IGI Logo

Gold

Gold's -0.21% decline to settle at 61977 is reflective of a complex interplay between positive and cautionary economic indicators. The U.S. labor market showed resilience, with weekly jobless claims dropping to 201,000, surpassing expectations and defying forecasts of a rise to 217,000. The report also highlighted a positive trend of some unemployed individuals rejoining the workforce, contributing to the overall health of the labor market. However, the Federal Reserve's cautious tone in its January meeting minutes, acknowledging a slowing momentum despite a healthy labor market, introduces an element of uncertainty for investors. The global gold market exhibited a pronounced shift in January, with Switzerland reporting a significant export of 207 tonnes to China, India, and Hong Kong, reaching an eight-year high. This emphasizes the continued demand for gold in Eastern nations, potentially driven by geopolitical and economic considerations. Technically, the gold market is undergoing long liquidation, evidenced by a -0.33% drop in open interest, settling at 13330. The price decline of -131 rupees adds to the bearish sentiment. Gold is finding support at 61850, and a breach below may lead to a test of 61720 levels. On the upside, resistance is anticipated at 62210, with a breakthrough possibly propelling prices to test 62440. In conclusion, gold's price performance is influenced by the contrasting dynamics of a robust U.S. labor market and the Federal Reserve's cautious outlook. The significant shift in global gold trade patterns adds complexity to the market. Technical indicators suggest a bearish trend, but market participants should monitor potential shifts in sentiment for a comprehensive assessment.

Trading Ideas:

* Gold trading range for the day is 61720-62440.
* Gold dropped as U.S. labor market remains relatively healthy
* The U.S. Labor Department said that weekly jobless claims dropped by 12,000 to 201,000.
* The report noted that some unemployed workers have found new jobs and reentered the labor market.

Silver

Silver faced a decline of -0.48%, settling at 70269, attributed to the recovery of the US Dollar following the Federal Reserve's maintenance of a hawkish rhetoric. The FOMC Minutes from the January meeting revealed concerns among most policymakers about the potential repercussions of premature rate cuts, with some highlighting the risks associated with an excessively restrictive monetary policy stance. This perspective may have contributed to the market's response. In the labor market, the number of people claiming unemployment benefits in the US dropped to 201,000, well below market expectations and marking the lowest count in five weeks. Continuing claims also decreased, suggesting an improved environment for unemployed individuals to find suitable jobs. The labor market dynamics continue to be a crucial factor influencing the Federal Reserve's monetary policy decisions, as the central bank aims to gauge inflation and economic conditions. The Chicago Fed National Activity Index for January indicated a contraction in activity, decreasing to -0.30 from the previous month. This contraction was observed across three of the four broad indicator categories, reflecting the challenges faced by the economy during that period. From a technical standpoint, Silver is undergoing long liquidation, with a drop in open interest by -2.13% to settle at 21532. Despite the decline in prices by -340 rupees, the market finds support at 69880, and a breach below could lead to a test of 69495. On the upside, resistance is likely at 70925, and a breakthrough could see prices testing 71585.

Trading Ideas:

* Silver trading range for the day is 69495-71585.
* Silver dropped as US Dollar recovers as Fed maintains the hawkish rhetoric.
* Fed policymakers want to see more evidence that inflation will sustainably decline to the 2% target before commencing rate cuts.
* The number of people claiming unemployment benefits in the US sank by 12,000 to 201,000.

Crude oil

Crude oil experienced a notable uptick, closing 1.36% higher at 6535 per barrel, fueled by the latest EIA report indicating a smaller-than-anticipated storage build last week. Despite a rise of 3.514 million barrels in US crude inventories, slightly below the market's 3.879 million expectations, the market responded positively. However, concerns emerged as two missiles targeted a vessel off Yemen's southeast coast, igniting a fire onboard, underscoring geopolitical tensions in the region amid support for Palestinians in the Gaza conflict. US crude stocks surged by 7.17 million barrels according to API figures, accompanied by increases in gasoline stockpiles and declines in distillate fuel inventories. Notably, US refiner net crude oil input plummeted to its lowest level since December 2022, reflecting subdued demand despite inventory fluctuations. Meanwhile, the IEA revised down its 2024 global oil demand growth forecast, citing waning momentum, and projecting peak demand by 2030 amidst a transition to cleaner energy. This contrasts sharply with OPEC's optimistic outlook, which anticipates continued oil demand growth over the next two decades. Technically, the market witnessed fresh buying momentum with a 4.65% increase in open interest, settling at 5398. Prices surged by 88 rupees, with support at 6451 and potential downside testing at 6368 levels. Resistance is anticipated at 6580, with a breakthrough potentially propelling prices to 6626. The technical outlook suggests a bullish sentiment, driven by increased open interest and positive price momentum, despite geopolitical uncertainties and diverging demand forecasts.

Trading Ideas:

* Crudeoil trading range for the day is 6368-6626.
* Crude oil gains after report showed a smaller-than-expected storage build.
* Crude oil inventories in the US rose by 3.514 million barrels in the week ending February 16, 2024
* U.S. refiner net crude oil input fell last week to the lowest since December 2022, EIA data showed.

Natural gas

Natural gas prices faced significant downward pressure, plummeting by -4.3% to settle at 149.2, attributed to diminished heating demand amid a mild winter and consistent output levels. Despite US utilities withdrawing 60 billion cubic feet from storage, slightly below market expectations, total stockpiles remain ample at 2.470 trillion cubic feet, well above historical averages. Chesapeake Energy's decision to slash 2024 gas production forecasts by 20%, alongside similar moves by other major producers like Antero Resources and Comstock Resources, underscores efforts to address oversupply conditions and stabilize prices. The oversupply situation is exacerbated by near-record production levels, abundant fuel storage, and above-average temperatures, which collectively pushed US natural gas prices to their lowest since June 2020 at $1.522/MMBtu. Technical issues at Freeport LNG's export facility further dampened sentiment, limiting gas flow to LNG terminals and delaying anticipated record export levels until the plant resumes full operation. From a technical standpoint, the market witnessed fresh selling pressure, with open interest surging by 23.5% to settle at 53112, while prices declined by -6.7 rupees. Support is identified at 145.6, with potential downside testing at 142.1 levels, reflecting the bearish sentiment. Resistance lies at 154.3, with a breakthrough possibly leading to a retest of 159.5.

Trading Ideas:

* Naturalgas trading range for the day is 142.1-159.5.
* Natural gas dropped due to lower heating demand and consistent output levels.
* US natural gas prices hit their lowest since June 2020 at $1.522/MMBtu, driven by near-record production.
* US utilities pulled 60 billion cubic feet of natural gas from storage

Copper

Copper prices edged up by 0.14%, settling at 733.25, driven by optimism surrounding economic support measures in China, expected to boost industrial activity and demand for key input materials. The International Copper Study Group (ICSG) reported a surplus of 20,000 metric tons in the global refined copper market for December, a significant shift from the 123,000 metric tons deficit in November. However, the annual figures still showed a deficit of 87,000 metric tons for the first 12 months of the year, a notable improvement from the 434,000 metric tons deficit in the same period the previous year. Concerns arose from poor industrial demand in China, reflected in the declining Yangshan copper premium and a substantial increase in inventories in major Chinese warehouses, rising over 180% year-to-date to 86,000 tonnes. In response, Beijing extended economic support measures to stimulate activity and counteract contractionary manufacturing trends, as indicated by the latest official PMI data and growing worries about accelerating deflation. Technically, the copper market is witnessing fresh buying, marked by a 24.7% increase in open interest to settle at 3801. Despite a modest price increase of 1 rupee, the market finds support at 730.9, and a breach below could test 728.6. On the upside, resistance is likely at 734.8, with a potential breakthrough targeting 736.4. Traders should closely monitor these levels, considering the impact of Chinese economic policies, global market dynamics, and technical factors on copper's performance.

Trading Ideas:

* Copper trading range for the day is 728.6-736.4.
* Copper gains on hopes that economic support in China will spur industrial demand.
* World refined copper output in December was 2.39 million metric tons, while consumption was 2.37 million metric tons.
* China will spur industrial activity and demand for input materials.

Zinc

Zinc settled marginally lower by -0.05% at 213.15, reflecting the impact of increased inventories attributed to diminished demand amid China's property market challenges. London Metal Exchange (LME) data indicates a significant 14% climb in zinc stocks over the past 10 days, reaching a one-month high. The slump in demand is particularly notable in China, where refined zinc output in January 2024 decreased month-on-month by 4.05%, amounting to 567,000 metric tons. Despite this, the year-on-year increase of 10.9% fell short of initial expectations. January saw a surge in domestic zinc alloy output by 6,600 metric tons, driven by increased production in response to demand. Chinese smelters experienced reduced output in January due to maintenance activities and holiday shutdowns in various provinces, offset by new production capacity in Guangxi. The global zinc market deficit expanded to 62,600 metric tons in December 2023, contrasting with a deficit of 53,500 tons in November, according to the International Lead and Zinc Study Group (ILZSG). However, the full-year 2023 data revealed a surplus of 204,000 tons, in contrast to a deficit of 73,000 tons in 2022. Technically, the zinc market is witnessing fresh selling, marked by a 9.9% increase in open interest, settling at 4762. Despite a marginal price decline of -0.1 rupees, support is identified at 212.2, with a potential test of 211.2 if breached. Resistance is anticipated at 214.3, and a breakthrough could lead to a testing of 215.4.

Trading Ideas:

* Zinc trading range for the day is 211.2-215.4.
* Zinc dropped as zinc inventories have rebounded recently
* The global zinc market deficit increased to 62,600 metric tons in December 2023 from a deficit of 53,500 tons in November
* China's refined zinc output in January 2024 was 567,000 mt, a month-on-month decrease of 4.05%

Aluminium

Aluminium prices faced a decline of -1.34%, settling at 198.75, influenced by China's robust aluminium output in January. The country's aluminium production reached 3.562 million metric tons, marking a 4.2% year-on-year increase. Despite a flat month-on-month daily average aluminium output at 114,900 metric tons, the operating rate of domestic aluminium primary processing enterprises experienced a slight decline. The output of aluminium billets and other products in specific regions decreased, contributing to a 3.7 percentage point month-on-month and 11.2 percentage point year-on-year decrease in the share of aluminium liquid output, reaching about 70.36%. In January, domestic aluminium smelters maintained steady operations, with no significant production suspensions or resumptions. The existing aluminium capacity stood at approximately 45.19 million metric tons, with an operating capacity of around 41.98 million metric tons. The operating rate increased by 3.9 percentage points year-on-year, reaching 92.9%. However, the market responded to the fresh selling trend, evidenced by a substantial 64.31% increase in open interest to settle at 4364, coupled with a price decline of -2.7 rupees. The People's Bank of China (PBoC) contributed to the market dynamics by slashing its 5-year loan prime rate by 25 basis points to 3.95% in February, exceeding market forecasts. This move aimed to stimulate credit demand and counter a property downturn. Technically, Aluminium finds support at 197.3, and a breach below could test 195.8. Resistance is likely at 200.8, with a potential breakthrough targeting 202.8.

Trading Ideas:

* Aluminium trading range for the day is 195.8-202.8.
* Aluminium dropped as China's aluminium output in January up by 4.2% YoY.
* In January, domestic aluminium smelters maintained steady operations
* PBoC slashed its 5-year loan prime rate, the reference for mortgages, by 25bps to 3.95% at the February fixing

Cottoncandy

Cotton candy prices surged by 1.07% to settle at 60600, driven by concerns over supply constraints and sustained cotton consumption. The U.S. cotton balance sheet for 2023/24 depicted lower ending stocks, primarily due to increased exports and decreased mill use, while production remained unchanged. The export forecast was raised by 200,000 bales to 12.3 million, supported by strong shipment and sales momentum. Meanwhile, global cotton ending stocks for 2023/24 were lowered, attributed to reduced beginning stocks and production, despite virtually unchanged consumption. India emerged as a significant player in the cotton export market, with a notable increase in exports expected for February, reaching the highest level in two years. The rally in global prices rendered Indian cotton highly competitive, attracting buyers from China, Bangladesh, and Vietnam. This surge in exports is expected to surpass earlier projections, with Indian cotton production forecasted to decrease by 7.7% compared to the previous year, according to the Cotton Association of India. Technically, the cotton candy market witnessed short covering, with a drop in open interest by -1.98% and prices rising by 640 rupees. Support is identified at 60100, with potential testing of 59600 if breached, while resistance is anticipated at 60940, with a possible breakthrough leading to testing of 61280. In summary, cotton candy prices rallied amid supply concerns and robust demand dynamics. The U.S. and global cotton balance sheets reflected tighter stocks, while India emerged as a key exporter due to competitive pricing. The technical overview suggests a short covering trend, with market participants closely monitoring support and resistance levels for potential price movements. Amidst evolving market dynamics, factors such as global economic conditions and trade policies will continue to influence cotton prices in the coming months.

Trading Ideas:

* Cottoncandy trading range for the day is 59600-61280.
* Cotton prices gained spurred by concerns over supply
* USDA weekly sales report a 69% increase in exports from previous week
* CAI estimates domestic consumption for the 2023-24 season to remain flat at 311 lakh bales.
* In Rajkot, a major spot market, the price ended at 27725.7 Rupees dropped by 0 percent.

Turmeric

Turmeric prices experienced a decline of -1.18%, settling at 15252, reflecting slower buying activities ahead of the expected release of stocks with the commencement of new crops. However, the downside is limited as reduced supplies in the spot market support the market. The delayed harvesting of new crops and tighter ending stocks are expected to keep market sentiments positive in the near term. Export of turmeric saw a drop of 2.27% during April to December 2023 compared to the same period in 2022. In December 2023, turmeric exports increased by 21.47% from November, but showed a decline of 13.41% compared to December 2022. Turmeric imports during April to December 2023 decreased by 25.43%, with a 29.91% rise in December 2023 compared to the same month in 2022. Despite concerns over PM Modi's Turmeric Board location sparking farmer concerns in Maharashtra, the overall outlook for turmeric is influenced by expectations of a decline in seeding, slower exports in recent months, and an anticipated increase in demand ahead of festivals. Technically, the market is under fresh selling, evidenced by a 0.42% increase in open interest to settle at 14255, coupled with a price decline of -182 rupees. Support for turmeric is identified at 15092, and a breach below could test 14930. Resistance is likely at 15478, with a potential breakthrough targeting 15702. Traders should closely monitor these levels, considering the impact of supply dynamics, export-import trends, and technical factors on turmeric's performance.

Trading Ideas:

* Turmeric trading range for the day is 14930-15702.
* Turmeric dropped as buying activities has been slower in expectation of new crops.
* However, downside seen limited supported by reduced supplies in the spot market.
* Export has been slow down in recent months and expected to increase in wake of series of festivals ahead.
* In Nizamabad, a major spot market, the price ended at 14323.05 Rupees dropped by -0.26 percent.

Jeera

The recent performance of the Jeera market has been characterized by a notable decline, with prices settling down by -2.37% at 26400. This downward trend can be attributed to the anticipation of higher production levels in key producing states like Gujarat and Rajasthan. The current rabi season has seen Jeera acreage reaching a four-year high, driven by farmers' response to record prices observed in the previous marketing season. In Gujarat alone, Jeera cultivation has expanded significantly, surpassing normal acreage levels and indicating strong market-price acreage dynamics. However, this surge in production prospects has been met with challenges, including lower water availability, fewer cold days, and concerns about fusarium wilt attacks on crops. Additionally, anticipation of higher incidence of blight and sucking pest attacks due to climate issues further adds to the complexities faced by Jeera farmers. Despite the increase in production, global demand for Indian Jeera has slumped, with buyers opting for alternative sources like Syria and Turkey due to comparatively higher prices in India. From a technical perspective, the market is currently experiencing long liquidation, as evidenced by a drop in open interest by -4.53% to settle at 2151. With prices down by -640 rupees, Jeera is finding support at 26100, with potential downside risks towards 25790 levels. On the upside, resistance is likely to be encountered at 26810, with a breakthrough potentially leading to further price tests at 27210.

Trading Ideas:

* Jeera trading range for the day is 25790-27210.
* Jeera prices dropped due to higher production prospects
* In Gujarat, Cumin sowing witnessed very strong growth by nearly 103% with 530,030.00 hectares against sown area of 2022
* Stockists are showing interest in buying on recent downfall in prices triggering short covering.
* In Unjha, a major spot market, the price ended at 30013.5 Rupees dropped by -0.47 percent.

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