IGI Logo

Gold

Gold prices saw a modest increase of 0.25% to settle at 66022 as the dollar softened slightly ahead of a crucial US inflation report, which could influence monetary policy decisions. The surprise rate cut by the Swiss National Bank spurred speculation that other major central banks might follow suit, boosting the dollar in the process. Despite recent high inflation readings, Federal Reserve policymakers reiterated their plan to reduce interest rates by three-quarters of a percentage point by the end of 2024, with Fed Chair Jerome Powell underscoring that the current inflationary pressures hadn't altered the gradual approach to addressing price levels. Investor attention remained focused on the upcoming release of the US PCE price index report, considered the Federal Reserve's preferred inflation gauge, scheduled for Friday. Additionally, speeches from US central bank officials throughout the week added to market sentiment and speculation surrounding future monetary policy actions. In terms of gold market dynamics, the SPDR Gold Trust reported a slight decrease in holdings, while COMEX gold speculators reduced their net long positions. Swiss gold exports in February declined from a recent peak driven by pre-Lunar New Year demand but showed a notable increase in exports to India, aligning with the upcoming wedding season. Technically, the gold market witnessed short covering, indicated by a drop in open interest by -7.64%. Prices rose by 164 rupees, with support levels identified at 65840 and 65660, while resistance is anticipated at 66220, with a potential move towards 66420.
Trading Ideas:
* Gold trading range for the day is 65660-66420.
# Gold gains ahead of US inflation reading that could provide more clues.
* A surprise rate cut from the Swiss National Bank prompted bets that other major central banks could ease policy earlier
* Fed policymakers indicated they still expected to reduce interest by three-quarters of a percentage point by the end of 2024.


Silver

Silver prices edged higher by 0.18% to settle at 74923, driven by demand for non-yielding assets following the Federal Reserve's decision to maintain projections for three interest rate cuts in 2024. Despite keeping rates unchanged, the Fed revised upward its Federal Funds Rates projections for 2025, indicating a slightly hawkish stance on future monetary policy. Fed officials emphasized the strength of the US economy and robustness of the labor market, with Chair Jerome Powell reiterating the need for more evidence before considering rate cuts. Powell acknowledged the challenges posed by higher inflation but maintained that the broader trajectory indicates a slowdown in price gains. Mixed business activity readings in the US added to uncertainties surrounding the economic outlook, with signs of cooling in the labor market countered by better-than-expected workforce additions and lower unemployment benefit applications. Technically, the silver market witnessed fresh buying interest, with open interest increasing by 0.17% to settle at 24017 contracts. Prices rose by 136 rupees, indicating bullish sentiment. Key support for silver is identified at 74740, with a potential downside test to 74560. On the upside, resistance is expected at 75185, with a breakout possibly leading to a test of 75450.
Trading Ideas:
* Silver trading range for the day is 74560-75450.
* Silver gains after Fed officials fueled the demand for non-yielding assets
* Fed kept rates unchanged but upward revised 2025 FFR projections.
* Fed Chair Jerome Powell emphasized the US economy's solidity and labor market's robustness.

Crude oil

Crude oil prices surged by 1.16% to settle at 6824 amid mounting concerns over global supply constraints stemming from escalating conflicts in the Middle East and between Russia and Ukraine. Additionally, a decrease in the US oil rig count contributed to upward price pressure, signaling potential future supply tightening. The shutdown of the Kuibyshev oil refinery's primary refining unit in Russia following a drone attack further exacerbated supply worries, with half of its capacity knocked out. Market sentiment was bolstered by money managers increasing their net long positions in US crude futures and options, according to data from the US Commodity Futures Trading Commission (CFTC). This indicates a bullish outlook among speculators, further supporting the upward trajectory of oil prices. However, challenges persist in the oil market, notably delays in crude exports from Iraq's Kurdistan region due to foreign oil firms' failure to submit contracts for revision, as cited by Iraq's oil ministry. Additionally, the Iraq-Turkey oil pipeline, once a significant conduit for global oil supply, has remained halted since March 2023, caught in legal and financial uncertainties. From a technical standpoint, the crude oil market witnessed fresh buying momentum, evidenced by a substantial increase in open interest by 42.98%. Prices climbed by 78 rupees, with support levels identified at 6752 and 6681, while resistance is anticipated at 6884, with a potential move towards 6945.
Trading Ideas:
* Crudeoil trading range for the day is 6681-6945.
* Crude oil prices rose on concerns over tighter global supply
* Russia's Kuibyshev oil refinery halts primary unit after drone attack
* Money managers raised their net long U.S. crude futures and options positions – CFTC


Natural gas

Natural gas prices experienced a decline of -1.5% to settle at 150.9, driven by forecasts indicating milder weather over the next two weeks, coupled with ample gas supplies in storage and low expectations for gas flows to liquefied natural gas (LNG) export plants due to outages at Freeport LNG's facility in Texas. Freeport LNG announced that two of its three liquefaction trains would remain offline for testing and repairs through May, further dampening demand expectations. Additionally, data from Baker Hughes showed a decrease of 4 rigs drilling for natural gas in the United States, indicating potentially lower production levels ahead. LSEG reported a decline in gas output in the Lower 48 U.S. states for March compared to February, with meteorologists projecting a shift from colder than normal weather to seasonally normal conditions. LSEG's forecast suggests a rise in gas demand in the Lower 48, including exports, in the coming weeks due to cooler weather before falling as temperatures become milder. However, these forecasts were higher than previously anticipated, adding to market uncertainties. Technically, the natural gas market witnessed fresh selling pressure, as evidenced by a notable increase of 20.29% in open interest, settling at 49117 contracts, while prices declined by -2.3 rupees. Key support for natural gas is identified at 148.6, with a potential downside test to 146.3. Conversely, resistance is expected at 153, with a breakout possibly leading to a test of 155.1.
Trading Ideas:
* Naturalgas trading range for the day is 146.3-155.1.
* Natural gas eased on forecasts for milder weather over the next two weeks
* Freeport LNG said it anticipates two of the three liquefaction trains at its export plant will remain out of service
* US natgas rig count fell 4 at 112



Copper

Copper prices edged up by 0.2% to settle at 760.5 as concerns over mounting inventories in China, the world's largest consumer, eased slightly. Inventories tracked by the SHFE saw their first weekly decline since December, hinting at a potential slowdown in inventory accumulation despite still hovering near their highest levels since 2020. Chinese production and imports remained robust, with refineries yet to curtail output in March, albeit consumption has been gradually picking up pace. Investors are closely monitoring the pace of maintenance by Chinese smelters in the second quarter, which could impact supply dynamics moving forward. Speculative activity intensified in the Comex copper market, with long positions reaching their highest levels since May 2021, driven by expectations of potential supply cuts in China. However, the global refined copper market continued to exhibit a surplus, with an 84,000 metric ton surplus recorded in January, according to the International Copper Study Group (ICSG). Despite strong production levels, consumption trailed slightly behind, contributing to the surplus. From a technical perspective, the copper market witnessed fresh buying momentum, indicated by a modest increase in open interest by 1.37%. Prices rose by 1.5 rupees, with support levels identified at 758.2 and 755.7, while resistance is anticipated at 763, with potential further upside towards 765.3.
Trading Ideas:
* Copper trading range for the day is 755.7-765.3.
* Copper prices rose as the piling up of inventories in China slowed.
* Copper SHFE inventories fell for the first time on a weekly basis since Dec. 22 to 285,090 tons
* Copper market in 84,000 metric tons surplus in Jan 2024 – ICSG


Zinc

Zinc prices closed marginally higher by 0.07% at 220.6, as Glencore Plc announced the suspension of operations at its McArthur River zinc and lead mine in Australia due to heavy rainfall. This disruption in production adds to existing concerns about tightened supply of zinc concentrates, further impacting the supply chain for refined zinc, primarily used in steel galvanization processes. Additionally, Peruvian miner Volcan, also backed by Glencore, halted operations at three mines in the country to update an operating permit for its Rumichaca tailings dam. These recent suspensions, combined with delays in the start of the major Russian zinc mine Ozernoye and the suspension of Europe's largest zinc mine Tara, have contributed to a decrease in mined zinc supply. Despite these disruptions, data from the International Lead and Zinc Study Group (ILZSG) showed that the global zinc market shifted to a surplus of 58,700 metric tons in January, compared to a deficit in the previous month. However, exchange stocks of zinc in Shanghai have been gradually increasing, nearing last year's seasonal build levels, which could potentially offset some of the supply constraints. Technically, the zinc market saw short covering, with a decrease in open interest by -1.29% and prices rising by 0.15 rupees. Key support for zinc is identified at 219.6, with a potential downside test to 218.5, while resistance is expected at 221.5, with a breakout possibly leading to a test of 222.3.
Trading Ideas:
* Zinc trading range for the day is 218.5-222.3.
* Zinc recovers as Glencore halts major zinc mine in Australia after heavy rainfall
* Global zinc market swings to surplus in January
* Exchange stocks of zinc in Shanghai crept a little higher in the week to 121,873 tons


Aluminium

Aluminium prices edged up by 0.55% to settle at 209.25 amid concerns regarding the sluggish recovery in production in China's Yunnan province, exacerbated by dry weather conditions impacting hydropower supply. Market sentiment remains cautious as aluminium smelters struggle to restore 500,000 metric tons of annual production, with the pace of recovery hampered by ongoing drought conditions. Uncertainty looms over demand from China, the top consumer of aluminium, with the upcoming release of the country's purchasing managers' index expected to provide clarity on manufacturing activity. A notable development in the aluminium market is a significant increase in premiums paid by Japanese buyers to a global producer. Premiums for shipments in April to June surged to $145 per metric ton, up 61% from the previous quarter, signaling tightening supply conditions and firm demand. Despite these challenges, global primary aluminium output recorded a year-on-year increase of 3.9% in February, according to data from the International Aluminium Institute (IAI). However, concerns persist over the dominance of Russian-origin aluminium stocks in LME-approved warehouses, with Russian stocks accounting for 91% of available aluminium stocks in February. Technically, the aluminium market witnessed fresh buying momentum, evidenced by a 3.05% increase in open interest. Prices rose by 1.15 rupees, with support levels identified at 208.3 and 207.3, while resistance is anticipated at 209.9, potentially leading to a test of 210.5.
Trading Ideas:
* Aluminium trading range for the day is 207.3-210.5.
* Aluminium gains on concerns over slow recovery in production in Yunnan province
* Overall, demand from China remains uncertain, with the country's purchasing managers' index due this Sunday
* Japan buyer agrees to pay Q2 aluminium premium of $145/T, up 61% from Q1.

Cottoncandy

Cottoncandy prices saw a decline of -0.23%, settling at 61980, influenced by revised production estimates and increased supply expectations in the cotton market. The Cotton Association of India (CAI) and Cotton Corporation of India (CCPC) both revised their cotton production estimates upwards for the current season, reflecting expectations of higher production levels. Additionally, Cotton Australia raised its production estimate for Australian cotton, further adding to supply projections. Despite lower production forecasts for the United States, global cotton supply is anticipated to increase, driven by higher production in India. However, increased consumption and trade are expected to offset some of the surplus, leading to slightly lower ending stocks globally. Amidst these dynamics, the Southern India Mills’ Association (SIMA) cautioned against panic buying of cotton by textile mills in the southern states, as domestic cotton prices experienced significant hikes in recent weeks. The association highlighted the fast approaching international prices and emphasized the need for prudent purchasing decisions. In the spot market, prices in Rajkot dropped by -0.33%, reflecting the downward pressure in cotton prices. Technically, the market witnessed long liquidation, with a decrease in open interest by -0.47% and prices falling by -140 rupees. Key support for Cottoncandy is identified at 61900, with a potential test of 61810, while resistance is expected at 62060, with a breakout possibly leading to a test of 62130.
Trading Ideas:
* Cottoncandy trading range for the day is 61810-62130.
* Cotton dropped after CAI revised production estimates upwards to 309.70 lakh bales
* CCPC raised crop production for the current season to 323.11 lakh bales
* Cotton Australia raised its estimate for Australian production this year to "at least" 4.5 million bales
* In Rajkot, a major spot market, the price ended at 29071.7 Rupees dropped by -0.33 percent.

Turmeric

Turmeric prices surged by 4.36% to settle at 17488, buoyed by below-normal supplies and robust festive demand, maintaining a positive bias in trading. The impact of lower production has been evident in reduced arrivals at major markets, signaling supply tightness. Stockists are likely to capitalize on this situation, anticipating further price increases. The seasonality of turmeric typically sees higher prices in March due to increased festive buying, with upcoming festivals and the commencement of the wedding season expected to sustain active buying. Production is forecasted to drop by about 14% year-on-year due to decreased cultivation area and tumbling yields, expected to range between 9.2-9.5 lakh tonnes. Despite lower domestic production, turmeric exports witnessed a slight decrease of 3.52% during April-January 2024 compared to the same period in the previous year. However, there was a month-on-month increase in exports in January 2024, indicating some recovery. Conversely, turmeric imports decreased by 22.34% during April-January 2024 compared to the same period in 2023. In the major spot market of Nizamabad, prices ended at 16527.65 Rupees, registering a gain of 0.7%, reflecting the overall positive sentiment in the market. Technically, the market observed short covering, with a drop in open interest by -3.73% and prices surging by 730 rupees. Key support for Turmeric is identified at 16748, with a potential downside test of 16010, while resistance is expected at 17986, with a breakout possibly leading to a test of 18486.
Trading Ideas:
* Turmeric trading range for the day is 16010-18486.
* Turmeric gains amid below normal supplies and active festive demand
* Festivals ahead in coming months and commencement of wedding season demand is likely to keep buyers engage.
* Production is likely to be dropped by about 14% Y-o-Y due to lower area under turmeric.
* In Nizamabad, a major spot market, the price ended at 16527.65 Rupees gained by 0.7 percent.

Jeera

Jeera prices rose by 0.38% to settle at 23920, primarily driven by a reduction in cumin arrivals in Unjha, reflecting tightening supply conditions. Despite a four-year high in jeera acreage during the current rabi season, arrivals have decreased to 35-37 thousand bags, indicating potential supply constraints. Farmers expanded cultivation in key producing states of Gujarat and Rajasthan in response to record prices in the previous marketing season, highlighting the strong correlation between market prices and acreage. Additionally, emerging weather risks in Rajasthan and Gujarat, such as water scarcity and adverse climate conditions, further supported price firmness. Global demand for Indian jeera has declined as buyers preferred other origins like Syria and Turkey due to comparatively higher prices in India. Export challenges persist due to seasonality and concerns about water availability, climate issues, and pest attacks. Despite expectations of a potentially bumper crop in India, other major producing countries like China, Egypt, and Syria anticipate higher yields, impacting the global market. Jeera exports witnessed a decline of 25.33% during Apr-Jan 2024 compared to the same period in the previous year. However, there was a marginal increase in exports from December 2023 to January 2024, reflecting seasonal fluctuations. From a technical perspective, the jeera market observed short covering, with a drop in open interest by -3.46%. Prices surged by 90 rupees, with support levels identified at 23640 and 23350, while resistance is anticipated at 24130, potentially leading to a test of 24330.
Trading Ideas:
* Jeera trading range for the day is 23350-24330.
* Jeera gains as in Unjha, arrival has reduced to 35-37 thousand bags.
* Support also seen in wake of emerging weather risk in Rajasthan and Gujarat that may affect the yield.
* Stockists are showing interest in buying on recent downfall in prices triggering short covering.
* In Unjha, a major spot market, the price ended at 25906.7 Rupees dropped by -0.55 percent.