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Gold

Gold prices rose by 1.21% to close at Rs.70,738, driven by safe-haven inflows as investors awaited U.S. inflation data that could clarify the Federal Reserve's interest rate outlook. Fed Governor Michelle Bowman hinted at some progress on inflation, leading markets to price in a 49% chance of a 50 basis point rate cut in September. Geopolitical tensions also played a role, as Russia evacuated civilians from regions near Ukraine amid increased military activity, further supporting gold's appeal. In India, gold demand slightly increased due to a price correction, though market volatility caused some buyers to delay purchases. In China, premiums firmed, with dealers charging up to $9 an ounce over official domestic prices, compared to $7 last week. There's rising interest in gold bars as a safe-haven asset, despite subdued retail sales of jewelry. China's central bank has not purchased gold for the third consecutive month in July. In other Asian markets, gold was sold at par to a $1.25 premium per ounce in Singapore and between a $0.5 discount and a $2 premium in Hong Kong. The World Gold Council noted a 5% year-on-year decline in India's gold demand for the June quarter. However, demand is expected to improve in the second half of 2024, driven by a reduction in import taxes and favorable monsoon rains ahead of the festival season. Technically, the gold market is seeing fresh buying, with a 1.05% increase in open interest to 17,448 contracts. Support is at Rs.70,040, with potential downside to Rs.69,345, while resistance is likely at Rs.71,105, with a move above possibly testing Rs.71,475.
 

Trading Ideas:
* Gold trading range for the day is 69345-71475.
* Gold prices rose driven by safe-haven inflows as traders keenly awaited U.S. inflation data.
* Fed Bowman softened her usually hawkish tone slightly, noting some further "welcome" progress on inflation in the last couple of months.
* Markets are pricing in a 49% chance of a 50bps rate cut by the Fed in September.


Silver
Silver prices surged by 1.34%, closing at 81,624, driven by a combination of safe-haven demand and rising expectations that the Federal Reserve (Fed) will cut interest rates at its next meeting. The geopolitical risks, particularly ongoing tensions that often drive investors towards safe-haven assets like silver, contributed to the upward momentum. The growing belief that the Fed will move towards easing monetary policy has further supported silver prices, as lower interest rates reduce the opportunity cost of holding non-interest-bearing assets like precious metals. Investors are closely monitoring upcoming U.S. economic data, particularly producer prices on Tuesday and consumer prices on Wednesday, which are expected to provide more clarity on inflation trends. The Federal Reserve's recent communications suggest that policymakers are increasingly confident that inflation is cooling sufficiently to allow for interest rate cuts in the near future. This dovish stance, combined with economic data, will likely influence the timing and scale of these anticipated rate cuts. The recent remarks by multiple Fed officials highlighted their readiness to consider rate cuts, depending on the economic data, rather than reacting to stock market movements. This cautious approach underscores the Fed's commitment to balancing inflation control with economic growth. Technically, the silver market is experiencing short covering, as indicated by a 2.65% drop in open interest, settling at 27,733 contracts. The price increase of 1,081 rupees reflects strong bullish sentiment. Silver is currently supported at 80,665, with further support at 79,700. On the upside, resistance is expected at 82,160, and a move above this level could see prices testing 82,690.
 

Trading Ideas:
* Silver trading range for the day is 79700-82690.
* Silver gains as fears of an escalation of the Gaza conflict.
* The expectation of interest rates falling is positive for prices
* Fed policymakers are increasingly confident that inflation is cooling enough to allow interest-rate cuts ahead


Crudeoil
Crude oil prices surged by 3.38%, closing at 6,662, driven by concerns over supply disruptions amid rising tensions in the Middle East. Positive U.S. economic data and growing speculation about a potential U.S. interest rate cut, due to easing inflation, further bolstered the market. The International Energy Agency (IEA) is expected to update its conservative 2024 demand growth forecast of 970,000 barrels per day (bpd) this week, a key focus for traders. OPEC revised its 2024 global oil demand growth forecast down to 2.11 million bpd, from 2.25 million bpd, citing weaker-than-expected first-half data and softer expectations for China's demand. The demand growth estimate for next year was also reduced to 1.78 million bpd. OPEC+ continues to support the market with output cuts, recently extending a 2.2 million bpd reduction until the end of September. Additionally, Saudi crude exports to China are expected to fall by 3 million barrels in September, reflecting tighter supply. In the U.S., crude oil inventories dropped by 3.728 million barrels for the week ending August 2, 2024, significantly exceeding market expectations. This marks the sixth consecutive weekly decline in inventories, underscoring a tightening supply situation. However, stocks at the Cushing, Oklahoma delivery hub saw a slight increase. Technically, the crude oil market is under fresh buying pressure, with a 37.85% increase in open interest, settling at 12,969 contracts. Prices rose by 218 rupees, with support now at 6,522 and resistance at 6,741. A move above this resistance could push prices towards 6,820, suggesting continued bullish momentum in the market.
 

Trading Ideas:
* Crudeoil trading range for the day is 6382-6820.
* Crude oil surged driven by supply disruption concerns amid rising Middle East tensions.
* OPEC cut its forecast for global oil demand growth in 2024, citing weaker than expected data for the first half of the year
* World oil demand will rise by 2.11 million barrels per day in 2024, down from growth of 2.25 million bpd expected last month. – OPEC


Naturalgas
Natural gas prices rose by 1.77%, closing at 183.7, supported by forecasts of hotter weather and increased demand in the coming week. Production in the Lower 48 states averaged 102.9 billion cubic feet per day (bcfd) so far in August, down from 103.4 bcfd in July, and well below the record high of 105.5 bcfd in December 2023. LSEG forecasts a decline in average gas demand this week to 104.0 bcfd, down from 109.9 bcfd last week, with an expected rise to 105.1 bcfd next week. Asian spot liquefied natural gas (LNG) prices have reached their highest level in over seven months, driven by European concerns over supply disruptions. The U.S. Energy Information Administration (EIA) has revised its outlook, projecting a larger decline in natural gas output for 2024 due to record-low prices earlier this year, which led to production cuts. The EIA now expects U.S. natural gas output to average 103.3 bcfd in 2024, slightly lower than the previous forecast of 103.5 bcfd. Consumption is projected to average 89.8 bcfd this year, up from the previous estimate of 89.4 bcfd. U.S. utilities added 21 billion cubic feet of gas to storage, bringing total stockpiles to 3,270 Bcf, which is 248 Bcf higher than last year and 424 Bcf above the five-year average. Technically, the natural gas market is experiencing short covering, as evidenced by a 3.82% drop in open interest, settling at 41,035 contracts. Prices increased by 3.2 rupees, with support now at 180.2 and potential further support at 176.7. On the upside, resistance is expected at 188.5, and a move above this level could see prices testing 193.3, indicating continued bullish momentum.
 

Trading Ideas:
* Naturalgas trading range for the day is 176.7-193.3.
* Natural gas rose aided by forecasts for hotter weather and higher demand for the next week.
* LSEG said gas output in the Lower 48 states had risen to an average of 102.9bcfd so far in August.
* Asian spot LNG prices remained at their highest level in over seven months.


Copper
Copper prices climbed by 1.76% to settle at Rs.790.3, driven by concerns over supply disruptions and a cautious assessment of demand. Zambia's closure of its border with the Democratic Republic of Congo, the world's second-largest copper producer, has delayed copper shipments, adding to supply worries. However, muted demand from China has weighed heavily on copper this year. Recent manufacturing PMIs from China and the U.S. pointed to a contraction, further indicating softness in industrial demand. China's limited stimulus measures have also kept demand subdued. On the supply side, copper inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) fell by 3.0% from the previous week, continuing a trend of a 23% decline since June, indicating a return of Chinese physical buyers as prices fell. In contrast, LME copper inventories have surged to their highest levels since September 2019, with the LME cash copper contract trading at a significant discount to the three-month contract, reflecting abundant near-term supply. Additionally, 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 International Copper Study Group (ICSG). For the first five months of 2024, the market surplus grew to 416,000 metric tons. China's unwrought copper imports also fell by 2.9% year-on-year in July, amid weak demand and high stock levels. Technically, the copper market is experiencing short covering, with open interest dropping by 5.46% to 13,151 contracts as prices rose by Rs.13.7. Support is seen at Rs.778.1, with a potential test of Rs.766, while resistance is expected at Rs.797.4, with a move above possibly driving prices to Rs.804.6.
 

Trading Ideas:
* Copper trading range for the day is 766-804.6.
* Copper rose as markets assessed threats to supply while gauging the magnitude of poor demand.
* Zambia closed its border with the DR Congo, delaying copper shipments amid growing disputes with trade customs.
* The NBS and the Caixin manufacturing PMIs pointed to a contraction in July, while the ISM PMI underscored factory softness in the US.


Zinc
Zinc prices rose by 0.91%, closing at 260.05, driven by expectations of higher energy costs, which significantly impact production expenses. The market was also supported by a decline in zinc inventories at Shanghai Futures Exchange warehouses, which fell 8.5% from last Friday, indicating tightening supply. Positive inflation data from China, showing signs of recovery from deflation, bolstered sentiment across equities and commodities markets. In the U.S., the latest job growth data revealed a slowdown in July, with the unemployment rate rising to 4.3%. This raised concerns about the potential vulnerability of the U.S. economy to a recession, although it also fueled expectations of deeper interest rate cuts by the Federal Reserve, potentially starting in September. Additionally, global zinc supply concerns were heightened by MMG Ltd's halt of operations at a mill in its Dugald River zinc mine in Australia, expected to last for about two months. This stoppage is likely to exacerbate the already tight zinc concentrates market. Data from the International Lead and Zinc Study Group (ILZSG) showed the global zinc market surplus decreased to 8,300 metric tons in May from 15,300 tons in April, reflecting a tightening market. China's refined zinc production in July 2024 fell significantly, both month-on-month and year-on-year, due to various disruptions, including heavy rainfall and maintenance activities across several provinces. Technically, the zinc market is experiencing short covering, as indicated by a 2.44% drop in open interest, settling at 2,158 contracts. Prices increased by 2.35 rupees, with support now at 257.4 and potential further support at 254.7. On the upside, resistance is expected at 262.5, and a move above this level could see prices testing 264.9, suggesting continued bullish momentum in the near term.
 

Trading Ideas:
* Zinc trading range for the day is 254.7-264.9.
* Zinc gains as buying was triggered by expectations of higher energy costs
* Zinc inventories in warehouses monitored by the SHFE fell 8.5% from last Friday.
* U.S. jobs data eased fears of a growth slowdown in the United States


Aluminium
Aluminium prices rose by 0.49% to settle at Rs.215.25, supported by a combination of positive economic signals and supply concerns. The Chinese government’s continued efforts to stimulate the domestic economy, alongside rising global liquidity and escalating regional conflicts, have bolstered market sentiment. In the U.S., better-than-expected jobs data eased fears of an economic slowdown, with unemployment claims falling more than anticipated, suggesting that concerns about the labor market might have been overstated. Domestically, China’s aluminium production in July 2024 saw a 3.22% year-on-year increase to 3.683 million metric tons, driven by the resumption of full production in Yunnan Province, new capacity in Inner Mongolia, and restored capacity in Sichuan Province. This growth trend was mirrored globally, with primary aluminium output rising 3.2% year-on-year in June to 5.94 million metric tons, according to the International Aluminium Institute (IAI). For the first half of 2024, global output increased by 3.9% to 35.84 million metric tons, largely due to higher production in China. China's aluminium output for the first half of 2024 grew by 7% to 21.55 million metric tons, with June marking the highest production level in nearly a decade. In other regions, production in Western and Central Europe rose by 2.2%, while Russia and Eastern Europe saw a 2.4% increase. Technically, the aluminium market is experiencing short covering, with open interest declining by 0.47% to 4,023 contracts as prices increased by Rs.1.05. Support is seen at Rs.214, with potential testing at Rs.212.7, while resistance is expected at Rs.216.7, with a move above possibly driving prices to Rs.218.1.
 

Trading Ideas:
* Aluminium trading range for the day is 212.7-218.1.
* Aluminium gains as the Chinese government continues to boost the domestic economy.
* U.S. jobs data eased fears of a growth slowdown in the United States.
* Domestic aluminium production in July 2024 was 3.683 million mt, up 3.22% YoY.


Cottoncandy
Cotton Candy prices increased by 1.07%, closing at 56,900, supported by a significant reduction in cotton acreage across key producing states in India. Punjab, Haryana, and Rajasthan collectively reported a substantial decline in the area under cotton, dropping to 10.23 lakh hectares from last year’s 16 lakh hectares. Punjab's cotton area shrank drastically to 97,000 hectares, a far cry from the 7.58 lakh hectares seen during the 1980s and 1990s. Similarly, Rajasthan and Haryana saw their cotton acreage reduce to 4.75 lakh hectares and 4.50 lakh hectares, respectively, compared to last year's figures. The delay in the arrival of shipments from major global producers like the US and Brazil has also boosted demand for Indian cotton, especially from mills in neighbouring countries. Additionally, firm cottonseed prices are supporting the upward trend in natural fiber prices, even as sowing for the Kharif 2024 season begins in southern states like Karnataka, Telangana, and Andhra Pradesh following the onset of monsoon rains. The U.S. Department of Agriculture’s (USDA) 2024/25 cotton projections indicate higher beginning and ending stocks compared to previous estimates. Despite unchanged production, domestic use, and export forecasts, the season average upland farm price has been revised down by 4 cents to 70 cents per pound, reflecting a decline in new-crop cotton futures. Ending stocks in the U.S. are projected to increase by 400,000 bales to 4.1 million. Globally, the 2024/25 cotton balance sheet shows higher beginning stocks, production, and consumption, with world ending stocks projected at 83.5 million bales, up by 480,000 bales from May. Technically, the Cotton Candy market is under fresh buying pressure, as evidenced by a 0.6% increase in open interest, settling at 169 contracts. Prices rose by 600 rupees, with strong support currently at 56,900. If the market holds above this level, resistance is expected at 56,900, with potential to test higher levels if the bullish momentum continues.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56900-56900.
* Cotton gains as Punjab, Haryana and Rajasthan reported a significant decline in areas from last year’s 16 lakh hectares.
* 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 0.65%, settling at Rs.16,290, amid reports of increased sowing in key producing regions. Despite the downward pressure, the decline was limited as farmers are holding back stocks, anticipating a further price rise. The expectation of fair prices has encouraged increased sowing, with reports indicating that turmeric sowing in Erode has doubled compared to last year. Additionally, higher sowing is estimated in Maharashtra, Telangana, and Andhra Pradesh, with an overall increase in turmeric acreage from 3-3.25 lakh hectares last year to an estimated 3.75-4 lakh hectares this year. Last year’s unfavorable weather conditions, coupled with lower sowing, resulted in an estimated production of 45-50 lakh bags of turmeric for 2024. Despite this, the carryover stock from the previous year was around 35-38 lakh bags. Even with increased sowing this season, the upcoming crop is expected to yield around 70-75 lakh bags, leaving availability potentially lower than consumption by 2025 due to the anticipated zero carryover stock. On the export front, turmeric shipments 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, highlighting increased demand from abroad despite the export decline. Technically, the turmeric market is under fresh selling pressure, with open interest rising by 0.6% to 16,498 contracts as prices fell by Rs.106. The market is currently supported at Rs.15,896, with a potential test of Rs.15,500 if the downward trend continues. On the upside, resistance is expected at Rs.16,594, with a move above possibly pushing prices to Rs.16,896.
 

Trading Ideas:
* Turmeric trading range for the day is 15500-16896.
* 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 16018.7 Rupees dropped by -1.13 percent.


Jeera
Jeera prices increased by 0.86%, closing at 26,345, driven by strong domestic and export demand, alongside tight global supplies. The rise was also supported by farmers holding back stocks in anticipation of better prices. Despite this, the potential for higher production could limit further price gains. Jeera production is expected to increase by 30% this season, reaching 8.5-9 lakh tonnes due to a significant rise in the cultivation area, particularly in Gujarat and Rajasthan, where sowing areas have increased by 104% and 16%, respectively. Global cumin production has also surged, with China leading the increase, and significant production gains are expected in Syria, Turkey, and Afghanistan, which could exert downward pressure on prices as these supplies enter the market. Despite the expected higher production, export demand remains strong, with Jeera exports rising by 43.50% during April-May 2024 compared to the same period last year. India’s meteorological department forecasts above-average rainfall in August and September, which could support higher farm output, further influencing Jeera production. However, the price increase seen recently is underpinned by robust demand and tighter current supplies. Technically, the Jeera market is under fresh buying pressure, as indicated by a 1.47% increase in open interest, settling at 26,600 contracts. Prices increased by 225 rupees, with support now at 26,090 and further support at 25,820. On the upside, resistance is anticipated at 26,690, and a move above this level could see prices testing 27,020. This technical setup suggests that while Jeera prices may face some resistance, the overall trend remains bullish.
 

Trading Ideas:
* Jeera trading range for the day is 25820-27020.
* 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 26468 Rupees gained by 0.1 percent.

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