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Gold

Yesterday, gold prices edged down by 0.08%, closing at 72,216. The decline was influenced by mixed economic data from the United States, which cast doubt on the perceived resilience of the US economy and supported the case for potential interest rate cuts by the Federal Reserve. Revised data indicated that US GDP growth for the first quarter was 1.3%, lower than previously estimated. Similarly, the headline and PCE price indices were adjusted downward. Additionally, initial unemployment claims remained above the yearly average, suggesting a slight weakening in the labor market, the recent economic data has led to increased speculation that the central bank might lower rates as early as September. Supporting this view, pending home sales in the US dropped by 7.70% month-over-month in April, marking the most significant decline since September 2022, and contrasting sharply with March’s 3.60% growth and market expectations of a 0.6% decrease. On the international front, gold imports to China via Hong Kong fell by 38% in April compared to the previous month, totaling 34.6 metric tons, down from 55.8 tons in March. This drop marks a shift from the high consumption levels seen in the first quarter of the year when Chinese buyers consumed 308.91 metric tons, a 5.94% increase from the previous year, according to the China Gold Association. Technically, the gold market is experiencing long liquidation, with open interest dropping by 0.31% to settle at 16,966 contracts, while prices declined by 55 rupees. Gold is currently supported at 71,845, with a potential test of 71,470 levels if this support is breached. On the upside, resistance is expected at 72,495, with further gains possibly pushing prices to test the 72,770 level.
 

Trading Ideas:
* Gold trading range for the day is 71470-72770.
* Gold steadied as a batch of economic data challenged the extent of resilience perceived in the US economy.
* Data showed that the US GDP expanded by 1.3% in the first quarter
* Initial unemployment claims held above this year’s average to back the slight softening in the labor market


silver
Yesterday, silver experienced a decline of -2.12%, settling at 94123, influenced by a stronger dollar and elevated U.S. Treasury yields. Market sentiment was swayed by renewed expectations that the Federal Reserve may delay rate cuts, with Minneapolis Fed President Neel Kashkari emphasizing the need for "many more months of positive inflation data" before considering rate adjustments. A Fed survey revealed ongoing expansion in U.S. economic activity from early April to mid-May, albeit with growing pessimism about the future. The Commerce Department's report showed a downward revision of first-quarter GDP growth for the U.S. to 1.3%, aligning with expectations. Slower consumer spending, lower-than-anticipated PCE prices, and higher-than-forecasted claims contributed to the revision. However, India's silver imports surged in the first four months of the year, surpassing the total for all of 2023. Rising demand from the solar panel industry and investor preference for silver over gold drove this increase. Notably, imports from the United Arab Emirates surged, taking advantage of lower import duties. Technically, silver witnessed long liquidation, with a notable 8.49% drop in open interest to settle at 26705 contracts, accompanied by a price decline of 2039 rupees. Presently, silver finds support at 93215, with a potential test of 92310 if this level is breached. Resistance is anticipated at 95460, with a move above potentially leading to prices testing 96800. Investors will likely monitor economic indicators and Fed commentary for further insights into silver's price trajectory.
 

Trading Ideas:
* Silver trading range for the day is 92310-96800.
* Silver dropped as the dollar traded higher and U.S. Treasury yields remained elevated.
* Fed’s Kashkari needs more positive inflation data before considering interest rate cuts.
* U.S. economic activity expanded from April to May, but firms became pessimistic.


Crudeoil
Crude oil experienced a decline of 2.05% yesterday, settling at 6488, driven by increasing global oil inventories in April amid soft fuel demand. Market sentiment was influenced by expectations of prolonged higher interest rates by the Federal Reserve, exerting pressure on oil prices. Despite ongoing geopolitical tensions, including the conflict in Gaza, downside pressure persisted. However, the downside was somewhat limited after an Israeli official suggested the possibility of the conflict lasting until the end of the year. On the supply side, the EIA Petroleum Status Report revealed a significant decrease in crude oil stocks in the United States by 4.16 million barrels, surpassing market expectations and doubling the consensus decline. Additionally, crude stocks at the Cushing, Oklahoma delivery hub saw a notable decrease, further supporting the bullish sentiment. However, distillate stockpiles, including diesel and heating oil, recorded a substantial increase, significantly above market expectations, indicating potential demand concerns. Looking ahead, rising global oil inventories through April may bolster the case for OPEC+ producers to maintain supply cuts during their upcoming meeting on June 2. OPEC+ delegates suggest that soft fuel demand could strengthen their resolve to uphold production curbs, potentially stabilizing oil prices. From a technical standpoint, the crude oil market witnessed long liquidation, with a drop in open interest by 0.86% to settle at 5661 contracts. Prices fell by 136 rupees. Currently, crude oil is finding support at 6437, with a possible test of 6385 levels if this support is breached. On the upside, resistance is anticipated at 6581, and a move above this level could lead to further testing at 6673.
 

Trading Ideas:
* Crudeoil trading range for the day is 6385-6673.
* Crude oil prices dropped due to rising global oil inventories in April.
* Rising global oil inventories may strengthen the case for OPEC+ producers to maintain supply cuts.
* Oil markets have been under pressure recently over expectation the Federal Reserve will keep interest rates higher for longer.


Naturalgas
Natural gas faced a significant decline of -2.73% yesterday, settling at 217, driven by indications of increased extraction by drillers and concerns over the substantial oversupply still present in storage. Despite forecasts for higher demand in the upcoming week and increased flow to liquefied natural gas export plants, prices faltered in the face of a larger-than-expected storage build. U.S. utilities added 84 billion cubic feet of gas into storage, marking the sharpest build in over a month and exceeding expectations, contributing to the ongoing seasonal increase in storage levels. With gas stocks now totaling 2,795 billion cubic feet, 15% higher than the previous year and 26% above the five-year average, the market is grappling with oversupply concerns. Although gas output in the Lower 48 U.S. states has seen a slight decline in May compared to April, recent weeks have witnessed an uptick, indicating that the recent surge in futures prices has incentivized some drillers to ramp up production. Looking ahead, LSEG forecasts an increase in gas demand in the Lower 48, including exports, from 93.6 bcfd to 95.1 bcfd next week. Despite this, the market remains under pressure, with technical indicators signaling fresh selling pressure. Open interest saw a notable 6.47% increase to settle at 18854 contracts, while prices declined by -6.1 rupees. Currently, natural gas finds support at 213, with a potential test of 209.1 if this level is breached. Resistance is anticipated at 222.4, and a move above could see prices testing 227.9. Traders will closely monitor storage levels, production trends, and demand forecasts for further insights into natural gas price movements.
 

Trading Ideas:
* Naturalgas trading range for the day is 209.1-227.9.
* Natural gas declined due to increased drilling activity and concerns about oversupply in storage.
* US utilities added 84 billion cubic feet of gas into storage, the largest increase in over a month.
* Gas output in Lower 48 U.S. states fell to an average of 97.7 billion cubic feet per day in May.
 

Copper
Copper prices faced a significant decline of 2.92% yesterday, settling at 877.2, primarily driven by higher inventories in China amidst robust output and subdued physical demand. However, recent measures implemented by China to bolster its property sector have buoyed prospects for copper demand. Several major cities, including Shanghai, have reduced minimum downpayment ratios for home buyers and relaxed certain restrictions, providing a potential boost to copper consumption. The International Monetary Fund upgraded its forecast for China's economic growth to 5% for the year, citing a strong first quarter performance, up from an earlier projection of 4.6%. Despite these positive indicators, Shanghai copper stocks have surged by 240% year-on-year, with deliveries flowing into LME warehouses. China's daily refined copper production rate has reached record highs, averaging 38,000 tons in April. Moreover, copper inventories monitored by the Shanghai Futures Exchange have reached four-year highs, currently standing at 290,376 tons, compared to approximately 30,000 tons in January. On the global scale, the International Copper Study Group (ICSG) reported a surplus of 125,000 metric tons in the refined copper market for March, compared to a surplus of 191,000 metric tons in February. Despite this surplus, world refined copper output in March was 2.33 million metric tons, slightly outpacing consumption at 2.20 million metric tons. From a technical perspective, the copper market witnessed fresh selling, with a notable increase in open interest by 11.03% to settle at 6,260 contracts, while prices fell by 26.35 rupees. Copper is currently finding support at 867.1, with a potential test of 856.9 levels if this support is breached. On the upside, resistance is likely at 891.7, and a move above this level could lead to further testing at 906.1.
 

Trading Ideas:
* Copper trading range for the day is 856.9-906.1.
* Copper dropped amid higher inventories in China amid strong output and soft physical demand.
* UBS expects copper prices to reach $11,500/mt by year-end, $12,000/mt or above by mid-2025
* Latest supply-demand estimates point to a roughly 390,000 metric tons (mt) copper deficit for both this year and 2025 - UBS.


Zinc
Zinc experienced a decline of -1.54% yesterday, settling at 271.5, as profit booking ensued following recent price gains. Traders are closely monitoring the demand outlook, particularly in key consumer China, amidst economic data releases and recent stimulus measures. The zinc market faced challenges from China's property crisis, highlighted by a peak in unsold home inventories. However, Chinese authorities responded with a historic support package, including reduced minimum mortgage interest rates, fostering optimism for the commodity's industrial prospects. In April 2024, China's refined zinc output saw a decrease both month-on-month and year-on-year, while domestic zinc alloy production increased. Smelter output declined in April due to routine maintenance and equipment issues, impacting production in various provinces. On the global scale, the zinc market surplus decreased to 52,300 metric tons in March, down from 66,800 tons in February, according to data from the International Lead and Zinc Study Group (ILZSG). Despite this reduction, the surplus for the first three months of the year remained elevated compared to the same period last year. Technically, the zinc market witnessed long liquidation, with a notable 7.41% drop in open interest to settle at 2973 contracts, accompanied by a price decline of -4.25 rupees. Presently, zinc finds support at 269.3, with a potential test of 267.1 if this level is breached. Resistance is anticipated at 273.8, with a move above potentially leading to prices testing 276.1. Traders will continue to monitor economic indicators, especially from China, and technical signals for further insights into zinc's price trajectory.
 

Trading Ideas:
* Zinc trading range for the day is 267.1-276.1.
* Zinc prices dropped on profit booking after prices rose as traders continue to assess the demand outlook.
* The global zinc market surplus fell to 52,300 metric tons in March from 66,800 tons in February – ILZSG.
* China's refined zinc output was 504,600 mt, a month-on-month decrease of 20,900 mt or 3.99%.


Aluminium
Aluminium prices experienced a notable decline of 2.64% yesterday, settling at 243.5, as funds offloaded bullish positions amid concerns that high interest rates are dampening metals demand, particularly in China. These worries were compounded by shortages of alumina, a crucial intermediary product in aluminium production, due to reduced output from China and disruptions to Rio Tinto's Australian exports. Rio Tinto's declaration of force majeure on alumina cargoes from its Australian refineries further raised apprehensions about the supply of this key material from the world’s second-largest producer. Despite these supply concerns, one global aluminium producer demonstrated confidence in the demand outlook by offering Japanese buyers a premium of $175 a metric ton for July-September, marking an 18% to 21% increase on a quarterly basis. Moreover, global primary aluminium output in April saw a 3.3% year-on-year rise to 5.898 million tonnes, according to data from the International Aluminium Institute (IAI). China's imports of unwrought aluminium and products surged by 72.1% year-on-year in April to 380,000 metric tons, bringing imports for the first four months of the year to 1.49 million tons, up 86.6% from the same period last year. Additionally, Russian imports totaled 392,775 tons in the first quarter, a significant 127.7% increase from the previous year, according to data from the General Administration of Customs. From a technical standpoint, the aluminium market witnessed long liquidation, with a drop in open interest by 13.03% to settle at 3,372 contracts, while prices declined by 6.6 rupees. Aluminium is currently finding support at 240.5, with a potential test of 237.3 levels if this support is breached. On the upside, resistance is expected at 248.4, and a move above this level could lead to further testing at 253.1.
 

Trading Ideas:
* Aluminium trading range for the day is 237.3-253.1.
* Aluminium dropped triggered by concerns that high interest rates are curbing metals demand
* A continued inflow of "wider money" into metals, providing further support for aluminium.
* Shortages of alumina, emerged recently because of lower output from China and disruption to Rio Tinto's Australian exports.


Cottoncandy
Cotton candy prices experienced a decline of -1.13% yesterday, settling at 57880, primarily driven by sluggish milling demand amidst muted global demand for yarn. However, the downside was limited as demand for Indian cotton remained robust, particularly from countries like Bangladesh and Vietnam. Additionally, prospects of a better crop in countries such as Australia added pressure on prices. The International Cotton Advisory Committee (ICAC) projected increases in cotton-producing area, production, consumption, and trade for the next season, 2024-25. In India, cotton stocks are expected to decline significantly in 2023/24, reaching their lowest level in more than three decades due to lower production and rising consumption. This decrease in stockpiles is anticipated to support global prices while potentially impacting domestic textile companies' margins. For the marketing year 2024/25, India's cotton production is estimated to decrease by two percent, with mill consumption expected to rise as yarn and textile demand improve in major international markets. Additionally, China's cotton imports are forecasted to increase on higher domestic and international demand for textile and apparel products. Technically, the cotton candy market is under fresh selling pressure, with a 1.77% increase in open interest to settle at 345 contracts while prices declined by -660 rupees. Presently, support for Cottoncandy is observed at 57480, with a potential test of 57090 if this level is breached. Resistance is likely at 58480, and a move above could see prices testing 59090. Traders will closely monitor economic indicators and technical signals for further insights into Cottoncandy's price trajectory.
 

Trading Ideas:
* Cottoncandy trading range for the day is 57090-59090.
* Cotton dropped as sluggish milling demand is still concerns amid muted demand of yarn.
* U.S. ending stocks projected 1.3 million bales above 2023/24 level
* Global supplies in 2024/25 projected to be higher than previous year
* In Rajkot, a major spot market, the price ended at 27314.35 Rupees dropped by -0.12 percent.


Turmeric
Turmeric prices experienced a significant decline of 4.25% yesterday, settling at 17872, attributed to an increase in supplies marking the end of the harvesting season. However, the downside was limited as farmers withheld stocks in anticipation of further price rises. The prevailing heat wave across India poses a threat to crop yields, exacerbating the supply crunch and providing support to prices. The India Meteorological Department's forecast suggests prolonged hot weather conditions across most parts of the country, which could further impact crop output. Additionally, rainfall in southern India was significantly below normal levels in April, further compounding concerns about crop productivity. The Ministry of Agriculture and Farmers’ Welfare’s first advance estimate indicates a decline in turmeric production for 2023-24 to 10.74 lakh tonnes compared to 11.30 lakh tonnes the previous year. Furthermore, demand destruction has been observed due to surging prices, leading to many adopting a hand-to-mouth approach. Despite the domestic dynamics, turmeric exports during Apr-Mar 2024 dropped by 4.75% compared to the previous year, while imports declined by 12.71% during the same period. However, in March 2024, both exports and imports exhibited contrasting trends, with exports rising by 34.90% compared to February 2024, while imports decreased by 24.67%. In the major spot market of Nizamabad, turmeric prices ended higher at 18203.75 Rupees, gaining 0.35%. Technically, the turmeric market witnessed long liquidation, with a drop in open interest by 4.71% to settle at 13540 contracts, while prices plummeted by 794 rupees. Turmeric is currently finding support at 17332, with a potential test of 16790 levels if this support is breached. On the upside, resistance is likely at 18632, with further gains possibly leading to testing at 19390.
 

Trading Ideas:
* Turmeric trading range for the day is 16790-19390.
* Turmeric dropped amid increase in supplies at the end of harvesting season.
* 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 18203.75 Rupees gained by 0.35 percent.


Jeera
Jeera, or cumin, witnessed a decline of -0.61% yesterday, settling at 28475, primarily driven by news of significant increases in global jeera production, particularly in China. The surge in China's cumin output, doubling from previous levels, alongside increased production in Syria, Turkey, and Afghanistan, signals a shift in the global market dynamics. This influx of new supplies is expected to exert downward pressure on jeera prices in the coming period. The surge in production is attributed to various factors, including favorable prices in the prior season, incentivizing farmers to increase cultivation areas. In India, major jeera-producing states like Gujarat and Rajasthan have witnessed substantial increases in sowing areas, leading to record-high production levels. The bumper crop forecasts for the current season further contribute to the bearish sentiment in the jeera market. Despite the increase in production, export trade in jeera has seen a decline, with exports dropping by 13.53% in Apr-Mar 2024 compared to the previous year. This decline is attributed to volatile domestic prices and reduced international demand. However, there is optimism for a rebound in exports, driven by increased production and declining international prices. Technically, the jeera market is under long liquidation, with a drop in open interest by -6.95% and prices down by -175 rupees. Presently, jeera finds support at 28240, with a potential test of 28010 if this level is breached. Resistance is likely at 28840, and a move above could see prices testing 29210. Traders will closely monitor global production trends, export dynamics, and technical signals for further insights into jeera's price trajectory in the foreseeable future.
 

Trading Ideas:
* Jeera trading range for the day is 28010-29210.
* Jeera prices dropped on the news that jeera production has seen significant increases globally.
* 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 28752.85 Rupees gained by 0.4 percent.

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