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Gold

Gold exhibited robust performance in yesterday's trading session, surging by 1.11% to settle at 73102, buoyed by a weaker dollar and subdued yields. The rally was propelled by data indicating that the U.S. consumer price index rose less than anticipated in April, heightening expectations of interest rate cuts by the Federal Reserve. With the CPI edging up by only 0.3% last month, market sentiments were bolstered, fostering a likelihood of a rate cut by September, with traders pricing in a 69% chance according to the CME FedWatch Tool. However, concerns lingered regarding U.S. retail sales, which unexpectedly stagnated in April, attributed to higher gasoline prices diverting consumer spending away from other goods. This tepid performance suggested a potential slowdown in consumer spending momentum, adding to the narrative for monetary policy easing. Meanwhile, South Africa's gold production witnessed a continued decline, contracting by 4.5% year-on-year in March 2024, marking the fifth consecutive month of decrease. Although there was a marginal uptick in gold output on a seasonally adjusted basis, it failed to offset the overall downward trend, exerting a negative impact on mining production. From a technical perspective, the market exhibited signs of short covering, as evidenced by a drop in open interest by -3.64% to settle at 11741. Despite this, gold prices surged by 805 rupees, underscoring bullish momentum. Currently, gold finds support at 72505, with a potential downside test towards 71915 levels. Conversely, resistance is anticipated at 73415, with a breakout potentially leading to a test of 73735 levels.
 

Trading Ideas:
* Gold trading range for the day is 71915-73735.
* Gold prices climbed aided by a weaker dollar and yields.
* Data showed the U.S. consumer price index rose less than expected in April.
* Traders are now pricing in about a 69% chance of a rate cut in September, according to the CME FedWatch Tool.


Silver
Silver prices experienced a significant uptick, surging by 1.7% to settle at 86865, fueled by fresh economic data from the US, which intensified expectations of interest rate cuts by the Federal Reserve. The moderation in both annual and core US inflation rates in April, coupled with stagnant retail sales figures, alleviated concerns surrounding inflationary pressures and consumer demand, thereby strengthening the case for a more accommodative monetary policy stance by the Fed. Market sentiment is currently heavily leaning towards a rate reduction in September, with more than a 70% probability compared to the previous day's 69%, reflecting growing anticipation of reduced interest rates. The subdued increase in US consumer prices in April, rising 0.3% after previous months' advancements of 0.4%, contributed to the narrative of a downward trajectory in inflation, further supporting expectations for a September rate cut. Additionally, the unchanged retail sales figures for April, following a slightly downwardly revised increase in March, suggested a softening in consumer spending momentum, providing further rationale for a less stringent approach by the Fed. Technically, the silver market demonstrated strong buying activity, with open interest climbing by 5.13% to settle at 29485 contracts. Prices surged by 1448 rupees, indicative of robust bullish sentiment prevailing in the market. Support for silver is currently established at 85695, with a potential downside target at 84530, while resistance is expected at 87500, with a possible breakthrough leading prices towards 88140.
 

Trading Ideas:
* Silver trading range for the day is 84530-88140.
* Silver gains as US economic data fueled bets for interest rate cuts by Fed.
* U.S. consumer prices increased less than expected in April, suggesting that inflation resumed its downward trend.
* U.S. retail sales were unexpectedly flat in April as higher gasoline prices pulled spending away from other goods.


Crude oil
Crude oil prices experienced a modest uptick of 0.6% in yesterday's trading session, settling at 6551, largely propelled by a significant drawdown in oil inventories. The Energy Information Administration (EIA) report revealed a larger-than-expected decline of 2.508 million barrels in US crude stocks, surpassing market projections. Moreover, unexpected decreases in gasoline and distillate fuel stockpiles further buoyed market sentiment. Despite the favorable inventory data, concerns loomed over global demand dynamics. The International Energy Agency (IEA) revised down its forecast for global demand growth by 140,000 barrels per day (bpd) for the year, citing sluggish industrial activity and reduced gasoil consumption, particularly in Europe. Additionally, the latest OPEC report indicated that OPEC+ members exceeded their production limit by 568,000 bpd last month. Nevertheless, OPEC remains optimistic about future demand, forecasting a steady rise in demand for both 2024 and 2025. In the US, crude oil stocks witnessed a notable decline of 3.104 million barrels in the week ending May 10th, according to data from the American Petroleum Institute's (API) Weekly Statistical Bulletin. This sharp drop marked the largest weekly decrease in three weeks, deviating significantly from market expectations. From a technical standpoint, the market exhibited signs of short covering, with a notable drop in open interest by -32.29% to settle at 6192, despite prices edging up by 39 rupees. Currently, crude oil finds support at 6451, with a potential downside test towards 6352 levels. Conversely, resistance is anticipated at 6613, with a breakout potentially leading to a test of 6676 levels.
 

Trading Ideas:
* Crudeoil trading range for the day is 6352-6676.
* Crude oil gains triggered by a larger-than-expected decrease in oil inventories.
* EIA report showed a 2.508 million barrel decline in US crude stocks
* Crude oil stocks in the US declined by 3.104 million barrels – API


Natural gas
Natural gas prices edged higher by 0.61% in yesterday's trading session, settling at 198.9, primarily driven by a decline in output and forecasts of warmer weather in the coming weeks. The anticipation of increased demand from gas power generators to meet electricity needs, particularly for air conditioning during warmer temperatures, contributed to the price uptick. However, the market remained constrained by a significant oversupply of gas still in storage, tempering the extent of the price increase. Notably, gas output in the Lower 48 U.S. states saw a decline to an average of 97.1 bcfd so far in May, down from 98.2 bcfd in April. This reduction in output, coupled with a 10% decline in U.S. gas production in 2024, attributed to delayed well completions and drilling cutbacks by energy firms in response to lower prices earlier in the year. EQT and Chesapeake Energy, key players in the industry, implemented measures to curtail drilling activities following a slump in prices to 3-1/2-year lows in February and March. The impending merger of Chesapeake Energy with Southwestern Energy positions it to become a significant player in the gas market. Moreover, meteorologists projected warmer-than-normal weather across the Lower 48 states from May 18-30, further fueling expectations of heightened gas demand for cooling purposes. From a technical standpoint, the market witnessed short covering, with a drop in open interest by -3.04% to settle at 23017, despite prices inching up by 1.2 rupees. Presently, natural gas finds support at 194.2, with a potential downside test towards 189.5 levels. Conversely, resistance is anticipated at 202.9, with a breakout potentially leading to a test of 206.9 levels.
 

Trading Ideas:
* Naturalgas trading range for the day is 189.5-206.9.
*  Natural gas climbed on a drop in output and forecasts for warmer weather over the next two weeks.
* That price increase was kept in check by the tremendous oversupply of gas still in storage.
* Gas output in the Lower 48 U.S. states fell to an average of 97.1 billion cubic feet per day (bcfd) so far in May.


Copper
Copper prices rallied by 0.88% to settle at 891.95, driven by mounting concerns over inadequate supply amidst speculative demand, exacerbated by a short squeeze in the US market. The metal's pivotal role in various industries, particularly in electrification projects such as electric vehicle charging and grid-scale energy storage, underscored its enduring utility, fueling optimistic forecasts for copper demand. Notably, China's increased import of copper ore inputs despite soaring prices highlighted robust demand from manufacturers, buoyed by Beijing's initiatives like long-maturity bond rollouts, signaling potential industrial traction in the country. However, supply-side challenges persisted as low material availability constrained margins for Chinese smelters, who account for a significant portion of global supply. The reluctance of major miners to commit to new projects due to high costs favored M&A activities, exemplified by BHP's recent bid to acquire Anglo American. Amidst these dynamics, the People's Bank of China (PBoC) intervened by injecting CNY 125 billion through a one-year medium-term lending facility (MLF) to stabilize the yuan against a strengthening dollar. The yuan's depreciation by 2% this year against the dollar, influenced by relatively low yields compared to other economies, prompted PBoC's efforts to maintain stability. Technically, the copper market experienced short covering, indicated by a decline in open interest by -18.8% to settle at 5305 contracts. Prices surged by 7.75 rupees, reflecting bullish sentiment. Support for copper is identified at 880.6, with a potential downside test at 869.2, while resistance is anticipated at 904.2, with a possible breakthrough targeting 916.4.
 

Trading Ideas:
* Copper trading range for the day is 869.2-916.4.
* Copper soared to a record-high amid increasing concerns of insufficient supply.
* Copper producers and traders have been shipping more metal to US to profit from higher prices for CME futures compared with LME.
* Peru copper output dips slightly in March to total 219,011 tons

Zinc
Zinc prices faced downward pressure in yesterday's trading session, settling at 261.95, marking a decline of -0.78%. The primary driver behind this downturn was China's announcement of an increase in refined zinc production for May 2024, with a projected rise of 26,800 metric tons to reach 531,400 metric tons. This uptick in output was attributed to production resumptions following maintenance, along with increased production at various smelters across different regions in China. The decision by Boliden, a Swedish mining giant, to resume production at its Tara zinc mine also contributed to market dynamics. Despite these production developments, the global zinc market continued to grapple with surplus conditions. Data from the International Lead and Zinc Study Group (ILZSG) revealed a widening surplus, reaching 40,100 metric tons in February, compared to 12,300 tons in January. Moreover, social inventories of zinc ingots across seven major markets in China displayed a mixed trend, totaling 212,900 metric tons as of May 9. While this marked a slight increase from April 29, it represented a decrease from May 6, indicating some variability in inventory levels. From a technical standpoint, the market witnessed long liquidation, with a notable drop in open interest by -21.86% to settle at 2935, accompanied by a decline in prices by -2.05 rupees. Presently, zinc finds support at 259.5, with a potential downside test towards 256.9 levels. Conversely, resistance is anticipated at 266, with a breakout potentially leading to a test of 269.9 levels.
 

Trading Ideas:
* Zinc trading range for the day is 256.9-269.9.
* Zinc dropped as China’s refined zinc production in May 2024 will increase by 26,800 mt.
* The production resumption after maintenance and increase in output at smelters in Gansu, Xinjiang, Liaoning, Hunan, Henan and Sichuan.
* Swedish mining giant Boliden to resume production at its Tara zinc mine.


Aluminium
Aluminium prices surged by 1.58% to settle at 237.65, bolstered by a weaker U.S. dollar and an optimistic demand outlook. China's aluminium production in April saw a significant year-on-year increase of 4.98%, with some smelters in Yunnan province resuming production, contributing to a rise in the domestic daily average output. This trend is expected to continue in May as power supply in Yunnan recovers and local capacity steadily resumes, although attention remains on the progress of resuming remaining production capacities in the region. However, aluminium inventories in LME warehouses soared to their highest level in over 2-1/2 years, more than doubling in less than a week, driven by significant deliveries from commodity trader Trafigura for financial transactions. Despite this influx, bullish sentiment prevailed, supported by expectations of rising demand and a favorable demand-supply balance. The People's Bank of China (PBoC) injected CNY 125 billion through a one-year medium-term lending facility (MLF) to stabilize the yuan amidst a resurgent dollar, while maintaining the interest rate at 2.50%. The yuan's depreciation by 2% against the dollar this year, influenced by lower yields compared to other economies, prompted PBoC's efforts to maintain stability. Technically, the aluminium market witnessed short covering, with a drop in open interest by -15.61% to settle at 2601 contracts. Prices rose by 3.7 rupees, indicating bullish sentiment. Support for aluminium stands at 234.8, with a potential downside test at 232, while resistance is anticipated at 240.1, with a possible breakthrough targeting 242.6.
 

Trading Ideas:
* Aluminium trading range for the day is 232-242.6.
* Aluminium gains aided by a weaker U.S. dollar and bullish demand outlook.
* China's aluminium output was 3.515 million mt in April (30 days), up 4.98% YoY.
* LME aluminium stocks surge to highest since October 2021


Cottoncandy
Cotton candy prices experienced a decline of -1.1% in yesterday's trading session, settling at 55980, primarily driven by sluggish milling demand amid muted global demand for yarn. Additionally, pressure mounted from prospects of a better crop in countries like Australia. However, downside potential was limited by strong demand for Indian cotton from countries such as Bangladesh and Vietnam. The International Cotton Advisory Committee (ICAC) projected increases in cotton-producing areas, production, consumption, and trade for the upcoming season, 2024-25. India's cotton stocks are anticipated to decline by nearly 31% in 2023/24, reaching their lowest level in more than three decades due to lower production and rising consumption. This reduction in stockpiles is expected to constrain exports from India, the world's second-largest cotton producer, supporting global prices but potentially impacting the margins of local textile companies. India's cotton production for the current season is forecasted to decrease slightly, with consumption expected to rise. Moreover, India's cotton exports are projected to increase compared to the previous year. Looking ahead to the 2024/25 marketing year, India's cotton production is estimated to decrease by two percent, while mill consumption is expected to rise by two percent as yarn and textile demand improves in major international markets. Meanwhile, China's cotton imports for the same period are forecasted to increase on higher domestic and international demand for textile and apparel products. From a technical perspective, the market witnessed fresh selling pressure, with a gain in open interest by 0.54% despite prices declining by -620 rupees. Presently, cotton candy finds support at 55700, with a potential downside test towards 55420 levels. Conversely, resistance is likely at 56380, with a breakout potentially leading to a test of 56780 levels.
 

Trading Ideas:
* Cottoncandy trading range for the day is 55420-56780.
* Cotton dropped as sluggish milling demand is still concerns amid muted demand of yarn in global market.
*  Pressure also seen amid prospects of a better crop in countries such as Australia.
* Cotton stocks at the end of 2023/24 marketing year could fall to 2 million bales  - CAI
* In Rajkot, a major spot market, the price ended at 27203.8 Rupees dropped by -0.24 percent.


Turmeric
Turmeric prices surged by 1.37% to settle at 18160, propelled by farmers withholding stocks in anticipation of further price increases amidst a looming supply crunch exacerbated by the current heat wave sweeping across India. The scorching weather conditions threaten to damage crop yields, adding pressure on already constrained supplies and bolstering prices. The India Meteorological Department's forecast of continued heat waves across the country in May reinforces concerns over crop health and production. However, profit booking and increased supplies towards the end of the harvesting season have capped upside potential for turmeric prices. Additionally, rainfall in southern India during April was significantly below normal levels, further exacerbating supply concerns. The Ministry of Agriculture and Farmers’ Welfare's first advance estimate indicates a decline in turmeric production for 2023-24 compared to the previous year, attributing to demand destruction as prices surged. Nonetheless, regions such as Sangli, Basmat, and Hingoli are experiencing strong demand for quality turmeric, driven by expectations of increased sowing areas in the current year. On the export front, turmeric exports during Apr-Feb 2024 witnessed a slight decrease compared to the previous year, while imports saw a notable decline, signaling a shift in trade dynamics. However, in February 2024, both exports and imports showed a month-on-month increase, indicating fluctuating trade patterns. In the spot market, prices in Nizamabad, a major trading hub, saw a marginal increase, reflecting overall market sentiment. Technically, the turmeric market experienced short covering, with a drop in open interest by -4.24% to settle at 17155 contracts, coinciding with a price increase of 246 rupees. Support for turmeric is identified at 17750, with a potential downside test at 17342, while resistance is anticipated at 18508, with a possible breakthrough targeting 18858.
 

Trading Ideas:
* Turmeric trading range for the day is 17342-18858.
* Turmeric prices gained as farmers are holding back stocks in anticipation of a further rise.
* The current heat wave could severely damage the crop yield, further contributing to the supply crunch.
*  The Ministry of Agriculture first advance estimate for turmeric production in 2023-24 is estimated at 10.74 lakh tonnes
* In Nizamabad, a major spot market, the price ended at 17483.35 Rupees gained by 0.35 percent.


Jeera
Jeera prices experienced a decline of -0.93% in yesterday's trading session, settling at 27060, primarily driven by profit booking activities. This correction came after prices had previously gained momentum, with the arrival pace slowing down as both stockists and farmers were hesitant to release their stocks in anticipation of better price realization. Despite this, upward pressure on prices was supported by robust export demand, aggressive buying by stockists, and a preference for Indian jeera among global buyers due to tightening global supplies. The increased sowing area and favorable weather conditions in major cumin-producing regions of India, particularly in Gujarat and Rajasthan, led to a significant rise in production. Gujarat alone is estimated to have produced a record-breaking 4.08 lakh tonnes of cumin, while Rajasthan's production surged by 53%. This surge in production is expected to significantly increase cumin exports, potentially reaching 14-15 thousand tonnes in February 2024. However, despite the positive production outlook, jeera exports during Apr-Feb 2024 saw a notable decline of 23.75% compared to the same period in the previous year. This drop in exports could be attributed to various factors, including volatile domestic prices and a decline in international cumin prices. From a technical perspective, the market witnessed long liquidation, with a drop in open interest by -0.56% despite prices declining by -255 rupees. Presently, jeera finds support at 26720, with a potential downside test towards 26360 levels. Conversely, resistance is likely at 27540, with a breakout potentially leading to a test of 28000 levels.
 

Trading Ideas:
* Jeera trading range for the day is 26360-28000.
* Jeera dropped on profit booking after prices gained as arrival pace has started slowed down.
* Global buyers preferred Indian jeera with tightening global supplies.
* New arrivals have started in Gujarat since last 20-25 days and new arrivals have started in Rajasthan also since last 15 days.
* In Unjha, a major spot market, the price ended at 28988.5 Rupees dropped by -0.03 percent.

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