IGI Logo

Gold

Gold surged by 1.77% to settle at 71,375, driven by growing optimism about a potential U.S. rate cut in September. However, expectations for aggressive easing by the Federal Reserve have been moderated, as recent solid economic data has tempered the market's expectations. Notably, St. Louis Fed President Alberto Musalem and Atlanta Fed President Raphael Bostic, who were previously cautious about lowering borrowing costs too quickly, are now leaning toward supporting a rate cut next month. This shift has fueled bullish sentiment in the gold market. In China, several banks received new gold import quotas from the central bank in August, signaling an anticipated revival in demand despite the high prices. This comes after a two-month pause in new quotas due to sluggish physical demand amidst a bullish market. The People's Bank of China (PBOC) also refrained from adding to its gold reserves for the third consecutive month in July, maintaining its holdings at 72.8 million fine troy ounces. In India, gold dealers had to offer discounts of up to $3 an ounce due to the recent price increase, which dampened retail purchases. This was a significant change from the previous week, where a premium of $9 was offered. Similar trends were observed in other key Asian markets, with discounts offered in China, Singapore, and Japan. From a technical perspective, the gold market is experiencing fresh buying interest, with open interest rising by 6.47% to 18,072. Gold is currently finding support at 70,615, with a potential decline testing 69,850 levels if this support is breached. On the upside, resistance is expected at 71,810, and a move above this level could push prices towards 72,240.
 

Trading Ideas:
* Gold trading range for the day is 69850-72240.
* Gold gains on growing optimism about a September U.S. rate cut
* More Fed officials line up behind September rate cut
* Several Chinese banks have been given new gold import quotas from the central bank


Silver
Silver prices surged by 3.94% to settle at Rs.83,213, driven by strong demand for safe-haven assets as geopolitical tensions and economic uncertainties influenced market sentiment. The ongoing conflict between Israel and Hamas, coupled with warnings from White House officials about potential retaliatory strikes from Iran, has heightened the appeal of precious metals like silver. Additionally, concerns over the escalation of the Ukraine-Russia conflict have further bolstered the demand for safe-haven assets. On the economic front, the U.S. housing market showed signs of strain, with housing starts and building permits falling to four-year lows in July. This indicates that the Federal Reserve's restrictive monetary policies may be having a more significant impact on the housing supply outlook. Despite this, markets remain broadly in consensus on the likelihood of a 100bps rate cut by the Fed across its three remaining decisions this year, though stronger-than-expected retail sales data has led some investors to reduce bets on a more aggressive 50bps cut next month. In the global silver market, Australian miner Perth Mint reported a significant 91% surge in silver product sales in July, reaching 939,473 ounces—the highest level since February. The bulk of these sales were shipped to the U.S., which remains the firm's largest market. Technically, the silver market is under short covering, with open interest dropping by 18.29% to settle at 24,825 contracts, while prices rose by Rs.3,152. Silver is currently supported at Rs.82,010, with a potential test of Rs.80,815 on further downside. On the upside, resistance is expected at Rs.83,890, and a move above this level could see prices testing Rs.84,575.
 

Trading Ideas:
* Silver trading range for the day is 80815-84575.
* Silver rose amid strong demand for safe-haven assets as markets continued to assess the policy Fed’s outlook.
* White House warned of a possible retaliatory strike from Iran in Iran.
* Concerns of escalation in Ukraine and Russia were raised.


Crudeoil
Crude oil prices fell by -0.8% to settle at 6,435, as disappointing economic data from China overshadowed geopolitical risks. China's Premier Li Qiang emphasized the need for significant efforts to boost the economy, with a focus on stimulating consumption, following data that revealed a loss of momentum in July. The data showed that new home prices in China fell at the fastest rate in nine years, industrial output slowed, and unemployment rose. Additionally, Chinese refineries significantly reduced crude processing rates last month due to weak fuel demand, further weighing on the oil market. Geopolitical developments provided some relief as maintenance on the pipeline linking Libya's Waha oilfield to the Es-Sider port was completed, with oil production expected to return to normal levels. However, this positive news was tempered by OPEC's decision to trim its demand outlook for the year, citing weaker expectations for China. The International Energy Agency (IEA) maintained its global oil demand growth forecast for 2024 but lowered its estimate for 2025, pointing to the impact of reduced Chinese consumption. In the United States, crude oil inventories unexpectedly rose by 1.357 million barrels for the week ending August 9, 2024, breaking a six-week streak of declines and defying market expectations of a 2 million barrel decrease. Meanwhile, stocks at the Cushing, Oklahoma delivery hub dropped sharply by 1.665 million barrels, and gasoline inventories saw a significant decline of 2.894 million barrels. From a technical perspective, crude oil is under long liquidation, with open interest dropping by 17.7% to 3,756. The market is currently finding support at 6,339, with a potential decline to 6,243 if this support level is breached. On the upside, resistance is expected at 6,542, and a move above this level could see prices testing 6,649.
 

Trading Ideas:
* Crudeoil trading range for the day is 6243-6649.
* Crude oil dropped after a string of dismal indicators for July from China overshadowed geopolitical risks.
* Chinese refineries also sharply lowered crude processing rates last month on tepid fuel demand.
* Commerzbank expects Brent oil price of $85 and WTI price of $80 per barrel by end 2024


Naturalgas
Natural gas prices fell sharply by -4.17% to settle at Rs.179.2, pressured by forecasts for milder weather and concerns about oversupply in storage, despite a surprise draw in U.S. inventories this week. The financial firm LSEG revised its estimate of cooling degree days (CDDs) over the next two weeks to 223, slightly down from the previous estimate of 227 CDDs, but still above the seasonal norm of 186 CDDs. This adjustment indicates expectations of reduced cooling demand, which could dampen natural gas consumption. LSEG also forecasted that average gas demand in the Lower 48 U.S. states, including exports, would rise slightly from 104.4 billion cubic feet per day (bcfd) this week to 106.5 bcfd next week. Meanwhile, natural gas output in the Lower 48 states has decreased to an average of 102.4 bcfd so far in August, down from 103.4 bcfd in July, and below the record high of 105.5 bcfd set in December 2023. Globally, the mixed performance of Dutch and British gas wholesale prices reflects strong storage inventories, which have alleviated concerns about potential supply disruptions due to geopolitical tensions in Russia, Ukraine, and the Middle East. The U.S. EIA projected a larger-than-expected decline in natural gas production this year, with output averaging around 103.3 bcfd, slightly down from previous estimates. Technically, the natural gas market is under fresh selling pressure, with a 17.92% increase in open interest to 39,738 contracts, while prices dropped by Rs.7.8. Natural gas is currently supported at Rs.176.1, with a potential test of Rs.173 on further downside. Resistance is now likely at Rs.184.4, and a move above this level could see prices testing Rs.189.6.
 

Trading Ideas:
* Naturalgas trading range for the day is 173-189.6.
* Natural gas dropped on forecasts for less hot weather and oversupply of gas in storage
* The U.S. Energy Information Administration said utilities drew 6 billion cubic feet (bcf) of gas from inventories
* LSEG forecast average gas demand to rise from 104.4 bcfd this week to 106.5 bcfd next week.


Copper
Copper prices surged by 2.08% to settle at 801.45, driven by concerns over potential supply disruptions as a strike at BHP’s Escondida copper mine in Chile, which accounts for more than 5% of global copper supply, threatened to create a significant deficit in the market. Other copper mines in Chile also face unresolved wage negotiations, adding to the supply concerns and keeping the market on edge. On the demand side, better-than-expected U.S. economic data alleviated fears of an imminent recession, supporting copper prices. Market participants are still betting that the Federal Reserve will begin cutting interest rates in September, as inflation pressures ease. However, signs of weak demand from China, the world’s largest copper consumer, continued to weigh on sentiment. China's industrial production grew less than anticipated in July, and the latest manufacturing PMI reports indicated deteriorating operating conditions, further clouding the demand outlook. Copper inventories monitored by the Shanghai Futures Exchange fell by 8.4% from last Friday, reflecting tighter supply. Meanwhile, China's refined copper production in July increased by 7% year-over-year, reaching 1.1 million metric tons, according to the National Bureau of Statistics. Despite the higher production, China's unwrought copper imports decreased by 2.9% in July compared to the previous year, underscoring subdued demand. Technically, the copper market is experiencing short covering, with open interest dropping by 13.13% to 11,364. Copper prices are currently supported at 795.7, with a potential decline testing 789.7 levels if this support is breached. On the upside, resistance is expected at 805.3, and a move above this level could see prices testing 808.9.
 

Trading Ideas:
* Copper trading range for the day is 789.7-808.9.
* Copper rose as a strike in BHP’s Escondida copper mine in Chile threatened to disrupt more than 5% of global supply.
* Other copper mines in Chile have also yet to finalize wage negotiations, raising risks of a supply deficit.
* Data showed that China’s industrial production rose less than anticipated in July.


Zinc
Zinc prices rose by 1.98% to settle at Rs.262.25, supported by a sharp decline in inventories and expectations of higher energy costs, which significantly impact zinc production expenses. Inventories in warehouses monitored by the Shanghai Futures Exchange dropped by 9.3% from last Friday, adding upward pressure to prices. Additionally, inflation data indicating that China is moving away from deflation contributed to a more positive sentiment in the broader equities and commodities markets. In the U.S., the labor market showed signs of slowing, with job growth falling more than expected in July and the unemployment rate increasing to 4.3%. This has heightened concerns about the potential vulnerability of the U.S. economy to a recession, which, combined with weak manufacturing activity in China, triggered a global selloff in risk assets. However, the weak job report has also fueled expectations of deeper interest rate cuts by the U.S. Federal Reserve, starting as early as September. On the supply side, MMG Ltd's decision to halt operations at its Dugald River zinc mine in Australia for two months due to repair work is expected to exacerbate the tightness in the zinc concentrates market. Additionally, China's refined zinc production in July was down 10.3% month-on-month and 11.15% year-on-year, further supporting prices. Technically, the zinc market saw fresh buying, with open interest increasing by 6.7% to settle at 1,799 contracts while prices rose by Rs.5.1. Zinc currently finds support at Rs.259.1, with a potential test of Rs.256 on further downside. On the upside, resistance is expected at Rs.264.3, and a move above this level could see prices testing Rs.266.4.
 

Trading Ideas:
* Zinc trading range for the day is 256-266.4.
* Zinc gains as Shanghai warehouse zinc stocks down 9.3%
* Support also seen as buying was triggered by expectations of higher energy costs
* MMG Ltd has halted operations at a mill at its Dugald River zinc mine in Australia for about two months of repair work.



Aluminium
Aluminium prices rose by 1.25% to settle at 219.05, buoyed by encouraging U.S. economic data that eased fears of an imminent recession in the world's largest economy. Positive retail sales and jobs data in the U.S. helped stabilize base metal prices, which had been under pressure in the previous weeks due to recession concerns. In Japan, aluminium stocks at three major ports decreased by 5.7% to 299,600 metric tons at the end of July, indicating tighter supply. Additionally, the share of Russian-origin aluminium in LME warehouses increased to 65% in July from 50% in June, while the share of Indian-origin aluminium fell to 33% from 40%. This shift highlights changing dynamics in global aluminium supply chains, with on-warrant aluminium stocks in LME-registered warehouses falling by 23% in July, primarily driven by a significant outflow of Indian metal. China, the world's largest aluminium producer, saw its July aluminium output rise by 6% year-on-year to 3.68 million metric tons, marking the highest monthly output since 2002. This increase was driven by new projects coming online in Inner Mongolia and strong production in other major regions, supported by a still-profitable market. Globally, primary aluminium output in June rose by 3.2% year-on-year to 5.94 million metric tons, with China leading the growth. From a technical perspective, the aluminium market is experiencing short covering, with open interest decreasing by 3.2% to 3,573. Aluminium prices are currently supported at 217.2, with a potential decline to 215.3 levels if this support is breached. On the upside, resistance is expected at 220.7, and a move above this level could see prices testing 222.3.
 

Trading Ideas:
* Aluminium trading range for the day is 215.3-222.3.
* Aluminium gains amid encouraging U.S. data that allayed fears of an imminent recession in the economy.
* China July aluminium output rises to highest monthly total in over 20 yrs
* Positive U.S. retail sales and jobs data eased worries about a potential recession in the country.


Cottoncandy
Cotton candy prices declined by -0.53% to settle at 56,830 due to profit booking after a recent rally, which was driven by concerns over reduced acreage in the current kharif cropping season. The Cotton Association of India (CAI) reported that cotton acreage has decreased by around 9% to 110.49 lakh hectares compared to 121.24 lakh hectares during the same period last year. The total acreage is expected to be around 113 lakh hectares this year, down from 127 lakh hectares in the previous year. This shift in acreage is attributed to cotton farmers moving to other crops due to lower yields and high production costs. CAI President Atul Ganatra highlighted that the cotton balance sheet for the next year’s opening stocks will be tight, primarily due to increased exports to Bangladesh. Cotton exports from India have risen unexpectedly from 15 lakh bales to 28 lakh bales, driven by strong demand from Bangladesh. India's cotton production and consumption are both estimated at around 325 lakh bales for 2023-24, with exports at 28 lakh bales and imports at 13 lakh bales, leaving a gap that will reduce last year’s stock. Global cotton production has also been revised downward by 2.6 million bales, mainly due to lower area and production in the United States and India. World ending stocks are projected to decrease by 5 million bales from July to 77.6 million bales. Technically, the cotton candy market is experiencing long liquidation, with open interest remaining unchanged. Prices are currently supported at 56,810, with a potential test of 56,780 levels if this support is breached. On the upside, resistance is expected at 56,860, and a move above this level could see prices testing 56,880.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56780-56880.
* Cotton dropped on profit booking after prices gained as Cotton acreage trails by 9% at 110 lh
* CAI predicts acreage to be around 113 lh this year, up from 127 lh in the previous year.
* Global cotton production cut by 2.6 million bales; lower in US, India.
* In the global 2024/25 cotton balance sheet, beginning stocks, production and consumption are increased.


Turmeric
Turmeric prices rose by 0.99% to settle at Rs.16,072, driven by short covering after recent declines due to limited demand. Buyers have been reluctant to make purchases, resulting in subdued market activity. Export opportunities for turmeric are also expected to face challenges due to potential volatility in Bangladesh, further complicating the demand outlook. Last week saw an increase in arrivals as stockists offloaded their holdings in anticipation of a possible price cut due to the current low demand. Additionally, the dry weather in Indonesia has accelerated harvesting, with many farmers selling their turmeric in the wet stage, leading to reduced production. Despite these pressures, the downside in prices remains limited as farmers are holding back stocks, anticipating a potential price rise. Turmeric sowing has significantly increased in key regions such as Erode, Maharashtra, Telangana, and Andhra Pradesh, with estimates suggesting a 30-35% increase compared to last year. Nationwide, turmeric sowing is expected to rise from 3-3.25 lakh hectares last year to 3.75-4 lakh hectares this year. However, even with increased sowing, the upcoming crop may still be insufficient to meet consumption needs in 2025, given the low carryover stocks from 2023. On the export front, turmeric exports during April-May 2024 dropped by 20.03% compared to the same period last year, while imports surged by 417.74%, indicating a shift in market dynamics. Technically, the turmeric market is experiencing short covering, with open interest dropping by 1.05% to settle at 15,832 contracts. Support is currently at Rs.15,776, with a potential test of Rs.15,480 on further downside. Resistance is expected at Rs.16,304, and a move above this level could see prices testing Rs.16,536.
 

Trading Ideas:
* Turmeric trading range for the day is 15480-16536.
* Turmeric gains  on short covering  after prices dropped as demand remains limited, as buyers are reluctant to make purchases.
* Pressure also seen amid news of increased sowing.
* In Indonesia, dry weather has accelerated harvesting, which is currently at peak levels.
* In Nizamabad, a major spot market, the price ended at 16082.15 Rupees gained by 0.79 percent.


Jeera
Jeera prices declined by -0.79% to settle at 25,145, primarily due to expectations of higher production, which could weigh on prices in the coming months. The market sentiment was also impacted by robust domestic and export demand, coupled with tight global supplies, which limited the downside. This season, jeera production in India is projected to be 30% higher, ranging between 8.5-9 lakh tonnes, driven by a substantial increase in the cultivation area. The sowing area in Gujarat surged by 104%, while Rajasthan saw a 16% increase. Gujarat's total jeera production is estimated at a record 4.08 lakh tonnes, significantly higher than the previous year's 2.15 lakh tonnes. Rajasthan also witnessed a 53% increase in production, contributing to the overall growth in India's cumin output. Globally, cumin production has seen significant increases, with China's output soaring to over 55-60 thousand tons, up from the previous 28-30 thousand tons. Other major producers like Syria, Turkey, and Afghanistan have also ramped up production due to high prices in the prior season. As these new supplies enter the market, cumin prices are expected to decline. Technically, the jeera market is under long liquidation, with open interest dropping by 3.04% to 24,920. Prices are currently supported at 24,880, with a potential decline to 24,620 levels if this support is breached. On the upside, resistance is expected at 25,440, and a move above this level could see prices testing 25,740. The market's focus remains on production trends and export demand, which will likely drive future price movements.
 

Trading Ideas:
* Jeera trading range for the day is 24620-25740.
* Jeera prices dropped as the expectation of higher production 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 25991.05 Rupees dropped by -0.05 percent.

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