IGI Logo

Gold

Gold prices surged by 1.07% to settle at ?69,704 as both the U.S. dollar and Treasury yields retreated, driven by increasing speculation that the U.S. Federal Reserve might begin its interest rate cut cycle as early as September. The ongoing weakness in U.S. economic data, coupled with concerns over U.S. debt, has bolstered the outlook for gold as a safe-haven asset. The Labor Department reported a decline in initial unemployment claims by 17,000 to a seasonally adjusted 233,000 for the week ending August 3, though the four-week moving average, considered a more stable labor market indicator, rose to 240,750. Market participants now see a 72% probability of a 50 basis points rate cut in September, with another reduction likely in December, according to the CME FedWatch Tool. In the global gold market, premiums in India fell as a price recovery tempered the buying surge that followed the government's decision to ease import taxes. Indian dealers were charging a premium of up to $7 per ounce, down from $20 the previous week. In contrast, China's demand weakened amid dwindling consumer sentiment. Gold was offered at various premiums and discounts across global markets, with dealers in Japan, Singapore, and Hong Kong reflecting diverse regional demand conditions. Technically, the gold market is under short covering, with a 2.54% drop in open interest, settling at 17,599 contracts. Prices rose by Rs.739, with immediate support at Rs.69,090 and a potential test of Rs.68,480 if this level is breached. On the upside, resistance is expected at Rs.70,030, with a possible move towards Rs.70,360 if the upward momentum continues.
 

Trading Ideas:
* Gold trading range for the day is 68480-70360.
* Gold prices firmed as the dollar and Treasury yields retreated
* Continued U.S. data weakness and U.S. debt concerns will ultimately support gold prices.
* Initial claims for state unemployment benefits fell by 17,000 claims to a seasonally adjusted 233,000.


Silver
Silver surged by 2.17% to settle at Rs.80,613, driven by signs of a cooling U.S. labor market. The latest data revealed that the number of unemployment benefit claims in the U.S. fell by 17,000 to 230,000 for the week ending August 3, below the expected 240,000. Despite this decline, the claims remain higher than this year’s average, reflecting a softening labor market since its post-pandemic peak, although it remains historically tight. The continuing claims also rose by 6,000 to 1.875 million, the highest since November 2021, further heightening concerns about a potential recession and increasing speculation that the Federal Reserve may consider emergency rate cuts. Global monetary policy moves have also influenced silver prices. The People's Bank of China (PBoC) and the Bank of England (BoE) both eased their monetary policies, contributing to the upward momentum for silver, particularly as investors look for safe-haven assets amid economic uncertainty. However, the outlook for silver’s industrial demand remains cautious, as global manufacturing activity has shown signs of weakness. The U.S. ISM PMI fell more than expected, highlighting poor factory momentum, while both the official and Caixin PMI gauges in China missed expectations. On the technical front, silver experienced short covering, with open interest declining by 5.96% to settle at 27,874 contracts, while prices increased by Rs.1,713. Silver is currently supported at Rs.79,320, with a potential downside to Rs.78,030. Resistance is expected at Rs.81,330, and a move above this level could see prices testing Rs.82,050.
 

Trading Ideas:
* Silver trading range for the day is 78030-82050.
* Silver rose as U.S. labor market pulled back from the brink last week.
* The number of people claiming unemployment benefits in the US fell by 17K to 230K.
* The pessimistic outlook for global manufacturing activity limited demand for silver as an industrial input.


Crudeoil
Crude oil prices climbed by 1.5% to settle at Rs.6,422, driven by supply disruptions at Libya’s largest oil field and a rare Ukrainian attack within Russia, heightening geopolitical tensions and concerns over oil supply. The global oil market remains tight, with OECD commercial stocks of crude and refined products standing at 2,761 million barrels at the end of June. In the U.S., crude oil production reached a record high of 13.4 million barrels per day (bpd) for the week ending August 2, marking an increase of 100,000 bpd from the previous record set in early July. However, U.S. crude oil shipments via rail in May saw a decline of 7,000 bpd from the previous month, totaling 328,000 bpd, with shipments from Canada to the U.S. falling by 41,000 bpd. Meanwhile, crude oil inventories in the U.S. decreased by 3.728 million barrels in the week ending August 2, significantly surpassing market expectations of a 0.4 million barrel draw. This marks the sixth consecutive week of inventory declines, all of which have exceeded market forecasts. Conversely, stocks at the Cushing, Oklahoma delivery hub rose by 579,000 barrels, while gasoline stocks increased by 1.34 million barrels, contrary to expectations of a decline. Technically, the crude oil market is experiencing short covering, as evidenced by a significant 19.94% drop in open interest, settling at 10,207 contracts. Prices rose by Rs.95, with support now seen at Rs.6,318. A breach of this level could lead to a test of Rs.6,214. On the upside, resistance is expected at Rs.6,480, with potential for prices to test Rs.6,538 if the bullish momentum continues.
 

Trading Ideas:
* Crudeoil trading range for the day is 6214-6538.
* Crude oil gains due to disruptions in Libya’s largest oil field and a rare Ukrainian attack into Russia.
* Crude stockpiles fell for the sixth consecutive week to their lowest since February, which might ease concerns about demand.
* U.S. crude oil production fell in May in its first monthly decline since January


Naturalgas
Natural gas prices rose by 1.93% to settle at Rs.179.6, driven by a smaller-than-expected storage build for this time of year. However, the upside was limited due to forecasts predicting less hot weather and lower demand in the coming weeks. Gas output in the Lower 48 states averaged 103.4 bcfd so far in August, matching July's levels but still below the record high of 105.5 bcfd set in December 2023. Despite the recent price recovery, major U.S. natural gas producers are preparing to further curtail production in the second half of 2024, responding to a nearly 40% price decline over the past two months. The U.S. EIA also revised its forecast, predicting a larger drop in natural gas output this year compared to previous estimates. The EIA now expects U.S. natural gas output to average 103.3 bcfd in 2024, slightly down from the previous forecast of 103.5 bcfd. Meanwhile, gas consumption is projected to average 89.8 bcfd this year, up from the prior estimate of 89.4 bcfd. For 2025, production is forecasted to be slightly lower at 104.6 bcfd, with consumption remaining steady at around 89.2 bcfd. U.S. utilities added 21 Bcf of gas into storage during the week ending August 2, 2024, bringing total stockpiles to 3,270 Bcf, which is 248 Bcf higher than last year and 424 Bcf above the five-year average. Technically, natural gas saw short covering, with open interest dropping by 3.55% to settle at 43,670 contracts while prices increased by Rs.3.4. Support is currently at Rs.172.6, with a potential test of Rs.165.7. Resistance is seen at Rs.184.9, with a move above this level potentially pushing prices to Rs.190.3.
 

Trading Ideas:
* Naturalgas trading range for the day is 165.7-190.3.
* Natural gas gains as storage build was smaller than usual for this time of year.
* US utilities added 21 billion feet of gas into storage to 3,270 billion cubic feet.
* EIA forecast a larger decline in natural gas output this year compared with earlier estimates.


Copper
Copper prices rose by 0.42% to settle at Rs.774.15, supported by expectations of improved consumption in China and anticipation of a larger-than-expected interest rate cut by the U.S. Federal Reserve in September. The copper market is also underpinned by supply concerns, particularly from Chile, where mined production remains sluggish. Additionally, the potential for a strike at the Escondida mine, one of the world’s largest, looms as operator BHP seeks mediation after failing to reach an agreement with the union. Lower copper stocks in warehouses monitored by the Shanghai Futures Exchange have also contributed to the bullish sentiment. Inventories have dropped 23% since June, indicating a return of Chinese physical buyers as prices have retreated. However, LME copper inventories have surged nearly threefold in less than three months, reaching 294,750 tons, reflecting broader market dynamics. On the macroeconomic front, traders have adjusted their expectations for U.S. Federal Reserve interest rate cuts, anticipating nearly 105 basis points of easing by the end of the year following a soft jobs report. The global refined copper market showed a surplus of 65,000 metric tons in May, up from 11,000 metric tons in April, according to the ICSG. Meanwhile, China’s unwrought copper imports in July slid 2.9% year-on-year amid subdued demand and high stocks, although imports for the first seven months of the year were up 5.4%. Technically, the copper market is under fresh buying pressure, with a slight increase in open interest by 0.31%, settling at 14,266 contracts. Prices are currently supported at Rs.769.4, with a potential test of Rs.764.7 if this level is breached. On the upside, resistance is expected at Rs.777.4, with the possibility of prices testing Rs.780.7 if the bullish momentum continues.
 

Trading Ideas:
* Copper trading range for the day is 764.7-780.7.
* Copper gains on expectations of improved copper consumption in China.
* Chinese imports of copper concentrates, dropped to a one-year low of 2.165 million tons in July.
* SHFE inventories have fallen 23% since June, reflecting a return of Chinese physical buyers as prices have retreated.


Zinc
Zinc prices surged by 2.65% to settle at Rs.251.4, driven by a reduction in the global zinc market surplus, which fell to 8,300 metric tons in May from 15,300 tons in April, according to the International Lead and Zinc Study Group (ILZSG). The market sentiment was further bolstered by a weaker-than-expected U.S. job growth report for July, where the unemployment rate rose to 4.3%, raising concerns about the potential vulnerability of the U.S. economy to a recession. This data, coupled with sluggish manufacturing activities in China, led to a global selloff in risk assets, but also fueled expectations of deeper interest rate cuts by the U.S. Federal Reserve, possibly starting in September. In the physical market, zinc inventories in warehouses monitored by the Shanghai Futures Exchange fell by 7.5% from the previous Friday. China's refined zinc production in June reached 545,800 metric tons, up 1.81% month-on-month but down 1.2% year-on-year. However, the overall H1 output was slightly below expectations, totaling 3.182 million metric tons, down 1.39% year-on-year. The production of zinc alloys also saw a slight decline in June. Despite higher-than-expected production in certain regions, the supply of zinc concentrate remains tight, with refinery raw material inventories being depleted faster than they are replenished. Adding to supply concerns, MMG Ltd halted operations at its Dugald River zinc mine in Australia for approximately two months for repair work, potentially tightening the zinc concentrate market further. Technically, zinc saw fresh buying interest, with a minor increase in open interest by 0.23%, settling at 2,139 contracts while prices rose by Rs.6.5. Zinc is currently supported at Rs.247.2, with potential support at Rs.243. Resistance is expected at Rs.253.7, with prices possibly testing Rs.256 on further gains.
 

Trading Ideas:
* Zinc trading range for the day is 243-256.
* Zinc gains as global zinc market surplus fell to 8,300 metric tons in May
* Inventories in warehouses monitored by the Shanghai Futures Exchange fell 7.5% from last Friday.
* China's refined zinc production was 545,800 mt, up 9,700 mt or 1.81% MoM but down 1.2% YoY.


Aluminium
Aluminium prices edged up by 0.54% to settle at Rs.213.05, driven by short covering after a recent downturn influenced by concerns over the U.S. economy and sluggish demand from China. The market has been volatile, with investors reacting to fears of a potential recession in the U.S., which led to a significant sell-off in risk assets. Despite this, the dollar is expected to regain some strength in the coming months as markets may have overly priced in the likelihood of multiple Federal Reserve interest rate cuts this year. In terms of supply and demand dynamics, aluminium production is on the rise while demand remains subdued. In July, global aluminium production is expected to reach around 3.68 million metric tons, with social inventories remaining high. In China, improved rainfall in Yunnan has increased hydropower availability, enabling smelters to resume operations and boost production. However, manufacturing activity in China contracted at a slightly faster pace in July, and growth in the services sector slowed to an eight-month low, reflecting ongoing economic challenges. Global primary aluminium output rose by 3.2% year-on-year in June to 5.94 million tons, with a 3.9% increase to 35.84 million metric tons in the first half of 2024. This growth was primarily driven by higher production in China, which saw a 7% rise in aluminium output in the first half of the year. Technically, the aluminium market is experiencing fresh buying, with a 2.38% increase in open interest, settling at 4,303 contracts. Prices have risen by Rs.1.15, with support now at Rs.211.3. A breach of this level could lead to a test of Rs.209.4. On the upside, resistance is likely at Rs.214.2, with potential for prices to test Rs.215.2 if the upward momentum continues.
 

Trading Ideas:
* Aluminium trading range for the day is 209.4-215.2.
* Aluminium gains on short covering after prices dropped hurt by looming concerns about demand from China
* Aluminium supply is increasing while demand remains sluggish.
* In July, aluminium production is expected to reach around 3.68 million mt


Cottoncandy
Cottoncandy prices settled slightly lower by -0.11% at Rs.56,440 due to profit booking, following a recent supportive trend driven by supply concerns. The decline in cotton acreage across key states such as Punjab, Haryana, and Rajasthan has raised concerns about future supply. Punjab reported a significant drop to just 97,000 hectares under cotton, a sharp decrease from historical levels of up to 7.58 lakh hectares during the 1980s and 1990s. Similarly, Rajasthan and Haryana have also seen reductions in cotton planting areas, with Rajasthan's acreage halving from 8.35 lakh hectares last year to 4.75 lakh hectares, and Haryana's falling from 5.75 lakh hectares to 4.50 lakh hectares in 2024. The market also found support due to delays in shipments from major exporters like the US and Brazil, triggering increased demand for Indian cotton from mills in neighboring countries. Additionally, firm cottonseed prices are keeping cotton prices buoyant despite the ongoing sowing season in southern Indian states like Karnataka, Telangana, and Andhra Pradesh. On the global front, the 2024/25 U.S. cotton projections indicate higher beginning and ending stocks, with the season average upland farm price forecasted lower by 4 cents to 70 cents per pound. Globally, beginning stocks, production, and consumption have been revised upwards, leading to an increase in projected world ending stocks by 480,000 bales to 83.5 million. Technically, the market is under fresh selling pressure, with a 0.6% gain in open interest settling at 169 contracts. Prices dropped by Rs.60, with support now seen at Rs.56,340, and a potential test of Rs.56,250 if this level is breached. On the upside, resistance is expected at Rs.56,510, with the possibility of prices testing Rs.56,590 if the market gains momentum.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56250-56590.
* Cotton dropped on profit booking after seen supported as area under cotton drops
* India's cotton exports in the first nine months of 2023-24 increased by 68% to 26 lakh bales
* CAI estimates closing stocks at 20 lakh bales at the end of 2023-24, down from 28.90 lakh bales in the previous year
* In the global 2024/25 cotton balance sheet, beginning stocks, production and consumption are increased.


Turmeric
Turmeric prices declined by -0.28% to settle at Rs.16,400, driven by reports of increased sowing activity across key producing regions. The news of higher sowing volumes, particularly in Maharashtra, Telangana, Andhra Pradesh, and on the Erode line, where sowing is reported to be double compared to last year, has put downward pressure on prices. It is estimated that turmeric sowing in India could increase to 3.75-4 lakh hectares this year, up from 3-3.25 lakh hectares last year. Despite this, the downside in prices is limited as farmers continue to hold back stocks, anticipating a further rise in prices due to potential supply constraints in the coming year. Last year, turmeric production was hampered by unfavorable weather, leading to an estimated production of 45-50 lakh bags, with an outstanding stock of 35-38 lakh bags. Even with the increased sowing this season, the upcoming crop is expected to be around 70-75 lakh bags, with no outstanding stock, suggesting that the availability of turmeric may still fall short of consumption needs in 2025. On the export front, turmeric exports during April-May 2024 dropped by 20.03% to 31,523.94 tonnes compared to the same period in 2023. However, imports surged by 417.74% during the same period, reflecting a shift in market dynamics. Technically, the turmeric market is experiencing long liquidation, with open interest decreasing by 0.85% to settle at 16,360 contracts while prices fell by Rs.46. Support for turmeric is currently seen at Rs.16,284, with a potential test of Rs.16,170. Resistance is expected at Rs.16,528, with prices possibly testing Rs.16,658 on the upside.
 

Trading Ideas:
* Turmeric trading range for the day is 16170-16658.
* Turmeric prices dropped amid news of increased sowing.
* Turmeric sowing on the Erode line is reported to be double as compared to last year.
* Turmeric was sown in about 3/3.25 lakh hectares in the country last year, which is estimated to increase to 3.75/4 lakh hectares this year.
* In Nizamabad, a major spot market, the price ended at 16155.8 Rupees dropped by -0.03 percent.


Jeera
Jeera prices edged up by 0.46% to settle at Rs.26,035, supported by strong domestic and export demand amid tight global supplies. However, the upside was limited by expectations of a higher production season, which could weigh on prices moving forward. This season, jeera production is anticipated to increase by 30%, reaching 8.5-9 lakh tonnes due to a significant rise in cultivation area, with Gujarat's sowing area up by 104% and Rajasthan's by 16%. Global jeera production has also seen substantial increases, particularly in China, where output surged to over 55-60 thousand tons. Other major producers like Syria, Turkey, and Afghanistan have also expanded their production, which is expected to lead to a decline in prices as new supplies enter the market. Despite these pressures, farmers have been holding back their stocks, anticipating better prices, which has provided some support to the market. On the export front, jeera shipments rose by 43.50% during April-May 2024, compared to the same period last year. However, exports in May 2024 saw a significant drop of 44.99% compared to April 2024, indicating some volatility in the export market. Technically, the jeera market is under short covering, with a slight drop in open interest by 0.19%, settling at 25,920 contracts. Prices gained Rs.120, with immediate support now at Rs.25,910. If this level is breached, the next support could be at Rs.25,780. On the upside, resistance is expected at Rs.26,180, with the potential for prices to test Rs.26,320 if the bullish momentum continues.
 

Trading Ideas:
* Jeera trading range for the day is 25780-26320.
* 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 26182.85 Rupees dropped by -0.07 percent.

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