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Gold

Yesterday, gold prices increased by 0.24%, settling at 72180, as investors remained cautious ahead of the key US PCE inflation report, which could provide further insight into the Federal Reserve's policy direction. Minneapolis Federal Reserve President Neel Kashkari emphasized that the Fed should refrain from cutting interest rates until substantial progress is made on inflation. This sentiment is consistent with recent FOMC member statements and the minutes from the latest policy-setting meeting, which highlighted maintaining the benchmark policy rate at its current level, with potential for further hikes if inflation persists. Traders are currently pricing in a 64% chance of a rate cut by November, according to the CME FedWatch Tool, but many believe the first cut will occur only in December. The Fed's decision to hold the federal funds rate at 5.25%-5.50% in May was driven by ongoing high inflation and robust economic growth. On the global front, gold imports to China via Hong Kong fell by 38% in April compared to the previous month, with net imports totaling 34.6 metric tons, down from 55.8 tons in March. This decline follows a strong first quarter, where China's gold consumption rose by 5.94% year-on-year, with 308.91 metric tons consumed, according to the China Gold Association. Technically, the gold market is experiencing short covering, with open interest dropping by 30.79% to settle at 4132, while prices rose by 171 rupees. Currently, gold has support at 71835, with a potential test of 71490 if this level is breached. On the upside, resistance is expected at 72450, and a move above this could see prices testing 72720.

Trading Ideas:
# Gold trading range for the day is 71490-72720.
# Gold steadied as investors remained cautious ahead of US PCE inflation report.
# Fed wants "many months" of positive inflation before cut
# U.S. PCE data, the Fed's inflation gauge, due on Friday


Silver
Yesterday, silver prices rose by 0.89%, settling at 95448, driven by a favorable macroeconomic environment and increased physical demand for industrial uses. The robust economic growth and persistent inflation in the US have delayed expectations for monetary easing by the Federal Reserve. Despite this, markets anticipate multiple rate cuts by the Fed this year. Alongside imminent rate cut expectations from the ECB, BoE, and PBoC, the lower opportunity costs of holding bullion and growing central bank interest in precious metals have contributed to silver's near 40% surge in the second quarter. The demand for silver has been bolstered by the increased need for solar panels amid volatile global power prices, reflected in solar equities trading at a year-to-date high. This industrial demand for silver underscores its critical role in renewable energy technologies. Federal Reserve policy statements, according to Cleveland Fed President Loretta Mester, should include more detailed assessments of economic developments, their influence on the central bank's outlook, and the associated risks. Federal Reserve Governor Michelle Bowman suggested a more moderate approach to tapering the U.S. central bank's balance sheet than what was announced earlier. Additionally, a recent survey by the European Central Bank revealed that Eurozone consumers have lowered their inflation expectations, which may influence future monetary policies. Technically, the silver market is under fresh buying pressure, with open interest increasing by 3.15% to settle at 28115, while prices rose by 840 rupees. Silver currently has support at 93780, with a potential test of 92105 if this level is breached. On the upside, resistance is expected at 96675, and a move above this level could see prices testing 97895.

Trading Ideas:
# Silver trading range for the day is 92105-97895.
# Silver prices surged due to favorable macroeconomic conditions and industrial purchasing for precious metals
# Markets anticipate multiple rate cuts by the US central bank this year.
# Demand for solar panels amid volatile power prices boosted industrial demand for silver.


Crudeoil
Crude oil prices surged by 1.37% to settle at 6637 yesterday, buoyed by expectations of OPEC+ maintaining oil supply curbs at its upcoming June 2 meeting and optimism surrounding robust U.S. summer fuel demand. Despite concerns about higher U.S. interest rates, which could potentially dampen economic growth and energy demand, the market found support from the repair of a Sudan oil pipeline damaged during February's fighting, with operations expected to resume within the next two weeks. In the U.S., gasoline demand hit its highest level since November, according to the Energy Information Administration (EIA), a positive sign as U.S. drivers account for a significant portion of global oil demand. However, the stronger U.S. Purchasing Managers' Index (PMI) data tempered expectations for Federal Reserve interest rate cuts, reflecting a more bullish outlook for the economy. Furthermore, U.S. weekly imports of crude oil from Mexico dropped to a record low of 184,000 barrels per day last week, indicating supply constraints from Mexico's state energy company. Meanwhile, U.S. crude inventories saw a surprise increase of 1.8 million barrels to 458.8 million barrels, contrary to expectations of a drawdown. Inventories at the Cushing, Oklahoma delivery hub also rose by 1.3 million barrels. Technically, the crude oil market is witnessing fresh buying momentum, with open interest increasing by 3.14% to settle at 6532 contracts. Prices surged by 90 rupees, indicating bullish sentiment. Currently, crude oil finds support at 6572, with the potential to test 6507 if it falls below this level. On the upside, resistance is likely at 6676, with a move above this level potentially testing 6715.

Trading Ideas:
# Crudeoil trading range for the day is 6507-6715.
# Crude oil gains as the prospect of OPEC+ maintaining oil supply curbs
# Summer fuel demand hopes support prices
# Higher-for-longer US interest rates seen limiting gains


Naturalgas
Natural gas prices edged up by 0.21% yesterday, closing at 235.2, driven by forecasts indicating higher demand over the next two weeks and increased flow to liquefied natural gas (LNG) export plants. Despite signs of increased drilling activity and a significant oversupply in storage, prices rose, highlighting the market's sensitivity to demand projections and supply dynamics. Gas output in the Lower 48 U.S. states slightly declined to 97.5 billion cubic feet per day (bcfd) in May from 98.2 bcfd in April, although still below the monthly record of 105.5 bcfd in December 2023. Daily output, however, saw a modest increase since hitting a 15-week low in early May, indicating some response from drillers to the recent surge in futures prices. Despite this uptick, overall U.S. gas production remained around 8% lower in 2024 compared to the previous year, as energy firms adapted to low prices earlier in the year by delaying completions and reducing drilling activities. Meteorological projections suggest warmer-than-normal weather across the Lower 48 states, contributing to the forecasted increase in gas demand. LSEG anticipates gas demand to remain around 92.7 bcfd over the next two weeks before slightly easing to 92.2 bcfd thereafter, with next week's forecast slightly higher than previously expected. From a technical perspective, the natural gas market is experiencing fresh buying pressure, with open interest increasing by 14.63% to settle at 15438, while prices rose by 0.5 rupees. Currently, natural gas finds support at 230.1, with a potential test of 225.1 if this level is breached. On the upside, resistance is expected at 238.1, and a move above this level could see prices testing 241.1.

Trading Ideas:
# Naturalgas trading range for the day is 225.1-241.1.
# Natural gas prices rose due to forecasts for increased demand and more gas flowing to LNG export plants
# However, gains were limited amid signs of increased gas production from some drillers and oversupply in storage
# Daily output increased by about 1.5 billion cubic feet per day since a 15-week low of 96.2 billion on May 1.



Copper
Copper prices saw a notable rise of 0.87% yesterday, settling at 907.45, driven by expectations of global interest rate cuts and a weaker dollar. The dollar's decline, coupled with a slight improvement in risk appetite, contributed to the positive sentiment in the copper market. Investors are closely monitoring major economies' inflation data this week, which will provide insights into the global interest rate outlook. In Europe, policymakers at the European Central Bank indicated that there is room to cut interest rates amid slowing inflation, although any policy easing would require careful consideration and timing. However, despite these potential rate cuts, concerns persist over the surplus in the global copper market. Shanghai copper stocks have surged by 240% year-on-year, while deliveries into LME warehouses continue. Additionally, China's daily refined copper production rate is at record levels, contributing to elevated inventory levels. Copper inventories in both Shanghai Futures Exchange and LME warehouses are near multi-year highs, indicating ample supply in the market. According to the International Copper Study Group (ICSG), the global refined copper market showed a surplus of 125,000 metric tons in March, a decrease from February's surplus of 191,000 metric tons. However, even with adjustments for changes in inventory in Chinese bonded warehouses, there remains a surplus in the market. Technically, the copper market is experiencing short covering, as evidenced by a drop in open interest by -1.02% to settle at 5410 contracts, despite prices increasing by 7.85 rupees. Currently, copper finds support at 900.5, with the potential to test 893.4 if it falls below this level. On the upside, resistance is likely at 913.2, with a move above potentially testing 918.8.

Trading Ideas:
# Copper trading range for the day is 893.4-918.8.
# Copper rose on prospects of global interest rate cuts and a weaker dollar.
# Shanghai copper stocks rose by 240% year-on-year, with deliveries into LME warehouses.
# Copper stocks in warehouses monitored by the Shanghai Futures Exchange are near four-year highs.


Zinc
Zinc prices climbed by 1.06% yesterday, reaching 276.65, buoyed by a reduction in the global zinc market surplus as reported by the International Lead and Zinc Study Group (ILZSG). The surplus fell to 52,300 metric tons in March from 66,800 tons in February, reflecting a tightening supply-demand balance. Despite this improvement, the surplus for the first three months of the year stood at 144,000 tons, lower than the surplus recorded in the same period last year. In April 2024, China's refined zinc output declined by 3.99% month-on-month to 504,600 metric tons, with a year-on-year decrease of 6.56%. However, the cumulative output for the first four months remained relatively stable, aligning with expectations. Domestic zinc alloy production saw a slight increase in April, reaching 95,500 metric tons, attributed to a rise in output from smelters. However, domestic smelter output saw a decline due to routine maintenance in several regions, including Xinjiang, Yunnan, and Gansu, as well as equipment and raw material issues in Henan, Shaanxi, Yunnan, and Hunan. These factors contributed to a decrease in overall output. On the economic front, China's retail sales rose by 2.3% year-on-year in April 2024, below market forecasts and moderating from the previous period. From a technical perspective, the zinc market is experiencing fresh buying pressure, with open interest rising by 7.37% to settle at 3396, while prices increased by 2.9 rupees. Currently, zinc finds support at 274.8, with potential downside to 272.9 if this level is breached. On the upside, resistance is expected at 278.1, with a potential move above this level testing 279.5.

Trading Ideas:
# Zinc trading range for the day is 272.9-279.5.
# Zinc gains as the global zinc market surplus fell to 52,300 metric tons in March.
# In April 2024, China's refined zinc output was 504,600 mt, a month-on-month decrease of 3.99%.
# In April, the output of domestic smelters declined, mainly due to routine maintenance of smelters.



Aluminium
Aluminium prices surged by 1.84% yesterday, settling at 246.65, driven by a strong rally in key raw material alumina and robust demand. Gas shortages led mining giant Rio Tinto to declare force majeure on alumina cargoes from its Australian refineries, raising concerns about supply from the world’s second-largest producer. Additionally, uncertain meteorological conditions in China's Yunnan province threatened hydroelectric power availability for aluminium producers, further exacerbating supply worries. The situation was compounded by significant changes in aluminium stocks. On-warrant aluminium LME stocks in Port Klang, Malaysia plummeted after the May 15th delivery deadline, reflecting trading giants' adjustments to new contract rules following US and UK sanctions on Russian aluminium. This has raised concerns about availability for clients who may require specific non-Russian contracts. Despite supply concerns, global primary aluminium output in April rose by 3.3% year-on-year to 5.898 million tonnes, according to data from the International Aluminium Institute (IAI). Meanwhile, China's imports of unwrought aluminium and products surged by 72.1% year-on-year in April, totaling 380,000 metric tons. This trend continued in the first four months of the year, with imports rising by 86.6% compared to the same period last year. Technically, the aluminium market is experiencing fresh buying momentum, with open interest increasing by 3.29% to settle at 3458 contracts, while prices rose by 4.45 rupees. Currently, aluminium finds support at 244.6, with potential to test 242.3 if it falls below this level. On the upside, resistance is likely at 248.2, with a move above potentially testing 249.5.

Trading Ideas:
# Aluminium trading range for the day is 242.3-249.5.
# Aluminium gains supported by a strong price rally in alumina and robust demand
# Gas shortages drove mining giant Rio Tinto to declare force majeure on alumina cargoes from its Australian refineries, raising concerns about supply.
# On-warrant aluminum LME stocks in Port Klang, Malaysia, plunged after the key delivery deadline of May 15th.


Cottoncandy
Cotton candy futures surged by 1.7% yesterday, closing at 58680, driven by robust demand for Indian cotton from countries like Bangladesh and Vietnam, among others. However, the upside was capped by sluggish milling demand and muted yarn demand in the global market. Despite these factors, there were prospects of improved crop yields in countries like Australia. The International Cotton Advisory Committee (ICAC) projected increases in cotton-producing area, production, consumption, and trade for the upcoming 2024-25 season. In India, cotton stocks are anticipated to decline by nearly 31% in 2023/24, reaching their lowest level in over three decades due to reduced production and rising consumption. Lower stockpiles are expected to constrain exports from the world's second-largest producer, supporting global prices but potentially impacting domestic textile companies' margins. For the marketing year 2024/25, India's cotton production is estimated to decrease by 2% to 25.4 million 480 lb. bales, with a shift in acreage to higher-return crops. However, mill consumption is forecasted to increase by 2%, driven by improving yarn and textile demand in major international markets. Additionally, with the recension of import duty on extra-long staple (ELS) cotton, imports are expected to rise by 20%. Technically, the cotton candy market is experiencing fresh buying, with open interest increasing by 1.84% to settle at 332 contracts, while prices surged by 980 rupees. Currently, cotton candy finds support at 57920, with potential to test 57160 if it falls below this level. On the upside, resistance is likely at 59120, with a move above potentially testing 59560. Overall, while demand remains strong, market dynamics and technical indicators will continue to shape price movements in the cotton candy futures market.

Trading Ideas:
# Cottoncandy trading range for the day is 57160-59560.
# Cotton gains as demand for India cotton continues to be strong
# 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 27234.9 Rupees dropped by -0.11 percent.


Turmeric
Turmeric prices faced a significant decline of -6% yesterday, closing at 18648, primarily due to an increase in supplies marking the end of the harvesting season. However, the downside was limited as farmers opted to hold back stocks in anticipation of further price rises. Moreover, the prevailing heat wave across the country threatens to damage crop yields, exacerbating the supply crunch and supporting prices. The India Meteorological Department's forecast of continued hot weather suggests little relief in sight, with most parts of the country expected to experience more heat wave days than usual in May. Despite the supply-side pressures, turmeric exports witnessed a decline during Apr-Mar 2024, dropping by 4.75% compared to the previous year. However, there was a notable increase in exports in March 2024 compared to February, indicating some fluctuation in demand patterns. On the import front, turmeric imports also declined during Apr-Mar 2024, dropping by 12.71% compared to the previous year. However, there was a slight increase in imports in March 2024 compared to the same period last year. In terms of production, the Ministry of Agriculture and Farmers’ Welfare's estimate suggests a decrease in turmeric production for 2023-24 compared to the previous year, contributing to the supply-demand dynamics. Technically, the turmeric market is experiencing long liquidation, with a decline in open interest by -5.12% to settle at 14740, while prices decreased by -1190 rupees. Currently, turmeric finds support at 18236, with a potential test of 17822 if this level is breached. On the upside, resistance is expected at 19476, with a potential move above this level testing 20302.

Trading Ideas:
# Turmeric trading range for the day is 17822-20302.
# 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 18230.4 Rupees dropped by -0.57 percent.


Jeera
Jeera futures experienced a slight decline of -0.79% yesterday, settling at 28365, primarily due to profit booking after a recent rise, coupled with a slowdown in arrival pace as stockists and farmers hesitated to release their stocks at current price levels. However, export demand remains strong, with global buyers preferring Indian jeera amidst tightening global supplies. Robust export demand and aggressive buying by stockists have provided support to prices. The arrival of jeera at major APMC mandies across India increased marginally in the first week of May compared to the prior week, indicating steady supply. However, the overall production of cumin has witnessed a significant increase due to expanded sowing areas and favorable weather conditions in major producing regions of Gujarat and Rajasthan. This surge in production, almost doubling compared to last year, may influence market dynamics and export volumes in the coming months. Despite the positive outlook for exports, jeera exports during Apr-Mar 2024 declined by 13.53% compared to the same period in the previous year. However, there was a notable increase in exports in March 2024 compared to February 2024 and March 2023, indicating a potential uptick in demand. In the technical analysis, the jeera market is currently experiencing fresh selling pressure, with open interest increasing by 0.9% to settle at 3036 contracts, while prices declined by -225 rupees. Jeera is finding support at 27900, with potential to test 27420 if this level is breached. On the upside, resistance is likely at 28760, with a move above potentially testing 29140.

Trading Ideas:
# Jeera trading range for the day is 27420-29140.
# Jeera dropped on profit booking after prices rose 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 28815.1 Rupees dropped by -0.15 percent.

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