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Gold

Yesterday, gold prices increased by 1.19%, settling at 72,586 per 10 grams, as signs of an economic slowdown in the U.S. bolstered expectations for Federal Reserve interest rate cuts this year. Despite a stable labor market indicated by falling jobless claims, single-family homebuilding dropped by 5.2% in May, pointing towards potential economic cooling. New York Fed President John Williams suggested that interest rates would gradually decrease, though he did not specify a timeline. Market sentiment reflects a 67% probability of a rate cut in September, according to the CME FedWatch Tool. The Federal Reserve is cautiously optimistic about recent inflation data, looking for further signs of cooling and monitoring the strong labor market closely. In terms of gold imports, China saw a 38% decrease via Hong Kong in April, with net imports falling to 34.6 metric tons from 55.8 tons in March. This contrasts with high first-quarter consumption, which rose by 5.94% year-on-year to 308.91 metric tons. In India, gold demand remained low due to the absence of major festivals, resulting in discounts of up to $10 per ounce over official domestic prices. Chinese premiums also decreased, ranging from $18 to $26 per ounce compared to the previous week's $27 to $32. Additionally, China's central bank paused its gold purchases in May after 18 consecutive months of buying. Technically, the gold market is experiencing fresh buying, with a 5.62% increase in open interest to 15,377 contracts as prices rose by 854 rupees. Gold currently has support at 71,980, with a potential test of 71,370 levels if breached. Resistance is anticipated at 73,025, with further gains possibly pushing prices to 73,460.
 

Trading Ideas:
* Gold trading range for the day is 71370-73460.
* Gold prices rose as recent U.S. economic data showing signs of a slowdown in economy
* Fed’s Williams said interest rates will come down gradually over time, but he declined to say when the U.S. central bank can begin easing monetary policy.
* US single-family housing starts fall in May


Silver
Yesterday, silver prices surged by 2.45%, closing at 91,665, driven by weaker-than-expected U.S. economic data which strengthened the likelihood of Federal Reserve interest rate cuts later this year. The number of U.S. unemployment claims slightly decreased to 238,000 in the second week of June, surpassing market expectations and marking the second-highest reading since August 2023. This data reinforces the view that the Fed may cut rates, aligning with actions already taken by the European Central Bank and the Bank of Canada, and anticipated moves by the Swiss National Bank and the Bank of England. Despite these bullish factors, signs of slowing industrial demand for metals, particularly in China, where overcapacity has led to calls for reduced solar panel production, tempered investor sentiment. However, Federal Reserve Bank of Chicago President Austan Goolsbee expressed relief over stable consumer inflation in May, although he emphasized the need for more data before making any decisions on rate cuts. Currently, traders are pricing in a 64% chance of a Fed rate cut in September according to the CME FedWatch Tool. India's silver imports have surged dramatically, with the first four months of the year surpassing the total imports for all of 2023, driven by strong demand from the solar panel industry and investors betting on silver's outperformance compared to gold. Technically, the market is under short covering, indicated by a 15.2% drop in open interest to settle at 17,205 contracts, while prices increased by 2,190 rupees. Silver is currently supported at 90,490, with a potential test of 89,310 if this level is breached. Resistance is anticipated at 92,350, with prices possibly reaching 93,030 if this resistance is overcome.
 

Trading Ideas:
* Silver trading range for the day is 89310-93030.
* Silver climbed as weaker-than-expected US economic data bolstered bets that Fed will cut interest rates twice this year.
* The number of people claiming unemployment benefits in the US eased by 5,000 to 238,000 on the second week of June
* Fed’s Goolsbee said he felt "relief" after data showed consumer inflation in May did not rise from the month earlier.

Crude oil

Yesterday, crude oil prices rose by 0.98%, settling at 6,799 per barrel, driven by a larger-than-expected decline in US crude inventories and heightened geopolitical tensions in the Middle East. US crude stocks dropped by 2.547 million barrels for the week ending June 14, surpassing market expectations of a 2 million barrel decrease. Additionally, gasoline stocks fell by 2.28 million barrels, against the anticipated rise of 1.10 million barrels, and distillate stockpiles, which include diesel and heating oil, decreased by 1.726 million barrels compared to the expected increase of 1 million barrels. However, crude stocks at the Cushing, Oklahoma delivery hub rose by 0.307 million barrels following a previous week's draw of 1.593 million barrels. Geopolitical factors also played a significant role in boosting oil prices. Israeli forces advanced into Rafah in the Gaza Strip, and concerns about a potential "all out war" with Hezbollah in Lebanon were voiced by a senior Israeli official, escalating fears of supply disruptions. The robust demand growth forecasts by major organizations such as OPEC, IEA, and US EIA have further supported oil prices, with strong demand anticipated in the second half of the year. Key OPEC+ members, including Russia and Iraq, have reiterated their commitment to production quotas, and Saudi Arabia has shown readiness to adjust output based on market conditions. Investor sentiment has improved since OPEC+'s surprising announcement to start increasing production from October, buoyed by hopes for stronger future demand. Technically, the crude oil market is witnessing fresh buying, with a 15.51% increase in open interest to settle at 4,908 contracts as prices rose by 66 rupees. Current support for crude oil is at 6,740, with a potential test of 6,680 levels if breached. Resistance is expected at 6,839, with further gains possibly pushing prices to 6,878.
 

Trading Ideas:
* Crudeoil trading range for the day is 6680-6878.
* Crude oil gains due to larger-than-anticipated drop in US crude stocks.
* Escalation of Middle East geopolitical tensions exacerbates oil supply concerns
* US crude inventories fell by 2.547 million barrels, exceeding predicted decrease of 2 million barrels.
 

Natural gas

Yesterday, natural gas prices declined by 4.96%, settling at 229.9. This drop occurred despite forecasts predicting hotter weather and higher demand over the next two weeks. Increased production from power generators, who are burning more gas to meet rising air conditioning usage, contributed to the price decline. The output in the Lower 48 U.S. states increased to an average of 98.2 billion cubic feet per day (bcfd) in June, slightly up from a 25-month low of 98.1 bcfd in May. However, this figure remains below the record high of 105.5 bcfd set in December 2023. EQT, the largest gas producer in the U.S., announced an increase in output earlier in June. Despite this, overall U.S. gas production has decreased by around 8% in 2024, as several energy companies, including EQT and Chesapeake Energy, delayed well completions and reduced drilling activities following price drops in February and March. Weather forecasts indicate that conditions across the Lower 48 states will remain hotter than normal through at least July 5, which is expected to boost gas consumption by power generators. LSEG forecasts that gas demand, including exports, will rise from 97.8 bcfd this week to 103.8 bcfd next week, reflecting the increased need for air conditioning. U.S. utilities added 74 billion cubic feet of gas to storage in the week ending June 7, 2024, slightly below market expectations of 75 billion cubic feet.  Technically, the market is under fresh selling pressure, with open interest increasing by 6.53% to settle at 8,324 contracts while prices fell by 12 rupees. Natural gas is currently supported at 224, with a potential test of 218 if this support is breached. Resistance is anticipated at 240.4, and surpassing this level could see prices testing 250.8.
 

Trading Ideas:
* Naturalgas trading range for the day is 218-250.8.
* Natural gas slid as producers slowly increase output
* That price decline came despite forecasts for hotter weather and higher demand
* U.S. energy company EQT, said earlier in June that it started boosting output.


Copper
Yesterday, copper prices increased by 0.86%, closing at 861.9 per metric ton, driven by expectations of improved demand in China following recent price drops and ongoing supply concerns. However, the upside was limited by a stronger dollar and rising stockpiles. The People's Bank of China (PBOC) reaffirmed its commitment to a supportive monetary policy, with Governor Pan Gongsheng indicating readiness to use various monetary tools, including interest rates and reserve requirement ratios. Despite this, China's decision to keep its key benchmark lending rates unchanged highlights the constraints on Beijing's monetary easing due to narrowing interest rate margins and a weakening currency. Meanwhile, copper inventories in LME-registered warehouses surged to 161,925 tons, the highest level since January 4, following a delivery of 3,450 tons. Conversely, stockpiles in warehouses monitored by the Shanghai Futures Exchange fell by 1.8% to 330,753 tons last week. China's May copper cathode imports rose by 17% year-on-year to 324,530 tons, indicating robust import activity despite weak physical consumption. Additionally, China's refined copper production in May saw a modest increase of 0.6% year-on-year to 1.09 million metric tons. The global refined copper market reported a 125,000 metric tons surplus in March, down from a 191,000 metric tons surplus in February, according to the International Copper Study Group (ICSG). World refined copper output in March was 2.33 million metric tons, while consumption was 2.20 million metric tons.  Technically, the copper market is experiencing short covering, with open interest dropping by 20.66% to 3,214 contracts while prices rose by 7.35 rupees. Copper currently has support at 856, with a potential test of 850.1 levels if breached. Resistance is anticipated at 865.4, with further gains possibly pushing prices to 868.9.
 

Trading Ideas:
* Copper trading range for the day is 850.1-868.9.
* Copper prices edged up on hopes of improved demand in China
* China to stick to supportive monetary policy, PBOC governor says
* LME Copper stockpiles rose to 161,925 tons, their highest level since January 4, after delivery of 3,450 tons


Zinc
Zinc prices closed higher by 0.46% yesterday, settling at 262.05, driven by positive sentiment following China's reaffirmation of its supportive monetary policies. The People's Bank of China stated its commitment to maintaining a accommodative stance and stabilizing the exchange rate, which buoyed market confidence. In China, zinc concentrate imports declined by 24% in the first four months of the year compared to last year, primarily due to a tightening in the raw materials market. Spot treatment charges for imported zinc concentrates plummeted to levels insufficient to cover processing costs for many Chinese smelters, prompting increased reliance on domestic sources for zinc supply. Globally, zinc production has faced challenges, with output declining by 2% in 2022 and another 1% in 2023. The trend continued into 2024, with a further 3% year-on-year decrease in the first quarter, as reported by the Group ILZSG. This reduction in production has been compounded by the restart of idled smelter capacity in Europe, limiting the availability of concentrates in the spot market. LME stocks, which saw a significant rebuild throughout 2023, currently stand at 255,900 tons, up 15% since January 2024. Despite these supply constraints, the global zinc market showed a surplus of 22,100 metric tons in April, down from 70,100 tons in March, according to ILZSG data. However, the surplus for the first four months of the year totaled 182,000 tons, lower than the 282,000 tons recorded in the same period last year. Technically, the zinc market saw short covering, with open interest dropping by 8.48% to settle at 1,371 contracts while prices rose by 1.2 rupees. Currently, zinc is supported at 260.3, with potential downside testing at 258.5. Resistance is expected at 263.5, and a breakthrough could push prices towards 264.9.
 

Trading Ideas:
* Zinc trading range for the day is 258.5-264.9.
* Zinc gains as sentiment was lifted by China's central bank's reinforcement of its easing monetary stance
* The global zinc market surplus fell to 22,100 metric tons in April from 70,100 tons in March.
* In China, zinc concentrate imports decreased by 24% in the first four months of this year compared to the previous year.

 

Aluminium

Yesterday, aluminium prices rose by 0.65% to settle at 232.45 amid optimism surrounding increased demand in China following recent price declines and ongoing supply concerns. China's decision to maintain its key lending rates unchanged reflects constraints in its monetary easing efforts due to narrowing interest rate margins and a weakening currency. Despite this, the People's Bank of China reaffirmed its commitment to a supportive monetary policy stance. Global primary aluminium production in May saw a 3.4% year-on-year increase, reaching 6.1 million tons, according to the International Aluminium Institute. Notably, China's aluminium output surged by 7.2% year-on-year to 3.65 million tons in May, contributing to a 7.1% rise in production for the first five months of the year compared to the same period in 2023. In terms of trade, China's aluminium imports spiked by 61.1% year-on-year in May, totaling 310,000 metric tons, driven by increased shipments from Russia amidst Western sanctions. Russia significantly boosted its aluminium exports to China following bans imposed by the US and UK in April, with imports from Russia increasing by 91.6% year-on-year in the first four months of 2024. The benchmark aluminium contract on the London Metal Exchange hit a nearly two-year high late last month, underscoring bullish market sentiment. Technically, the aluminium market is witnessing short covering, with open interest declining by 18.53% to settle at 1,965 contracts, while prices rose by 1.5 rupees. Currently, aluminium finds support at 231.1, with a potential test of 229.8 levels if breached. Resistance is expected at 233.3, with further gains possibly pushing prices to 234.2.
 

Trading Ideas:
* Aluminium trading range for the day is 229.8-234.2.
* Aluminium gains amid hopes of improved demand in China.
* Global primary aluminium output rose 3.4% year on year to 6.1 million tons in May
* China aluminium production up 7.2 % to 3.65 mln tonnes in May


Cottoncandy
Cottoncandy prices closed higher by 1.46% yesterday, settling at 57,790, driven by increased demand spurred by delays in shipments from major producers like the US and Brazil. This delay has boosted demand for Indian cotton from mills in neighboring countries. Additionally, firm cottonseed prices have contributed to the support of natural fiber prices, despite the onset of sowing for the kharif 2024 season in southern Indian states like Karnataka, Telangana, and Andhra Pradesh, which have started receiving monsoon rains. Looking at global dynamics, the US cotton projections for the 2024/25 season indicate higher beginning and ending stocks compared to the previous month, with production, domestic use, and exports remaining unchanged. The forecasted farm price for new-crop cotton futures has decreased slightly, affecting ending stocks which are now higher at 4.1 million bales. Globally, the 2024/25 cotton balance sheet shows increased beginning stocks, production, and consumption, with world ending stocks projected at 83.5 million bales, up by 480,000 bales from May. Factors contributing to this include higher production in countries like Burma and increased consumption in Vietnam and Burma. In the Indian market, Rajkot, a major spot market, saw cotton prices closing marginally lower at 26,655 Rupees, down by -0.16%. Technically, Cottoncandy is experiencing short covering as open interest dropped by -4.45% to settle at 365 contracts, while prices rose by 830 rupees. Support levels are identified at 57,060, with potential downside testing at 56,340 if support is breached. Resistance is currently expected at 58,240, with a breakthrough potentially pushing prices towards 58,700.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56340-58700.
* Cotton gains amid delay in arrival of shipments from US, Brazil, triggers demand for Indian fibre.
* 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
Turmeric prices experienced a slight decline yesterday, down by -0.57% to settle at 18,196 per ton, primarily driven by profit booking after recent gains. Farmers have been holding back stocks in anticipation of higher prices, although increased supplies towards the end of the harvesting season limited the upside potential. The ongoing heat wave across India poses a threat to crop yields, potentially exacerbating the supply crunch and supporting prices in the near term. The India Meteorological Department's forecast of continued hot weather suggests little relief from the heat wave, with below-normal rainfall further compounding agricultural challenges. Production estimates for turmeric in 2023-24 indicate a decrease to 10.74 lakh tonnes from 11.30 lakh tonnes the previous year, reflecting potential supply constraints amidst adverse weather conditions and farmer behavior. Despite this, there has been some demand destruction as prices surged, with consumers adopting hand-to-mouth purchasing patterns. Turmeric-export dynamics showed a decline in April 2024 compared to the previous month and year, with exports falling by 19.07% and 27.98% respectively. Conversely, imports surged in April 2024, increasing by 192.36% compared to March 2024, and by 570.31% compared to April 2023, potentially balancing domestic market needs. In the spot market, Nizamabad saw turmeric prices closing marginally lower at 18,220.25 Rupees, down by -0.07%. Technically, the turmeric market witnessed long liquidation with a decrease in open interest by -0.4% to settle at 20,965 contracts. Prices declined by -104 rupees. Currently, turmeric finds support at 18,054, with a potential downside target of 17,912 if support levels are breached. Resistance is anticipated at 18,404, and a breakout above this level could push prices towards 18,612.
 

Trading Ideas:
* Turmeric trading range for the day is 17912-18612.
* Turmeric dropped on profit booking after prices gained as farmers are holding back stocks.
* The current heat wave could severely damage the crop yield, further contributing to the supply crunch.
* 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 18220.25 Rupees dropped by -0.07 percent.


Jeera
Jeera prices surged by 1.84% yesterday to settle at 28,765, driven by robust domestic and export demand coupled with tight global supplies. The market sentiment was buoyed by farmers holding back stocks in anticipation of better prices, further supporting the upward price movement. However, the upside potential is seen as limited due to expectations of higher production this season, projected to increase by 30% to 8.5-9 lakh tonnes, primarily driven by substantial acreage expansion in key producing states like Gujarat and Rajasthan. Globally, the surge in cumin production, particularly in China where output has more than doubled, alongside increased production in Syria, Turkey, and Afghanistan, is expected to weigh on prices as new supplies enter the market. Reduced export activity in cumin has also contributed to the price pressures, reflecting shifting dynamics in the global cumin trade landscape. In India, the sowing area for jeera has expanded significantly, with Gujarat witnessing a 104% increase and Rajasthan a 16% rise, setting the stage for record production levels. Gujarat alone is expected to produce a record 4.08 lakh tonnes, highlighting the favorable weather conditions and increased cultivation efforts driving this year's output. From a technical standpoint, the jeera market experienced short covering as open interest dropped by -4.65% to settle at 3,138 contracts, while prices rose by 520 rupees. Support levels are identified at 28,150, with potential downside testing at 27,530 if support is breached. On the upside, resistance is currently expected at 29,290, and a breakout above this level could push prices towards 29,810.
 

Trading Ideas:
* Jeera trading range for the day is 27530-29810.
* Jeera gains amid robust domestic and export demand besides tight global supplies.
* 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 28938 Rupees dropped by -0.33 percent.

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