IGI Logo

Gold

Yesterday, gold settled up by 0.12% at 68268 as the dollar firmed slightly ahead of the Federal Reserve's monetary policy meeting. The US June PCE reading, the Fed's favored inflation gauge, met forecasts, but the core rate increased by 0.2%, slightly above the expected 0.1%. Despite this, expectations for rate cuts remained intact, with markets fully pricing in a reduction at the September meeting and anticipating two additional cuts by the end of the year. Rising geopolitical tensions in the Middle East also supported safe-haven assets like gold. Israel pledged strong retaliation against Hezbollah after accusing the Iran-backed group of a weekend strike that resulted in the deaths of 12 people, although Hezbollah denied involvement. Data showed the Fed's preferred personal consumption expenditures price index rose by 2.5% in June after a 2.6% gain in May. China's net gold imports via Hong Kong in June fell by about 18% from May, with net imports at 21.919 metric tons, down from 26.722 tons. Gold premiums in India surged to their highest level in a decade as the government's move to cut import duties brought down prices to a near four-month low, igniting demand. Dealers charged a premium of up to $20 an ounce over official domestic prices. In China, dealers were offering a $10 discount to a $2 premium an ounce, while in Singapore, gold was sold at a discount of $1 to a premium of $2.20 per ounce. Technically, the market is under short covering as open interest dropped by 55.93% to settle at 2027 while prices rose by 82 rupees. Gold is currently supported at 67980, with further support at 67695 levels. Resistance is likely at 68610, and a move above this level could see prices testing 68955.
 

Trading Ideas:
* Gold trading range for the day is 67695-68955.
* Gold steadied as the dollar firmed a bit ahead of Fed’s monetary policy meeting.
* Expectations for rate cuts remained intact, with markets fully pricing in a reduction at the September meeting.
* Rising geopolitical tensions in the Middle East also supported safe-haven assets.

Silver

Silver prices settled down by -0.1% at 81,287 as investors prepared for the upcoming Federal Reserve policy meeting and a series of U.S. data releases this week, which could provide more clarity on the timeline for potential rate cuts. The slight decline in silver prices was influenced by market participants' cautious stance ahead of these crucial economic events. The Federal Reserve's monetary policy decisions and the accompanying data are highly anticipated, as they will offer insights into the central bank's future actions regarding interest rates. The market is keenly focused on whether the Fed will signal any changes in its stance, particularly regarding rate cuts. This anticipation has led to increased volatility and cautious trading in the silver market. In the broader context, silver's price movement is also influenced by its role as both an industrial metal and a safe-haven asset. The ongoing economic uncertainties and geopolitical tensions play a significant role in shaping investor sentiment towards silver. As the week progresses, the market will closely monitor the Fed's policy meeting outcomes and the U.S. economic data releases, which will likely set the tone for silver's near-term price trajectory. Overall, silver's performance remains sensitive to macroeconomic indicators and policy signals from major central banks, particularly the Federal Reserve. Technically, the silver market is under fresh selling pressure, as evidenced by a 3.08% increase in open interest, bringing the total to 29,702 contracts. Despite the price drop of 84 rupees, silver remains supported at 80,265, with further support at 79,245 levels. On the upside, resistance is likely at 82,310, with a potential test of 83,335 if prices move higher.
 

Trading Ideas:
* Silver trading range for the day is 79245-83335.
* Silver little changed as investors braced for the Federal Reserve policy meeting
* Expectations that silver demand from the renewable energy sector would lead to a shortfall in the coming years.
* A key political meeting in Beijing failed to excite investors, hoping for fresh stimulus measures.

Crude Oil

Yesterday, crude oil prices settled down by -1.96% at 6351, pressured by muted demand in China and hopes of a Gaza ceasefire deal that could ease Middle East tensions and alleviate supply concerns. Data showing an 11% drop in China's total fuel oil imports in the first half of 2024 raised concerns about the broader demand outlook in China. However, oil price declines were limited by threats to production from Canadian wildfires, a significant draw in U.S. crude stocks, and continued hopes for a September rate cut in the U.S. following strong economic data. Russia has stated it will compensate for exceeding crude oil production quotas set by OPEC+ partners. Russian Deputy Prime Minister Alexander Novak confirmed no friction over this issue, and despite exceeding quotas in June, the energy ministry pledged to adhere to the required output level in July. Novak expects the OPEC+ JMCC meeting on August 1 to be constructive. In India, crude oil imports in June fell to their lowest level since February, attributed to monsoons reducing mobility and major refiners preparing for maintenance. In the U.S., crude oil inventories fell by 3.741 million barrels in the week ending July 19, 2024, surpassing market expectations of a 2.05 million draw. This marks the fourth consecutive week of decreases. Technically, the market is under fresh selling pressure with a 52.24% increase in open interest to settle at 12380 while prices dropped by 127 rupees. Crude oil is currently supported at 6275, with further support at 6200 levels. Resistance is likely at 6472, and a move above this level could see prices testing 6594.
 

Trading Ideas:
* Crudeoil trading range for the day is 6200-6594.
* Crude oil prices slipped pressured by muted demand in China and hopes of a Gaza ceasefire deal.
* China's total fuel oil imports dropped 11% in the first half of 2024, have raised concern about the wider demand outlook in China.
* US economy showed stronger-than-expected growth in Q2, suggesting potential Fed interest rate cuts in September, which could boost oil demand.

Natural gas

Natural gas prices settled down by -0.46% at 172.9, influenced by rising output that offset forecasts for increased demand over the next two weeks, driven by potential record heat in the Lower 48 U.S. states. Despite the anticipated higher demand, prices have been under pressure due to a significant oversupply of gas in storage. Even though injections have been smaller than usual in 10 of the past 11 weeks, gas stockpiles remain about 16% above normal for this time of year. LSEG reported that gas output in the Lower 48 states averaged 102.4 billion cubic feet per day (bcfd) in July, up from 100.2 bcfd in June and a 17-month low of 99.4 bcfd in May. U.S. output reached a record high of 105.5 bcfd in December 2023. Meteorologists projected that weather across the Lower 48 would stay mostly near normal through July 28 before turning hotter than normal through at least August 10, suggesting increased demand for cooling. U.S. utilities added 22 billion cubic feet of gas into storage during the week ending July 19, 2024, surpassing market expectations of a 15 billion cubic feet increase. This raised stockpiles to 3,231 billion cubic feet (Bcf), which is 249 Bcf higher than last year and 456 Bcf above the five-year average of 2,775 Bcf. With total working gas above the five-year historical range, the market remains oversupplied. Technically, the natural gas market is experiencing fresh selling pressure, with open interest increasing by 3.26% to settle at 46,511 contracts, while prices declined by -0.8 rupees. Natural gas is currently supported at 168.8, with further support at 164.6 levels. Resistance is likely at 176.9, with a potential test of 180.8 if prices move higher.
 

Trading Ideas:
* Naturalgas trading range for the day is 164.6-180.8.
* Natural gas dropped as rising output offset forecasts for more demand over the next two weeks
* Gas stockpiles were currently about 16% above normal for this time of year
* U.S. output hit a monthly record high of 105.5 bcfd in December 2023.


Copper

Yesterday, copper settled down by -0.68% at 791.2 due to concerns over Chinese demand and high inventories, as market participants awaited the Federal Reserve policy meeting and key U.S. data releases for further direction. Pressure on prices stemmed from worries about China’s demand prospects following slower-than-expected economic growth in the second quarter and the absence of significant stimulus from a key political meeting. Copper inventories in warehouses monitored by the ShFE declined to a two-month low of 301,203 tons. China's weaker-than-expected economic growth disappointed investors, who had hoped for more substantial policy changes. Citi Research forecasted that copper prices might struggle for direction in the coming weeks but could recover to $9,500 per ton within three months and touch $11,000 by early 2025. This anticipated rally is attributed to a recovery in global manufacturing sentiment driven by expected Fed rate cuts and inventory draws in the second half of 2024. The global refined copper market showed a 65,000 metric tons surplus in May, compared to an 11,000 metric tons surplus in April, according to the International Copper Study Group. China's unwrought copper imports declined to a 14-month low in June, with high global prices and weak domestic demand suppressing buying appetite. Imports were 436,000 metric tons, down 3% from the previous year and the lowest since April 2023. Technically, the market is under fresh selling as open interest increased by 1.49% to settle at 13,691 while prices fell by -5.45 rupees. Copper is currently supported at 786, with further support at 780.8 levels. Resistance is likely at 798.1, and a move above this level could see prices testing 805.
 

Trading Ideas:
* Copper trading range for the day is 780.8-805.
* Copper slid on Chinese demand concerns and high inventories.
* Pressure seen on worries about China demand prospects after slower-than-expected economic growth in the second quarter.
* Copper inventories in warehouses monitored by ShFe declined to a two-month low of 301,203 tons.

Zinc

Zinc prices settled down by -0.95% at 249.8, influenced by increased refined zinc production in China and a mixed outlook for supply and demand. In June, China's refined zinc production was 545,800 metric tons (mt), up 9,700 mt or 1.81% month-on-month (MoM) but down 1.2% year-on-year (YoY). The first half of 2024 saw total output of 3.182 million mt, down 1.39% YoY, which was higher than expected. The domestic zinc alloy production in June was 93,000 mt, down 1,800 mt MoM. The production in domestic smelters exceeded expectations due to higher-than-expected output in Guangxi, Gansu, and Guizhou, and some smelters resuming production post-maintenance. Despite this increased production, the supply of zinc concentrate remains tight, with refinery raw material inventories continuing to deplete more than they are replenished. The forecasted decline in domestic refined zinc production in the third quarter remains unchanged, maintaining the atmosphere of tight supply. Zinc inventories in the Shanghai Futures Exchange-monitored warehouses fell by 5.1% from the previous Friday. In the global market, the zinc market surplus fell to 22,100 mt in April from 70,100 mt in March, according to the International Lead and Zinc Study Group. Additionally, MMG Ltd halted operations at a mill at its Dugald River zinc mine in Australia for about two months for repair work, further tightening the already constrained zinc concentrates market. Technically, the zinc market is under fresh selling pressure, with an 8.13% increase in open interest to settle at 1,995 contracts, while prices declined by -2.4 rupees. Zinc is currently supported at 248.2, with further support at 246.4 levels. Resistance is likely to be seen at 252.6, with a potential test of 255.2 if prices move higher.
 

Trading Ideas:
* Zinc trading range for the day is 246.4-255.2.
* Zinc dropped as in June, China's refined zinc production was up by 1.81% MoM
* The supply of zinc concentrate remains tight, and refinery raw material inventories continue to be consumed more than replenished
* In June, China's refined zinc production was 545,800 mt, up 9,700 mt or 1.81% MoM but down 1.2% YoY.


Aluminum

Yesterday, aluminum prices settled down by -1.53% at 209.25 amid mounting demand concerns from top consumer China. The Chinese government refrained from implementing targeted stimulus measures to address the aggressive slowdown in the manufacturing sector. Instead, it reiterated its focus on steering the economy towards advanced technologies and new energies. Despite this, the total social inventory of aluminum ingots in China decreased by 7,000 metric tons week-on-week to 790,000 metric tons, but it remains 254,000 metric tons higher year-on-year. China's lowering of deposit rates and Canada's rate cut aligned with expectations, increasing global market liquidity. On a macro level, the Third Plenum of the Communist Party of China, which aims for comprehensive reforms, is expected to stabilize market confidence. Aluminum inventories in Shanghai Futures Exchange warehouses fell by 0.6% from last Friday. Global primary aluminum output in June rose by 3.2% year-on-year to 5.94 million tons, with first-half 2024 production up by 3.9% to 35.84 million metric tons, driven mainly by higher production in China. China's first-half aluminum output grew by 7% to 21.55 million tons, with June's production the highest in nearly a decade. The International Aluminium Institute (IAI) estimated China's production at 21.26 million tons for January-June, up 5.2%. The premium for aluminum shipments to Japanese buyers for July to September was set at $172 per metric ton, up 16%-19% from the previous quarter. Technically, the market is under fresh selling pressure with a 4.33% increase in open interest to settle at 5127, while prices fell by 3.25 rupees. Aluminum is currently supported at 207.4, with further support at 205.6 levels. Resistance is likely at 212, and a move above this level could see prices testing 214.8.
 

Trading Ideas:
* Aluminium trading range for the day is 205.6-214.8.
* Aluminium dropped amid mounting demand concerns from China.
* The Chinese government refrained from passing stimulus to target the aggressive slowdown in the manufacturing sector.
* The total social inventory of aluminum ingots is 254,000 mt higher YoY.

Cottoncandy

Yesterday, cottoncandy prices settled up by 0.44% at 56980 due to a significant decline in cotton acreage in Punjab, Haryana, and Rajasthan, which collectively reported only 10.23 lakh hectares under cotton, a stark drop from last year's 16 lakh hectares. Punjab saw a dramatic decrease to 97,000 hectares compared to the normal 7.58 lakh hectares in the 1980s and 1990s. In Rajasthan, the area under cotton fell from 8.35 lakh hectares last year to 4.75 lakh hectares this year, while Haryana saw a reduction from 5.75 lakh hectares to 4.50 lakh hectares in 2024. Support for cotton prices also came from delayed shipments from the US and Brazil, which triggered demand for Indian cotton from neighboring mills. Additionally, firm cottonseed prices have bolstered natural fiber prices even as sowing for the kharif 2024 season has begun in Karnataka, Telangana, and Andhra Pradesh due to the onset of monsoon rains. The trade expects an increase in cotton acreage in Telangana as some chilli farmers shift to cotton due to weak spice crop prices. The 2024/25 U.S. cotton projections show higher beginning and ending stocks compared to last month, with projected production, domestic use, and exports remaining unchanged. The season average upland farm price is down 4 cents from the May forecast to 70 cents per pound, resulting in ending stocks being 400,000 bales higher at 4.1 million, or 28% of use. Globally, the 2024/25 cotton balance sheet projects higher beginning stocks, production, and consumption, with world trade unchanged. Technically, the market is under fresh buying with a 0.6% increase in open interest to settle at 167 while prices rose by 250 rupees. Cottoncandy is currently supported at 56980, with resistance likely at 56980, and a move above this level could see prices testing 56980.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56980-56980.
* Cotton prices gained as area under cotton in North India drops
* China's agriculture ministry raised its forecast for cotton imports in the 2023/24 crop year by 200,000 metric tons
* The 2024/25 U.S. cotton projections show higher beginning and ending stocks compared to last month.
* In the global 2024/25 cotton balance sheet, beginning stocks, production and consumption are increased.

Turmeric

Turmeric prices settled down by -0.81% at 15,592 amid news of increased sowing across major producing regions. Despite this decline, the downside was limited as farmers are holding back stocks in anticipation of a further price rise. Encouraged by fair prices, turmeric sowing is expected to increase in all producing states this year. In Erode, sowing is reported to be double compared to last year, while in Maharashtra, Telangana, and Andhra Pradesh, sowing is estimated to be 30-35% higher. The previous year saw low sowing and unfavorable weather conditions, resulting in an estimated production of 45-50 lakh bags of turmeric in 2024, with an outstanding stock of 35-38 lakh bags. Despite the increased sowing this season, the upcoming crop is projected to be around 70-75 lakh bags, with the outstanding stock expected to be zero. This implies that the availability of turmeric will be less than the consumption in 2025. Turmeric exports during April-May 2024 dropped by 20.03% to 31,523.94 tonnes compared to the same period in 2023. However, exports in May 2024 rose by 23.43% compared to April 2024. Conversely, turmeric imports surged by 417.74% during April-May 2024, reaching 14,637.55 tonnes. This significant increase is due to the low import figures in the previous year. In May 2024, turmeric imports rose marginally by 0.18% compared to April 2024. In Nizamabad, a major spot market, the price ended at 16,384.6 rupees, gaining 0.13%. Technically, the market is under fresh selling pressure, with a 0.67% increase in open interest to settle at 15,848 contracts while prices fell by 128 rupees. Turmeric is currently supported at 15,484, with further support at 15,378. Resistance is expected at 15,772, with a potential test of 15,954 if prices move higher.
 

Trading Ideas:
* Turmeric trading range for the day is 15378-15954.
* Turmeric prices settled down 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 16384.6 Rupees gained by 0.13 percent.

Jeera

Yesterday, jeera prices settled up by 1.04% at 26760 amid robust domestic and export demand alongside tight global supplies. However, the upside was limited by the expectation of higher production. Farmers are holding back their stocks in anticipation of better prices, further bolstering the market. This season, jeera production is projected to be 30% higher, reaching 8.5-9 lakh tonnes due to a substantial rise in cultivation area. The sowing area in Gujarat increased by 104% and in Rajasthan by 16%. Globally, China's cumin output surged to over 55-60 thousand tons from the previous 28-30 thousand tons. High prices last season encouraged increased production in Syria, Turkey, and Afghanistan. Turkey expects to produce 12-15 thousand tons, while Afghanistan's output could double, weather permitting. As new supplies enter the market, cumin prices are likely to decline. Reduced export trade in cumin also contributes to this price drop, indicating a shift in global cumin market dynamics. In India, favorable weather and increased sowing areas in major cumin-producing regions have led to a significant production increase. Gujarat's cumin production is estimated at 4.08 lakh tonnes, a new record, up from 2.15 lakh tonnes last year. Rajasthan's production also increased by 53%. Trade analysts estimate a significant rise in cumin exports, potentially reaching 14-15 thousand tonnes in February 2024. Technically, the market is under short covering with open interest remaining unchanged at 26700 while prices rose by 275 rupees. Jeera is currently supported at 26480, with further support at 26190 levels. Resistance is likely at 27180, and a move above this level could see prices testing 27590.
 

Trading Ideas:
* Jeera trading range for the day is 26190-27590.
* 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 26693.65 Rupees dropped by -0.8 percent.

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