IGI Logo

Gold

Gold closed higher by 0.51%, settling at 65,178, driven by a weakening US dollar amid concerns over the robustness of the US economic outlook. February's PMI figures raised doubts, and the United States ADP Research Institute reported lower-than-expected private payrolls, with 140,000 jobs added compared to the anticipated 150,000. While this figure exceeded the revised January count of 111,000, the data contributed to the dollar's decline. Federal Reserve Chair Jerome Powell's cautious stance on rate cuts further influenced the market. In his semi-annual monetary policy report to Congress, Powell refrained from specifying a timeline for rate cuts and expressed uncertainty about inflation returning to the target of 2%. Central banks' gold-buying activities also impacted gold prices. The Central Bank of Turkey emerged as the largest buyer, increasing official gold holdings by 12.2 tonnes, contributing to a total of 552 tonnes—just 6% below the all-time high reached in February 2023. The People's Bank of China added 10 tonnes, marking the 15th consecutive month of gold additions, bringing total holdings to 2,245 tonnes. The Reserve Bank of India increased its gold reserves by nearly 9 tonnes, the first monthly increase since October 2023 and the largest since July 2022, bringing total holdings to 812 tonnes. From a technical perspective, gold is experiencing fresh buying interest, evidenced by a 3.34% increase in open interest to settle at 17,041. Support is identified at 64,820, with a potential test of 64,465, while resistance is likely at 65,390, with a breakthrough potentially leading to a test of 65,605.

Trading Ideas:
* Gold trading range for the day is 64465-65605.
* Gold gains as Dollar weakens as February’s PMI figures cast doubts over the strong US economic outlook.
* US ADP Research Institute has reported lower private payrolls in February than market expectations.
* Central banks added 39 tonnes (t) to global gold reserves in January

Silver

Silver posted a gain of 1.04%, settling at 74,138, primarily driven by a weakening US dollar in the wake of lower-than-expected private job gains. The dollar's decline followed the report that US businesses added 140,000 workers in February, slightly below the forecast of 150,000. Fed Chair Powell's remarks in his semiannual Monetary Policy Report emphasized the uncertainty in the economic outlook and the need for caution in adjusting policy restraint. Powell hinted that the fed funds rate might be at its peak for the current tightening cycle and that dialing back policy restraint could occur later in the year, contingent on greater confidence in inflation sustainably moving toward the 2% target. Additional US labor market data showed a decline in job quits to 3.385 million in January, touching the lowest level since January 2021. Job openings decreased to 8.863 million, the lowest in three months, further contributing to the cautious sentiment in the market. Technically, silver is experiencing fresh buying interest, with a 2.25% increase in open interest, settling at 22,437. Support is identified at 73,360, with a potential test of 72,580, while resistance is likely at 74,580, with a breakthrough potentially leading to a test of 75,020. The combination of a weakening dollar, cautious Fed statements, and mixed labor market data contributes to the positive momentum in the silver market. Traders will likely monitor economic indicators and Fed communications for further insights into the precious metal's direction.

Trading Ideas:
* Silver trading range for the day is 72580-75020.
* Silver gains buoyed by a weakening dollar following fewer-than-expected private job gains in US.
* Fed is in no rush to cut rates
* Private businesses in US hired 140K workers in February 2024, following an upwardly revised 111K in January

Crude Oil

Crude oil closed higher by 1.84% at 6600, driven by supply tightness attributed to ongoing output cuts by major producers and signals from the U.S. Federal Reserve chief indicating potential rate cuts later in the year. The Energy Information Administration (EIA) reported a rise in U.S. crude stocks by 1.4 million barrels to 448.5 million barrels in the week ended March 1, contrary to expectations of a 2.1 million-barrel increase. Gasoline and distillate inventories, however, declined during the same period. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) extended their output cuts of 2.2 million barrels per day until the end of the second quarter, contributing to supply tightness, particularly in Asian markets. The disruption in oil tanker movements due to the Red Sea attacks by Houthi militia in Yemen has further tightened supply dynamics. Technically, the market is witnessing fresh buying, with a notable increase in open interest by 5.25% to settle at 4896. Crude oil is currently supported at 6499, and a breach below may lead to a test of 6398. On the upside, resistance is expected at 6686, and a move above could propel prices to test 6772. The market remains sensitive to geopolitical events impacting oil transportation and the ongoing OPEC+ production cuts, making it crucial for traders to monitor developments closely for potential price movements.

Trading Ideas:
* Crudeoil trading range for the day is 6398-6772.
* Crude oil gains on supply tightness amid output cuts from major producers
* Saudi Arabia unexpectedly hiked prices of its main grade for buyers in Asia.
* Fed's Powell says he expects rate cuts later this year

Natural Gas

Natural gas prices saw a moderate increase, settling up by 0.81% at 161.3, driven by a decline in output as several producers scaled back new drilling activities. This price rise occurred despite a decrease in U.S. liquefied natural gas (LNG) and gas pipeline exports, along with forecasts indicating mild weather and reduced heating demand through at least mid-March. The drop in natural gas output in the U.S. Lower 48 states to an average of 100.3 billion cubic feet per day (bcfd) in March, down from 104.1 bcfd in February, highlighted the impact of reduced drilling activities by energy firms. Companies such as Chesapeake Energy, soon to be the largest U.S. gas producer post-merger with Southwestern Energy, have been implementing plans to cut gas drilling this year. Additionally, EQT, the current largest U.S. gas producer, announced curtailing nearly 1 bcfd of production through March, further contributing to the decline in output. Despite the mild weather outlook and reduced heating demand, the decrease in natural gas output due to producers cutting back on drilling activities has supported prices. Technically, the natural gas market witnessed short covering, with a drop in open interest despite the marginal price increase. Natural gas is currently finding support at 157.8, with a potential test of 154.2 levels below. On the upside, resistance is likely at 164.9, with the possibility of prices testing 168.4 if this level is breached.

Trading Ideas:
* Naturalgas trading range for the day is 154.2-168.4.
* Natural gas rose as output continued to decline as several producers cut back on new drilling
* EQT, the biggest U.S. gas producer, plans to cut nearly 1 billion cubic feet of production through March.
* Gas output in the U.S. Lower 48 states fell to 100.3 billion cubic feet per day in March.

Copper

Copper prices experienced a modest increase, settling up by 0.64% at 730.8, driven by a weaker dollar and declining exchange stockpiles. However, concerns persisted regarding the lack of significant policy stimulus from China, the top consumer of copper, which tempered gains. China's exports growth likely slowed in the January-February period, indicating ongoing challenges for manufacturers in attracting overseas buyers. Despite these concerns, copper inventories in LME-registered warehouses continued to decline, reaching a fresh six-month low. This reduction in stockpiles, coupled with bullish sentiments from some funds for the second half of 2024, supported copper prices. Additionally, delays in shipping from Latin America and Africa contributed to withdrawals from LME warehouses in Hamburg, further tightening supply dynamics. The global refined copper market showed a surplus of 20,000 metric tons in December, a significant shift from the deficit recorded in November. However, the market remained in a deficit for the first 12 months of the year, albeit smaller compared to the same period in the previous year. From a technical standpoint, the market witnessed short covering, with a drop in open interest despite the marginal price increase. Copper is currently finding support at 726.8, with potential testing of 722.9 levels below. On the upside, resistance is likely at 733.8, with the possibility of prices testing 736.9 if this level is breached.

Trading Ideas:
* Copper trading range for the day is 722.9-736.9.
* Copper rose as a weaker dollar and declining exchange stockpiles provided support.
* Copper inventories in the LME-registered warehouses continued to slide and reached their fresh six-month low.
* China's exports growth likely slowed in the January-February period, suggesting manufacturers are still struggling

Zinc

Zinc prices displayed a modest increase, settling up by 0.69% at 218.6, with mine supply remaining a significant constraint on zinc production, thereby supporting prices. In China, refined zinc output witnessed a decline in January 2024, attributed to maintenance activities and holiday shutdowns in key smelting regions like Guangxi, Yunnan, Sichuan, Anhui, and Jiangxi. However, new production capacity in Guangxi contributed to some offsetting production increases. Output also rose in Inner Mongolia, Gansu, and Yunnan as production resumed from maintenance. Economic indicators in China present a mixed picture, with the Caixin China General Manufacturing PMI showing improvement in February 2024, surpassing market estimates. However, the official NBS Manufacturing PMI edged down slightly, in line with market forecasts. These indicators suggest a somewhat stable but cautious manufacturing sector in China, a crucial market for zinc demand. On the global front, the zinc market deficit widened in December 2023 compared to November, according to data from the International Lead and Zinc Study Group (ILZSG). However, the full-year 2023 data revealed a surplus, contrasting with the deficit recorded in 2022. From a technical perspective, the market is witnessing short covering, with a drop in open interest despite a marginal increase in prices. Zinc is finding support at 217.3, with potential testing of 216.1 levels below, while resistance is likely at 219.5, with a possible move towards 220.5 if breached.

Trading Ideas:
* Zinc trading range for the day is 216.1-220.5.
* Zinc gains as mine supply remains the key constraint on zinc.
* Bank of America expects zinc prices to average $2,375 in 2024
* China's refined zinc output in January 2024 was 567,000 mt, a month-on-month decrease of 23,900 mt or 4.05%.

Aluminium

Aluminium prices experienced a slight decline, settling down by -0.1% at 201.6, amidst disappointment among traders due to the lack of policy support from China, the top consumer of the metal. The government's announcement of a 5% economic growth target for the year has provided some reassurance, with expectations of a favorable first quarter for the economy. However, concerns linger regarding the troubled property market and its impact on construction-led demand for aluminium. An aluminium smelter in Inner Mongolia has resumed power supply and production, alleviating some supply disruptions. Additionally, stability in power supply in regions like Yunnan has helped maintain production levels. These factors have contributed to a stabilization in aluminium production, both in China and overseas. China's aluminium consumption is projected to grow at a slower rate this year, with a forecasted increase of 1.7% to 48.67 million metric tons. This is a notable slowdown compared to the 7.6% jump witnessed last year, which saw total consumption reach a record high of 47.86 million tons. The growth in 2023 was largely driven by a rebound in construction-led consumption and the rapid expansion of the renewable energy sector, offsetting weaker export-led demand. From a technical standpoint, the market is witnessing fresh selling, with a slight increase in open interest despite a marginal decrease in prices. Aluminium is finding support at 201.2, with potential testing of 200.8 levels below, while resistance is likely at 202.2, with a possible move towards 202.8 if breached.

Trading Ideas:
* Aluminium trading range for the day is 200.8-202.8.
* Aluminium dropped amid lack of policy support from China left traders disappointed.
* China's state planner said that the government's 5% economic growth target this year
* China's aluminium consumption to grow 1.7% in 2024.

Cottoncandy

Cotton prices surging by 1.17% to settle at 62320 amid a combination of global supply shortages and increased demand has been instrumental in driving this upward momentum. Severe cold weather in China has disrupted the crop cycle, while reduced acreage in the US has further compounded the shortage of cotton in the global market. The latest World Agricultural Supply and Demand Estimates (WASDE) report from the USDA indicates a tightening of the US cotton balance sheet for the 2023/24 season, with lower ending stocks and higher exports. This has prompted concerns among textile mills, with the Southern India Mills’ Association (SIMA) advising against panic buying despite rising prices. However, global supply is expected to improve post-July, offering some relief to the market. On the global front, the USDA's February WASDE report forecasts a slight decrease in world cotton production for the 2023/24 season, with reductions in Australia and Benin partly offset by smaller increases elsewhere. Despite this, world cotton ending stocks are expected to decrease due to lower beginning stocks and production. India's cotton exports have surged in February, reaching the highest level in two years, driven by competitive pricing and increased demand from Asian buyers, particularly China, Bangladesh, and Vietnam. From a technical perspective, the market is witnessing short covering, with a drop in open interest by -3.76% while prices continue to rise. Cottoncandy finds support at 61800, with potential testing of 61270 levels below, while resistance is likely at 62660, with a possible move towards 62990 if breached.

Trading Ideas:
* Cottoncandy trading range for the day is 61270-62990.
* Cotton prices rose after severe cold in China has affected the crop
* USDA reported a 69% drop in net sales of 40,000 running bales for 2023/2024.
* World 2023/24 cotton ending stocks are nearly 700,000 bales lower compared to January
* In Rajkot, a major spot market, the price ended at 29027 Rupees dropped by -0.19 percent.

Turmeric

Turmeric prices surged by 1.82% to settle at 17386, supported by reduced supplies in the spot market. However, the upside was limited as buying activities slowed down, with expectations of stocks being released ahead of the commencement of new crops. Despite this, delayed harvesting of the new crop and tighter ending stocks are expected to keep market sentiments positive in the near term. Export activities have witnessed a slowdown in recent months but are anticipated to pick up in anticipation of upcoming festivals. However, pressure on prices is evident due to improved crop conditions resulting from favorable weather conditions. Moreover, concerns among Maharashtra farmers regarding the location of PM Modi's Turmeric Board in Telangana have added to market uncertainties. Expectations of a 20–25% decline in turmeric seeding this year, particularly in areas like Maharashtra, Tamil Nadu, Andhra Pradesh, and Telangana, reflect farmers' shifting priorities. This decline in seeding could potentially impact future supply dynamics and market stability. Turmeric exports during April-December 2023 dropped by 2.27% compared to the same period in 2022. From a technical perspective, the market observed fresh buying, with a gain in open interest by 1.6% while prices rose by 310 rupees. Turmeric finds support at 17036, with potential testing of 16684 levels below, while resistance is likely at 17614, with a possible move towards 17840 if breached.

Trading Ideas:
* Turmeric trading range for the day is 16684-17840.
* Turmeric prices gained supported by reduced supplies in the spot market.
* However, upside seen limited as buying activities has been slower in expectation of new crops.
* Export has been slow down in recent months and expected to increase in wake of series of festivals ahead.
* In Nizamabad, a major spot market, the price ended at 15414.35 Rupees dropped by -0.68 percent.

Jeera

Jeera prices surged by 3.01% to settle at 26200, driven by emerging weather risks in key producing regions of Rajasthan and Gujarat, which could potentially affect yields adversely. However, this upside was limited by the significant increase in jeera acreage, hitting a four-year high in the current rabi season. Farmers responded to record prices from the last marketing season by expanding cultivation area significantly, particularly in Gujarat and Rajasthan, the primary jeera-producing states. In Gujarat alone, jeera cultivation saw a remarkable 160% increase, surpassing the normal acreage. Similarly, Rajasthan witnessed a 25% rise in jeera cultivation. This surge in acreage highlights the strong correlation between market prices and farmers' planting decisions. Anticipation of higher incidence of blight and sucking pest attacks due to climate issues adds to the uncertainties faced by farmers. On the global front, Indian jeera exports witnessed a decline during April-December 2023, dropping by 29.95% compared to the same period in 2022. Despite a rise in December 2023 exports from the previous month, the overall trend remains downward. In the major spot market of Unjha, Jeera prices ended at 27542.1 Rupees, registering a modest gain of 0.64%. From a technical perspective, the market witnessed short covering, with a drop in open interest by -18.67% while prices rose by 765 rupees. Jeera is finding support at 25250, with potential testing of 24310 levels below, while resistance is likely at 26790, with a possible move towards 27390 if breached.

Trading Ideas:
* Jeera trading range for the day is 24310-27390.
* Jeera gained in wake of emerging weather risk in Rajasthan and Gujarat may affect the yield.
* However, upside seen limited as jeera acreage hits a four-year high in the current rabi season.
* Stockists are showing interest in buying on recent downfall in prices triggering short covering.
* In Unjha, a major spot market, the price ended at 27542.1 Rupees gained by 0.64 percent.

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