotton is expected to boost imports by 20 percent. In China, cotton imports for the 2024/25 marketing year are forecasted to increase to meet higher domestic and international demand for textile and apparel products. Despite stable planted areas in Xinjiang, China's production is expected to decline due to a shift in planting preferences. Technically, the cotton market witnessed long liquidation, indicated by a drop in open interest by -0.8% alongside a decline in prices by -540 rupees. Currently, Cottoncandy finds support at 56200, with potential downside towards 55800, while resistance is anticipated at 57000.

Trading Ideas:
* Cottoncandy trading range for the day is 55800-57400.
* Cotton dropped as sluggish milling demand is still concerns amid muted demand of yarn in global market.
* Pressure also seen amid prospects of a better crop in countries such as Australia.
* Cotton stocks at the end of 2023/24 marketing year could fall to 2 million bales  - CAI
* In Rajkot, a major spot market, the price ended at 27438.6 Rupees dropped by -0.19 percent.


Turmeric
Turmeric prices experienced a notable decline yesterday, down by -1.89% to settle at 17914, driven by profit booking and an increase in supplies marking the end of the harvesting season. However, the downside was limited as farmers are withholding stocks in anticipation of further price increases. 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 indicates that most parts of India are likely to experience more heat wave days than usual in May, further heightening concerns over crop damage. Despite the supply challenges, turmeric production for 2023-24 is estimated to be lower at 10.74 lakh tonnes compared to 11.30 lakh tonnes in the previous year. Additionally, demand destruction has occurred as prices surged, leading to a hand-to-mouth approach for many consumers. Nevertheless, turmeric-growing regions such as Sangli, Basmat, and Hingoli are witnessing strong demand for quality produce in anticipation of an increase in sowing area this year. In terms of international trade, turmeric exports during Apr-Feb 2024 dropped by 4.42% compared to the previous year, while imports decreased by 15.36% during the same period. However, there was a notable rise in both exports and imports in February 2024 compared to January 2024, indicating fluctuating trade patterns. From a technical standpoint, the market observed long liquidation, with a drop in open interest by -4.4% to settle at 17915, alongside a significant decline in prices by -346 rupees. Presently, turmeric finds support at 17658, with potential downside testing towards 17400 levels if support is breached, while resistance is expected at 18270. A breakthrough above resistance could lead to testing 18624.

Trading Ideas:
* Turmeric trading range for the day is 17400-18624.
* Turmeric prices dropped amid profit booking and as increase in supplies at the end of harvesting season.
* However, downside seen limited as farmers are holding back stocks in anticipation of a further rise.
* 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 17422.85 Rupees dropped by -0.04 percent.


Jeera
Jeera prices saw a marginal uptick yesterday, settling up by 0.05% at 27315, primarily due to a slowdown in arrival pace as stockists and farmers hesitated to release their stocks in anticipation of better price realizations. The arrival of jeera at major APMC mandies across India increased slightly in the first week of May, indicating a steady flow of the commodity into the market. Export demand is expected to rise, supported by prevailing rates, which is likely to further bolster jeera prices. Additionally, robust export demand and aggressive buying by stockists contributed to the supportive sentiment in the market. A significant increase in sowing area in major jeera-producing regions of Gujarat and Rajasthan, coupled with favorable weather conditions, led to a substantial rise in production. Gujarat alone is estimated to have produced a record 4.08 lakh tonnes of cumin, while Rajasthan witnessed a 53% increase in production. This surge in production is expected to lead to a substantial increase in cumin exports, with trade analysts estimating exports to reach about 14-15 thousand tonnes by February 2024. However, despite the optimistic outlook for exports, recent data indicates a decline in jeera exports during Apr-Feb 2024 compared to the same period in the previous year. Jeera exports dropped by 23.75%, with 120,062.66 tonnes exported during Apr-Feb 2024 compared to 157,458.98 tonnes exported during the same period in 2023. The decline continued into February 2024, with a drop of 11.54% compared to January 2024 and 3.49% compared to February 2023. Technically, the jeera market is witnessing fresh buying momentum, with a 3.4% increase in open interest and prices up by 15 rupees. Currently, jeera finds support at 26800, with potential downside towards 26260, while resistance is anticipated at 28100, with a breakthrough potentially leading to further gains towards 28860.

Trading Ideas:
* Jeera trading range for the day is 26260-28860.
* Jeera  prices gained as arrival pace has started slowed down
* Global buyers preferred Indian jeera with tightening global supplies.
* New arrivals have started in Gujarat since last 20-25 days and new arrivals have started in Rajasthan also since last 15 days.
* In Unjha, a major spot market, the price ended at 29427.7 Rupees gained by 0.4 percent.

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