IGI Logo

Gold

Gold experienced a marginal uptick, settling up by 0.03% at 61199, as investors processed fresh economic data from the US and awaited the US Federal Reserve's interest rate decision. November's US headline and core producer inflation came in below forecasts, suggesting a potential easing in price pressures. Market attention now turns to Fed Chair Jerome Powell's commentary, with expectations of rate cuts in the first half of 2024. However, a robust US jobs report and potential upside risks to inflation could lead policymakers to adopt a less dovish stance than anticipated. Traders are also closely monitoring monetary policy decisions from the European Central Bank and the Bank of England later in the week, contributing to overall market uncertainty. On a monthly basis, US headline inflation saw a slight increase of 0.1%, contrary to the market consensus of a flat reading, while the core rate edged up slightly to 0.3%. In the physical gold market, Indian dealers increased discounts to seven-month highs to attract customers as record local prices dampened demand. In China, premiums ranged from $12-$30 per ounce over global spot prices, down from the $25-$35 premiums charged in the preceding week. Technically, the gold market is currently under short covering, with a drop in open interest by -0.98% to settle at 14594, while prices are up by 18 rupees. Gold finds support at 61020, with a potential downside test at 60840. On the upside, resistance is likely at 61360, and a move above could lead to a test of 61520.
 

Trading Ideas:
* Gold trading range for the day is 60840-61520.
* Gold steadied as investors digested fresh economic data from the US
* The US headline and core producer inflation came below forecasts for November, indicating the easing in the price pressures
* Robust US jobs report and upside risks to inflation could prompt policymakers to take a less dovish stance than what market participants anticipate.

Silver

Silver faced a decline, settling down by -0.46% at 71532, as traders evaluated the latest US data for insights into the potential start of interest rate cuts by the Federal Reserve in 2024. The US consumer inflation survey indicated a year-on-year slowdown to 3.1% in November 2023, aligning with estimates. However, on a monthly basis, prices edged up by 0.1%, contrary to expectations of a flat reading. Meanwhile, the annual core rate held steady at 4%. The US jobs report highlighted a resilient labor market, delaying expectations of monetary easing until May and increasing the opportunity cost of holding precious metals. Silver, serving both as a precious metal and an industrial input, faces pressure as the potential for prolonged restrictive interest rates looms. Chile's state-owned Chochilco predicts a 9.4% drop in silver demand in 2024 due to reduced investments. Despite this, the market is expected to be in a deficit due to lower output from Peru and Mexico. In the US, producer prices steadied in November after a downwardly revised 0.4% fall in the previous period. Notably, prices for chicken eggs surged 58.8%, and costs for fresh fruits, melons, utility natural gas, electric power, and carbon steel scrap also rose. Technically, the silver market is under fresh selling pressure, with a gain in open interest by 4.96% to settle at 19645, while prices are down by -330 rupees. Silver finds support at 71190, with a potential downside test at 70845. On the upside, resistance is likely at 71925, and a move above could lead to a test of 72315.
 

Trading Ideas:
* Silver trading range for the day is 70845-72315.
* Silver dropped as traders continued to assess the latest data from the US
* Consumer inflation in the US slowed to 3.1% yoy in November 2023, matching the estimates.
* Chile’s state-owned Chochilco stated that the metal's demand is expected to drop 9.4% in 2024 due to decreased investments.

Crude oil

Crude oil experienced a 1.12% gain, settling at 5781, following OPEC's monthly oil market report that maintained a forecast of a supply shortfall in the coming quarters. The report attributed the recent decline in crude prices to "exaggerated concerns" about oil demand growth. OPEC retained its forecast for world oil demand growth at 2.25 million barrels per day (bpd) for 2024. In the US, crude oil inventories recorded a significant decline of 4.259 million barrels for the week ending December 8th, surpassing market expectations of a 0.65 million barrel draw. This reduction extended the 4.632 million drop from the previous week. The data indicated increased demand, supported by a 1.468 million barrel rise in total product supplied to refineries. However, stocks at the Cushing, Oklahoma, delivery hub increased by 1.228 million barrels. The American Petroleum Institute's figures for the same period showed a 2.3 million barrel decline in crude stocks, contrasting with a rise of about 5.8 million barrels in gasoline inventories and nearly 280,000 barrels in distillate stocks. Technically, the crude oil market is under short-covering pressure, with a drop in open interest by -33.35% to settle at 9963, while prices increased by 64 rupees. Crude oil finds support at 5687, with a potential downside test at 5592. On the upside, resistance is likely at 5848, and a move above could lead to a test of 5914. Investors should monitor OPEC announcements, global oil demand trends, and geopolitical factors for insights into potential supply and demand dynamics that may impact crude oil prices.
 

Trading Ideas:
* Crudeoil trading range for the day is 5592-5914.
* Crude oil rose as OPEC issued its report where it sticks to a shortfall in the coming quarters.
* OPEC maintains cautious optimism for 2024 in latest report
* Crude oil inventories in the US fell by 4.259 million barrels - EIA

Natural gas

Natural gas settled up by 0.15% at 196.3, driven by heightened demand forecasts for the week and record gas flows to liquefied natural gas (LNG) export plants. Despite expectations of mild weather and lower heating demand in the coming weeks, the price increased. The warm weather conditions are anticipated to persist through December 27, leading to reduced gas demand in the Lower 48 from 123.7 billion cubic feet per day (bcfd) this week to 122.8 bcfd next week. Record gas output in the Lower 48 U.S. states reached 108.4 bcfd in December, up from the previous record of 108.3 bcfd in November. Gas flows to major U.S. LNG export plants increased to an average of 14.6 bcfd in December, surpassing the record of 14.3 bcfd in November. The U.S. is expected to become the world's largest LNG supplier in 2023, outpacing Australia and Qatar, driven by higher global prices, disruptions, and sanctions related to the Ukraine conflict. Despite the increased output and forecasts of mild weather, U.S. natural gas storage is projected to end the winter withdrawal season at 1.973 trillion cubic feet (tcf) on March 31, the highest since 2020. From a technical standpoint, the market is under short-covering, with a drop in open interest by -12.79% to settle at 27,402, while prices increased by 0.3 rupees. Natural gas finds support at 189.1, and a potential downside test at 181.8. On the upside, resistance is likely at 201.5, and a move above could lead to a test of 206.6.
 

Trading Ideas:
* Naturalgas trading range for the day is 181.8-206.6.
* Natural gas edged up on raised demand forecasts for this week, and as record amounts of gas flowed to LNG export plants.
* That price increase came despite record output and forecasts for mild weather and lower heating demand next week
* Meteorologists predicted that warmer-than-usual weather conditions would persist through December 27.


Copper

Copper settled down by -0.17% at 713.7, influenced by the outcomes of China's Central Economic Work Conference, which primarily focused on defusing risks without introducing new stimulus measures for the country's property sector. Despite this, Peru's copper production showed a 1.9% increase in October compared to the same period last year, reaching 240,097 metric tons for the month. Some support for copper prices emerged from the prospect of tighter supply in the coming year and expectations of additional economic stimulus from China. Refined copper inventories in both the Shanghai Futures Exchange (SHFE) and China's bonded warehouses decreased to 39,342 tons from 316,176 tons at the end of the first quarter. However, challenges loom as China experiences the fastest decline in consumer prices in three years in November, coupled with deepening factory-gate deflation, suggesting growing deflationary pressures amid weak domestic demand. Mine closures and disruptions have reshaped the copper supply landscape, prompting analysts to revise their surplus forecasts, signaling positive momentum for copper prices. Yet, downside risks exist, notably with Anglo American lowering its copper production guidance for 2024 and 2025 due to uncertainties in the operating environment. From a technical perspective, the market is under long liquidation, witnessing a drop in open interest by -0.19% to settle at 4,611. Copper finds support at 710.9, with a potential test of 708 on the downside. Resistance is now likely at 715.9, and a move above could see prices testing 718.
 

Trading Ideas:
* Copper trading range for the day is 708-718.
* Copper dropped as China's Central Economic Work Conference lacking new stimulus for the country's property sector.
* China's imports of copper rose 10.1 % from month ago to 550,565.6 tonnes in November
* Macquarie now expects copper market surpluses of 100,000 and 287,000 tons for 2024 and 2025 respectively

Zinc

Zinc faced a setback, dropping by -0.02% to 218.2 as China's pivotal meeting failed to meet investor expectations, casting shadows on the demand outlook from the world's largest consumer. The absence of a clear growth target heightened concerns, prompting the meeting to stress concerted efforts to boost domestic demand through comprehensive fiscal and monetary policies. With the focus on upcoming Chinese industrial production, retail sales, and unemployment figures, alongside the People’s Bank of China's medium-term lending rate decisions, investors await crucial signals for market direction. Over the weekend, China reported a YoY consumer price decline of 0.5% in November, surpassing the 0.2% drop in October and missing the 0.1% forecast. Producer prices also fell sharply by 3%, marking the 14th consecutive month of decline, the steepest since August. These indicators point to ongoing economic challenges, adding to the market's uncertainty. Specifically for China, the ADB adjusted its growth projection to 5.2% for 2023, up from 4.9%, while retaining a 4.5% growth forecast for the following year. From a technical standpoint, the market is undergoing fresh selling pressure, evidenced by a 0.33% increase in open interest, settling at 3900. Despite a marginal price dip of -0.05 rupees, Zinc is finding support at 217, and a breach below could test 215.8 levels. On the upside, resistance is anticipated at 219.1, and a breakthrough could lead to further testing at 220. The technical outlook suggests a delicate balance between bearish sentiment and potential upward momentum.
 

Trading Ideas:
* Zinc trading range for the day is 215.8-220.
* Zinc dropped as China's agenda-setting meeting that failed to meet investors' expectation and darkened demand outlook
* Developing Asia to end 2023 on brighter note as China's economy recovers - ADB
* The global zinc market swung to a deficit of 15,400 metric tons in September from a surplus of 28,000 tons in August


Aluminium

Aluminium prices experienced a 0.64% increase to reach 195.65 amid optimistic expectations of increased economic stimulus from China, a major metals consumer. The three-month contract's cash aluminium discount hit a three-month high of $47 per ton. Concerns about deflationary pressures surfaced as China reported the fastest decline in consumer prices in three years in November, coupled with deepening factory-gate deflation, reflecting uncertainties about its economic recovery. Warehouse inventories monitored by the Shanghai Futures Exchange dropped by 8.20% from the previous Friday, influenced by ongoing production restrictions due to China's winter power shortage and local smelter capacity ceilings. According to the World Bureau of Metal Statistics (WBMS), global refined aluminium production and consumption in September resulted in a supply shortage of 14,900 tons. In October, China's primary aluminium production hit a record monthly high of 3.62 million tons, reflecting a 6% increase compared to the same month the previous year, driven by rising smelter profits and domestic demand. Technically, the market showed signs of short covering, with a 4.36% drop in open interest to 4497, accompanied by a price increase of 1.25 rupees. Support for aluminium is identified at 193.9, with a potential test of 192.2 levels, while resistance is anticipated at 196.6, with a breakout potentially leading to a test of 197.6.
 

Trading Ideas:
* Aluminium trading range for the day is 192.2-197.6.
* Aluminium gains amid hopes of more economic stimulus from top metals consumer China.
* The discount for cash aluminium against the three-month contract reached its three-month high of $47 per ton.
* China’s primary aluminium production totaled 3.62 million tons in October, up by 6%

Cotton

Cotton prices, represented by Cottoncandy, closed marginally lower by -0.18% at 56620. The decline comes in the wake of reports indicating a reduction in the infestation of pink bollworm in the cotton crop. The infestation has notably decreased from 30.62% during 2017-18 to 10.80% in 2022-23. This positive development in pest control is expected to have implications for cotton yields and crop quality. However, there are contrasting factors influencing the cotton market globally. On one hand, certified cotton stocks available for delivery against contracts dropped significantly to 6,325 bales on December 5th from their recent high of 87,770 bales on December 1st, indicating a potential tightening of supplies. On the other hand, Brazilian cotton shipments increased by 12% in November compared to October 2023 but decreased by 5.5% compared to November 2022. The International Cotton Advisory Committee (ICAC) projected a situation where global cotton production would surpass consumption for the second consecutive year. The global cotton lint production is forecasted to increase by 3.25% year-on-year to 25.4 million metric tons in the 2023-2024 season. However, consumption is expected to marginally decline to 23.4 million metric tons. In India, the Cotton Association of India (CAI) revised down its cotton production estimate for the current 2023/2024 season to 29.4 million bales, citing damage caused by pink bollworm infestation in Haryana and farmers uprooting plants. Additionally, a significant decline in cotton production by 25% is anticipated in north Maharashtra due to inadequate rainfall. Technically, the market is currently under fresh selling pressure, with open interest up by 1.68% to settle at 182. Cottoncandy is finding support at 56540, with a potential downside test at 56450. Resistance is likely at 56740, and a move above could lead to a test of 56850.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56450-56850.
* Cotton dropped as infestation of pink bollworm in the cotton crop witnessed a decline.
* The infestation has reduced from 30.62 per cent during 2017-18 to 10.80 per cent in 2022-23.
* ICAC projected that global cotton production will likely outpace consumption for the second year in a row.
* In Rajkot, a major spot market, the price ended at 26393.6 Rupees dropped by -0.37 percent.

Turmeric

Turmeric prices experienced a significant surge, closing up by 6% at 15164, primarily driven by concerns over potential yield losses due to unfavorable weather conditions for the crop. Buying activities have been relatively slower, with expectations of stock releases ahead of the new crop commencement in January 2024. However, the market has faced some pressure due to improved crop conditions resulting from favorable weather. There are farmer concerns in Maharashtra over the location of PM Modi's Turmeric Board in Telangana, which adds an element of uncertainty to the market. Despite this, the crop condition is reported to be satisfactory, with harvest readiness expected during January to March. The current levels of buying activity and decreasing supplies are expected to sustain price stability, and support is evident for improved export opportunities. Turmeric exports during April-September 2023 increased by 4.14% to 92,025.16 tonnes compared to the same period in 2022. However, in September 2023, exports dropped by 19.75% month-on-month and 35.06% year-on-year. The potential decline in turmeric seeding by 20–25% in key producing regions like Maharashtra, Tamil Nadu, Andhra Pradesh, and Telangana is attributed to shifting priorities among farmers. Technically, the market is witnessing fresh buying, as open interest has increased by 17.25% to settle at 11,625. Turmeric is finding support at 14560, with a potential downside test at 13958. Resistance is likely at 15464, and a move above could lead to a test of 15766.
 

Trading Ideas:
* Turmeric trading range for the day is 13958-15766.
* Turmeric gains due to the potential for yield losses caused by the crop's unfavourable weather.
* In Sep 2023 around 9,085.81 tonnes exported as against 11,322.58 tonnes in Aug 2023 showing a drop of 19.75%.
* Expectations for a 20–25 percent decline in turmeric seeding this year
* In Nizamabad, a major spot market, the price ended at 13198.85 Rupees gained by 0.7 percent.

Jeera

Jeera prices surged significantly, closing up by 5.47% at 38440, driven by short covering amid reports of tighter ending stocks. However, the market faces challenges posed by a substantial increase in cumin sowing in key producing states like Gujarat and Rajasthan. In Gujarat alone, cumin sowing witnessed an impressive growth of nearly 94%, reaching 433,754.00 hectares, a stark contrast to the 224,140.00 hectares sown in the same period last year. Additionally, a 13% increase in cumin area was recorded in Rajasthan, contributing to the overall rise in production. Despite the positive momentum, global demand for Indian jeera has slumped as buyers prefer other origins like Syria and Turkey due to comparatively higher prices in India. This has led to a decline in jeera exports, dropping by 29.79% to 76,969.88 tonnes during April-September 2023 compared to the same period in 2022. In September 2023, jeera exports decreased by 60.27% year-on-year. Technically, the market is currently witnessing fresh buying, with open interest up by 0.6% to settle at 3,522. Jeera is finding support at 37360, and a breach could lead to a test of 36280. On the upside, resistance is anticipated at 39010, and a move above could push prices towards 39580. Despite the short-term positive momentum driven by short covering, the substantial increase in cumin sowing and subdued global demand are likely to influence the market in the coming weeks. Traders are advised to monitor these factors alongside technical levels for a comprehensive understanding of the jeera market and to make informed decisions in a complex trading environment.
 

Trading Ideas:
* Jeera trading range for the day is 36280-39580.
* Jeera prices gained as prices witnessed short covering in wake of tighter ending stocks.
* An increase in sowing of about 13 percent has been recorded in the area of cumin in Rajasthan.
* Stockists are showing interest in buying on recent downfall in prices triggering short covering.
* In Unjha, a major spot market, the price ended at 38302.25 Rupees gained by 0.43 percent.