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Gold

Gold prices climbed by 0.72%, settling at 72,518, driven by macroeconomic indicators suggesting a cooling global economy and potential interest rate cuts. Weak economic data from the US has bolstered expectations that the Federal Reserve might reduce interest rates before year-end. For instance, the US JOLTS Job openings data fell sharply to 8.059 million, below the anticipated 8.340 million and the previous 8.355 million, indicating a normalizing labor market. Additionally, the ADP Employment Change in May missed estimates, coming in at 152K compared to the expected 173K. These factors have led traders to price a 65% probability of a rate cut in September, according to the CME FedWatch tool. Globally, net gold purchases by central banks surged to 33 metric tons in April from a revised 3 tons in March, signaling strong demand despite high prices. However, gold imports to China via Hong Kong dropped 38% in April from March, with net imports totaling 34.6 metric tons, down from 55.8 tons. This decline follows high consumption levels in the first quarter, which saw a 5.94% increase year-on-year, with China consuming 308.91 metric tons of gold. High gold prices have dampened retail demand in most Asian markets, with Indian dealers offering discounts for a fourth consecutive week. In China, premiums ranged between $24-$33 per ounce over benchmark prices, higher than the previous week's $15-$20. Technically, the gold market is experiencing fresh buying, with a 1.17% increase in open interest to 16,786 contracts, while prices rose by 521 rupees. Gold currently has support at 72,025, with a potential test of 71,525 if it falls below this level. Resistance is expected at 72,810, with prices possibly testing 73,095 if they move above this threshold.
 

Trading Ideas:
* Gold trading range for the day is 71525-73095.
* Gold strengthens on the back of a decline in global interest-rate expectations.
* Overall weaker growth and cooler inflation in many countries is indicating central banks are about to start cutting interest rates.
* Net gold purchases by global central banks increased to 33 metric tons in April from a revised 3 tons in March.


silver
Yesterday, silver prices rose by 0.88% to settle at 90,444, driven by ongoing assessments of central bank rate outlooks and the industrial demand landscape. One significant factor was the US imposing 50% tariffs on Chinese imports of solar cells, a key industry for silver. This move aims to curb demand for Chinese-manufactured panels, even those produced in Southeast Asia. Despite this, strong domestic demand in China, highlighted by the world's largest solar farm in Xinjiang, helped stabilize silver prices. Further supporting silver, expectations are growing that major central banks will cut interest rates soon. The ECB and BoC are anticipated to reduce rates at their next meetings, while the Fed, BoE, and PBoC are expected to follow suit in the third quarter. Lower interest rates decrease the opportunity cost of holding non-yielding assets like silver, boosting its appeal. In India, silver imports for the first four months of the year have already surpassed the total imports for all of 2023. This surge is driven by rising demand from the solar panel industry and investors' preference for silver over gold. India, the world's largest silver consumer, imported a record 4,172 metric tons of silver from January to April, up significantly from 455 tons in the same period last year. Notably, nearly half of these imports came from the United Arab Emirates, leveraging lower import duties. Technically, the market is experiencing short covering, with open interest declining by 0.93% to settle at 22,629 contracts while prices increased by 785 rupees. Silver has support at 89,375, with potential to test 88,310 if this level is breached. Resistance is expected at 91,040, and a move above this could see prices testing 91,640.
 

Trading Ideas:
* Silver trading range for the day is 88310-91640.
* Silver gains as markets continued to assess the rate outlook for major central.
* Further strong demand in the domestic Chinese markets supported prices.
* India's silver imports exceeded total for all of 2023 in the first four months of the year.


Crude oil
Crude oil prices edged up by 0.37%, settling at 6,190, as traders largely dismissed the EIA report indicating an unexpected rise in crude oil inventories. The EIA data showed U.S. crude stocks increased by 1.233 million barrels for the week ending May 31, 2024, against the market's expectation of a 2.30 million barrel decline. Crude stocks at the Cushing, Oklahoma delivery hub also rose by 854 thousand barrels, following a significant draw of 1.766 million barrels the previous week. Gasoline inventories surged by 2.102 million barrels, surpassing the expected 1.95 million rise, while distillate stockpiles, including diesel and heating oil, soared by 3.197 million barrels, above the consensus of 3.01 million. OPEC+ decided to extend most of their supply cuts into 2025, but allowed for voluntary cuts from eight member countries to be gradually reversed starting in October. This move will see over 500,000 barrels per day re-enter the market by December, with a total of 1.8 million barrels per day expected to return by June 2025. Additionally, U.S. crude production reached its highest level this year in March at 13.2 million barrels per day, a 0.6% increase from the previous month, while product supplied, a demand proxy, fell by 0.4% to 19.9 million barrels per day. Technically, the crude oil market is experiencing short covering, as indicated by a 7.57% drop in open interest, settling at 14,563 contracts, while prices rose by 23 rupees. Crude oil is currently finding support at 6,113, with a potential test of 6,037 if it dips below this level. On the resistance side, prices are likely to encounter resistance at 6,231, with a move above this level potentially leading to a test of 6,273.
 

Trading Ideas:
* Crudeoil trading range for the day is 6037-6273.
* Crude oil gains as traders largely shrugged off a report showing crude oil inventories unexpectedly rebounded.
*  Stocks of crude oil in the United States rose by 1.233 million barrels in the week ending May 31, 2024.
* Gasoline stocks surged by 2.102 million barrels, above market expectations of a 1.95 million rise.


Natural gas
Yesterday, Natural gas prices rose by 3.92% to settle at 228.2, primarily driven by a decline in daily gas output. Recent higher prices in May prompted some producers to return to the well pad, although the U.S. still faces an oversupply situation with storage levels significantly above historical averages. In June, gas output in the Lower 48 states averaged 98.1 billion cubic feet per day (bcfd), matching May's output but well below the December 2023 record of 105.5 bcfd. On a daily basis, production dropped by about 2.1 bcfd over the past two days, reaching a five-week low of 96.7 bcfd on Wednesday. Despite this decline, output has increased by 0.2 bcfd from a 15-week low on May 1, indicating a gradual recovery fueled by a 47% rise in futures prices in April and May. Output peaked at a six-week high of 99.5 bcfd on May 24. Overall, U.S. gas production remains down about 9% in 2024 after several major energy firms, including EQT and Chesapeake Energy, delayed well completions and cut drilling activities when prices plummeted to 3-1/2-year lows earlier in the year. Meteorologists forecast warmer-than-normal weather across the Lower 48 states through June 20, with only a few near-normal days expected between June 9-11. In storage data, U.S. utilities added 84 billion cubic feet of gas during the week ending May 24, the largest build in over a month and higher than the anticipated 77 billion cubic feet increase. Technically, the market experienced short covering, as evidenced by a 12.45% drop in open interest to settle at 14,830 contracts while prices rose by 8.6 rupees. Natural gas has support at 220.7, with potential to test 213.1 if this level is breached. Resistance is expected at 233, and a move above this could see prices testing 237.7.
 

Trading Ideas:
* Naturalgas trading range for the day is 213.1-237.7.
* Natural gas edged up on a decline in daily gas output.
*  That price increase occurred despite the tremendous oversupply of gas still in U.S. storage.
* Gas output in the Lower 48 U.S. states has averaged 98.1 bcfd so far in June.




Yesterday, copper prices rose by 0.71% to settle at 869.65, supported by a weaker dollar and expectations of earlier U.S. rate cuts amidst weak economic data. Soft U.S. economic indicators have strengthened the case for Federal Reserve rate cuts, leading to a rebound in the dollar from mid-March lows. In inventory news, LME copper inventories reached a six-week high of 118,950 tonnes, with deliveries to registered warehouses in Taiwan. Meanwhile, Shanghai's inventory has hovered around 300,000 tonnes since March, indicating that Chinese copper inventories have not yet begun their seasonal decline. This suggests a more abundant copper market than previously anticipated. Indonesia's announcement of a 7.5% export tax on copper concentrate shipments, effective immediately, adds further complexity to the market dynamics. China's daily refined copper production rate hit a record high, averaging 38,000 tons in April. Shanghai Futures Exchange-monitored copper stocks are near four-year highs, contrasting with January's levels of around 30,000 tons. Additionally, global refined copper showed a surplus of 125,000 metric tons in March, down from 191,000 metric tons in February, according to the International Copper Study Group. However, when adjusted for changes in inventory in Chinese bonded warehouses, the surplus was 138,000 metric tons in March compared to 221,000 metric tons in February. Technically, the market experienced short covering, with a 2.66% drop in open interest to settle at 5,917 contracts while prices rose by 6.15 rupees. Copper finds support at 860.8, with potential to test 851.9 if breached, while resistance is expected at 875, with a move above possibly leading to prices testing 880.3.
Trading Ideas:
*  Copper trading range for the day is 851.9-880.3.
*  Copper gains supported by a softer dollar and prospects of earlier U.S. rate cuts amid weak economic data.
*  The United States' manufacturing data is weaker than expected.
*  Indonesia imposes 7.5% export tax on copper concentrate shipments


Zinc
Zinc prices experienced a decline of -1.24%, settling at 258.35, largely influenced by China's manufacturing activity unexpectedly falling in May. The official PMI dropped to 49.5 from 50.4 in April, signaling contraction and dampening demand outlook in the world's leading metals consumer. This decline in demand was exacerbated by a recent price rally, further impacting consumption. China's refined zinc output in April decreased by 20,900 mt month-on-month, contributing to a year-on-year decrease of 6.56%. However, domestic zinc alloy production saw a slight increase, primarily due to maintenance activities at smelters in various regions and some equipment and raw material issues. On a positive note, Chinese authorities implemented measures to support the housing market, including lowering the minimum mortgage interest rates for first and second-time buyers. These actions, coupled with expectations of interest rate cuts, provided a boost to the commodity's industrial outlook. In terms of global market dynamics, the zinc market surplus narrowed to 52,300 metric tons in March from 66,800 tons in February, according to the International Lead and Zinc Study Group (ILZSG). Despite this reduction, the global surplus for the first three months of the year remained elevated compared to the same period last year. Technically, the zinc market witnessed fresh selling pressure, with a notable increase of 12.69% in open interest, settling at 3,304 contracts, while prices declined by -3.25 rupees. Zinc is currently finding support at 255.9, with a potential test of 253.5 if it drops below this level. Resistance is expected at 261.1, with prices possibly testing 263.9 if they move above this threshold.
 

Trading Ideas:
*  Zinc trading range for the day is 253.5-263.9.
*  Zinc prices dropped as China's manufacturing activity unexpectedly fell in May.
*  The global zinc market surplus fell to 52,300 metric tons in March from 66,800 tons in February – ILZSG.
*  China's refined zinc output was 504,600 mt, a month-on-month decrease of 20,900 mt or 3.99%.


Aluminium
Yesterday, aluminium prices dipped by -0.83% to settle at 239.1, driven by fund selling of bullish positions amidst concerns over high interest rates dampening metals demand, particularly in China. Recent shortages of alumina, a key intermediary product in aluminium production, arose due to reduced output from China and disruptions to Rio Tinto's Australian exports. Gas shortages compelled Rio Tinto to declare force majeure on alumina cargoes from its Australian refineries, raising supply concerns from the world’s second-largest producer. Despite these challenges, one global aluminium producer offered Japanese buyers a premium of $175 a metric ton for July-September, up 18% to 21% quarterly, signaling confidence in demand prospects. Global primary aluminium output in April increased by 3.3% year-on-year to 5.898 million tonnes, according to data from the International Aluminium Institute (IAI). Notably, China's imports of unwrought aluminium and products surged by 72.1% year-on-year in April to 380,000 metric tons, with first-four-month imports totaling 1.49 million tons, an 86.6% increase from the previous year. Russian imports also saw a significant rise, totaling 392,775 tons in the first quarter, up 127.7% from the corresponding period last year. Technically, the market witnessed fresh selling pressure, with a 1.75% increase in open interest to settle at 3,260 contracts while prices declined by -2 rupees. Aluminium now finds support at 237.7, with potential to test 236.2 if breached, while resistance is expected at 240.5, and a move above this could see prices testing 241.8.
 

Trading Ideas:
* Aluminium trading range for the day is 236.2-241.8.
* Aluminium dropped amid concerns that high interest rates are curbing metals demand.
* A continued inflow of "wider money" into metals, providing further support for aluminium.
* Shortages of alumina, emerged recently because of lower output from China and disruption to Rio Tinto's Australian exports.


Cottoncand
Cotton candy prices rose by 0.85% to settle at 56,960, buoyed by robust demand for Indian cotton from countries like Bangladesh and Vietnam, despite concerns over sluggish milling demand and muted yarn demand globally. However, the upside was capped by expectations of a better crop in countries such as Australia. The International Cotton Advisory Committee (ICAC) has projected increases in cotton-producing area, production, consumption, and trade for the upcoming season, 2024-25. India's cotton stocks are anticipated to decline by nearly 31% in the 2023/24 marketing year, reaching their lowest level in over three decades, driven by lower production and rising consumption. This reduction in stockpiles is expected to limit exports from the world's second-largest producer, supporting global prices while potentially lifting domestic prices and affecting the margins of local textile companies. India's cotton exports for the season could rise to 2.20 million bales from 1.55 million bales a year ago. Looking ahead to the 2024/25 marketing year, India's cotton production is estimated to decrease by two percent due to farmers shifting acreage to higher return crops. However, mill consumption is projected to increase by two percent as yarn and textile demand improves internationally. Additionally, China's cotton imports for the same period are forecasted to rise on higher domestic and international demand for textile and apparel products. Technically, the cotton candy market is witnessing short covering, with open interest remaining unchanged and prices increasing by 480 rupees. Support is found at 56,600, with a potential test of 56,230 if prices drop below this level. Resistance is likely at 57,260, with a move above possibly testing 57,550.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56230-57550.
* Cotton gains as demand for India cotton continues to be strong.
* U.S. ending stocks projected 1.3 million bales above 2023/24 level
* Global supplies in 2024/25 projected to be higher than previous year
* In Rajkot, a major spot market, the price ended at 26912.3 Rupees gained by 0.03 percent.


Turmeric
Turmeric prices surged by 2.62% yesterday, settling at 17244, fueled by farmers withholding stocks in anticipation of further price hikes. However, the upside is expected to be limited due to increased supplies towards the end of the harvesting season. The prevailing heat wave across India poses a threat to crop yields, exacerbating the supply crunch and providing further support to prices. The India Meteorological Department forecasts more heat wave days than usual in May, with rainfall over southern India significantly below normal levels. In terms of production, the Ministry of Agriculture and Farmers’ Welfare’s first advance estimate projects turmeric production for 2023-24 at 10.74 lakh tonnes, down from 11.30 lakh tonnes the previous year. Additionally, demand destruction has occurred as prices soared, prompting many to adopt a hand-to-mouth approach. Despite domestic dynamics, turmeric exports during Apr-Mar 2024 dipped by 4.75% compared to the same period in 2023, while imports dropped by 12.71%. Notably, in March 2024, turmeric exports rose by 34.90% compared to February 2024, although they declined by 7.37% compared to March 2023. Conversely, turmeric imports in March 2024 surged by 32.70% year-on-year, but witnessed a 24.67% drop compared to February 2024. In the spot market, prices in Nizamabad, a major trading hub, closed at 17965.2 Rupees, marking a slight decline of -0.08 percent. Technically, the market experienced short covering, with a 14.7% drop in open interest to settle at 9165 contracts while prices increased by 440 rupees. Turmeric now finds support at 16476, with potential to test 15706 if breached, while resistance is expected at 17908, with a move above possibly leading to prices testing 18570.
 

Trading Ideas:
*  Turmeric trading range for the day is 15706-18570.
* 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 17965.2 Rupees dropped by -0.08 percent.


Jeera
Jeera prices surged by 2.53% to settle at 29,140, driven by robust domestic and export demand coupled with tight global supplies. Farmers withholding their stocks in anticipation of better prices further bolstered the market. However, the upside potential was constrained by expectations of higher production this season, projected to be 30% higher at 8.5-9 lakh tonnes due to increased cultivation area in Gujarat and Rajasthan. Globally, jeera production has seen significant increases, particularly in China where output soared, and in Syria, Turkey, and Afghanistan where new seeds are expected to yield higher production. These factors, along with reduced export trade in cumin, are expected to exert downward pressure on prices. India's jeera exports dropped by 13.53% during Apr-Mar 2024 compared to the previous year, reflecting fluctuations in domestic prices. Despite this decline, the area sown in Gujarat and Rajasthan has increased, and international cumin prices have declined, indicating a potential increase in exports for the upcoming period. Technically, the jeera market witnessed short covering, with a notable decrease of -14.19% in open interest, settling at 1,977 contracts, while prices rose by 720 rupees. Jeera is currently finding support at 28,000, with a potential test of 26,850 if prices fall below this level. Resistance is likely at 29,900, with prices possibly testing 30,650 if they move above this threshold. Overall, while demand remains strong, the market is closely monitoring supply dynamics and production forecasts to gauge future price movements.
 

Trading Ideas:
* Jeera trading range for the day is 26850-30650.
* Jeera gained 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 28636.2 Rupees dropped by -0.02 percent.

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