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Gold

Gold prices fell by -0.5% to settle at 68,965, as investors seek clarity on whether the US economy will enter a recession and anticipate how much the Federal Reserve will reduce interest rates this year. Despite this decline, the outlook for gold remains strong due to various supportive factors. Rising geopolitical tensions in the Middle East have bolstered gold's appeal as a safe-haven asset. This follows the escalation of conflicts between Iran and Israel, particularly after Iran launched missiles in response to the assassination of Hamas leader Ismail Haniyeh by an Israeli airstrike. In Vietnam, demand for gold bars and coins in the first half of the year reached 26 tonnes, the highest since 2014, driven by rising inflation, a weaker currency, and poor performance in equity and real estate markets. Conversely, gold jewelry demand in Vietnam fell by 15% year-on-year in Q2 due to high prices and slowing GDP growth. In India, gold premiums have decreased as price recovery tempered the buying frenzy sparked by the government's decision to ease import taxes. Indian dealers charged a premium of up to $7 an ounce over official domestic prices, down from $20 the previous week. Meanwhile, in China, demand was subdued, with dealers offering a $2 discount to an $8 premium per ounce. In other Asian markets like Singapore and Hong Kong, gold traded at minor discounts and premiums. Technically, the market is under long liquidation, with a -1.57% drop in open interest to 18,268, and prices fell by 344 rupees. Gold currently finds support at 68,620, with potential to test 68,280 levels. Resistance is likely at 69,385, with possible testing of 69,810 on the upside.
 

Trading Ideas:
* Gold trading range for the day is 68280-69810.
* Gold dropped as investors look for fresh cues, which could clarify whether the US enters a recession
* Fed officials resisted the idea that weaker-than-expected July jobs data indicates a recessionary freefall, warning that the Fed will need to cut rates.
* ANZ predicts gold will move towards $2,500 or beyond if upcoming economic data from the U.S. is weaker.


Silver
Silver prices edged up by 0.03% to settle at 79,623, buoyed by its safe-haven appeal as markets turned more risk-averse. Investors are evaluating the likelihood of a US recession following weak economic data and disappointing corporate earnings. This has increased expectations for multiple rate cuts by the Federal Reserve, with markets pricing in over 100 basis points of easing this year and anticipating a significant 50 basis point rate cut in September. San Francisco Fed President Mary Daly expressed openness to cutting interest rates if necessary, highlighting a proactive policy approach. Meanwhile, elevated tensions in the Middle East continued to support gold and silver's safe-haven appeal. The price of silver remains on a positive trajectory, driven by firm speculation that fears of a US economic slowdown will lead to substantial rate cuts by the Fed. Concerns about a potential recession in the US have been fueled by soft labor demand, a higher unemployment rate, and contracting manufacturing activities. A technical recession is typically confirmed by two consecutive declines in GDP. However, the US economy performed strongly in the first half of this year, expanding by 2.8% in the second quarter on an annualized basis, double the growth rate of the first quarter. Additionally, a faster-than-expected expansion in the US ISM Services PMI has reduced some recession fears. Technically, the market is experiencing fresh buying, with a 1.74% increase in open interest to 28,839 as prices rose by 25 rupees. Silver finds support at 78,605, with further support at 77,585 levels. Resistance is likely at 80,350, with potential testing of 81,075 on the upside.
 

Trading Ideas:
* Silver trading range for the day is 77585-81075.
* Silver steadied supported by its safe-haven appeal as markets became more risk-averse.
* Investors continued to evaluate the likelihood of a US recession following weak economic data
* Traders anticipate 100 basis points of easing this year from the Fed, with a 50 bps cut in September priced in at over 70% chance.


Crudeoil
Yesterday, crude oil prices settled up by 0.65% at 6,186 amid fears of an escalation in the Middle East conflict and a drop in Libyan production. Concerns that Iran, a major Middle Eastern producer, might retaliate against Israel and the U.S. following the assassination of a Hamas leader in Tehran and an Israeli attack that killed a Hezbollah commander in Lebanon are raising the specter of a wider regional war, providing a floor to oil prices. Additionally, lower production at Libya's 300,000 barrel-per-day Sharara oilfield, due to protests, further supported prices. Despite these factors, weak demand figures, particularly from China, have capped oil price gains. Nonetheless, oil prices have found some support as OPEC+ ministers maintain oil output policy, including plans to start unwinding one layer of output cuts from October. OPEC+ is currently cutting output by 5.86 million barrels per day, approximately 5.7% of global demand. In the U.S., crude oil inventories fell by 3.436 million barrels for the week ending July 26, 2024, significantly above market expectations of a 1.6 million barrel draw, marking the fifth consecutive weekly decline. Inventories at the Cushing, Oklahoma delivery hub also fell by 1.1 million barrels, reflecting the fourth straight draw. Meanwhile, gasoline stocks dropped by 3.7 million barrels despite a weekly decline in product supplied. Technically, the market is experiencing fresh buying, evidenced by a 6.57% gain in open interest to settle at 16,000 contracts while prices increased by 40 rupees. Crude oil is currently supported at 6,096, with further support at 6,007. Resistance is expected at 6,256, and a move above this level could see prices testing 6,327.
 

Trading Ideas:
* Crudeoil trading range for the day is 6007-6327.
* Crude oil gains amid fears of an escalation in the Middle East conflict, and a drop in Libyan production.
* Fear of wider Middle East conflict spurs buying
* US passes message to Iran not to escalate


Naturalgas
Natural gas prices surged by 3.65% to settle at 170.4, driven by increased flows to liquefied natural gas (LNG) export plants and forecasts for near-record-breaking heat in the coming days, which is expected to boost gas consumption by power generators to an all-time high. The number of rigs drilling for natural gas in the United States fell by three to 98, according to Baker Hughes, highlighting reduced drilling activity. Gas output in the Lower 48 states averaged 103.8 billion cubic feet per day (bcfd) in August, up from 103.4 bcfd in July, though still below the record high of 105.5 bcfd set in December 2023. Meteorologists slightly reduced their temperature forecasts for the Lower 48 states, which tempered power demand predictions. Temperatures are expected to rise from an average of 82.6 degrees Fahrenheit (28.1 Celsius) on Thursday to 82.8 F on Monday, remaining below the daily record high of 83.0 F set on July 20, 2022. Nonetheless, U.S. power demand could still reach record highs on Friday or Monday. U.S. utilities added 18 billion cubic feet of gas to storage during the week ending July 26, 2024, significantly below market expectations of a 31 billion cubic feet build, and a slowdown from the previous week's 22 billion cubic feet build. Despite this, storage levels rose to 3,249 billion cubic feet, 8.4% higher than the previous year and over 15% above the five-year average. Technically, the market is under short covering, with a 9.9% drop in open interest to 47,309 as prices increased by 6 rupees. Natural gas finds support at 163.4, with further support at 156.5 levels. Resistance is likely at 174.2, with potential testing of 178.1 on the upside.
 

Trading Ideas:
* Naturalgas trading range for the day is 156.5-178.1.
* Natural gas climbed as the amount of gas flowing to LNG export plants rises.
* Support also seen on forecasts for near record-breaking heat over the next few days.
* The number of rigs drilling for natural gas in the United States fell by 3 to 98.



Copper
Yesterday, copper settled up by 0.68% at 782.5, supported by tight mine supply and potential demand growth from the energy transition sectors. However, the upside was limited due to a weak consumption outlook amid fears of a U.S. recession. On the COMEX, fund managers significantly reduced their net long positions for copper to 9,449 contracts by July 30, an 87% drop from May 21. U.S. data showed job growth fell short of expectations, and the unemployment rate rose, raising concerns of a recession and sparking hopes for a rate cut from the Federal Reserve. Both the NBS and the Caixin manufacturing PMIs indicated a contraction in July, while the ISM PMI underscored factory softness in the U.S. In China, demand is expected to remain muted as the government refrained from enacting significant stimulus during its recent Third Plenum. Reports that some Chinese smelters are pursuing new projects to comply with output mandates challenged earlier reports of a joint production cut to lift treatment charges, easing supply concerns. The global refined copper market showed a surplus of 65,000 metric tons in May, compared to an 11,000 metric ton surplus in April, according to the ICSG. China's unwrought copper imports declined to a 14-month low in June, with imports at 436,000 metric tons, down 3% from the previous year. Technically, the market is under short covering, indicated by a 1.4% drop in open interest to settle at 13,156 contracts, while prices increased by 5.25 rupees. Copper is currently supported at 773.4, with further support at 764.3. Resistance is expected at 787.7, and a move above this level could see prices testing 792.9.
 

Trading Ideas:
* Copper trading range for the day is 764.3-792.9.
* Copper gains amid tight mine supply and demand growth potential from the energy sectors.
* However upside seen limited pulled down by a weak consumption outlook amid fears of a U.S. recession.
* On the COMEX, fund managers reduced their net long positions for copper to 9,449 contracts by July 30


Zinc
Zinc prices edged down by -0.12% to settle at 247.45, pressured by concerns over global economic conditions. U.S. job growth slowed more than anticipated in July, with the unemployment rate rising to 4.3%, heightening fears of a deteriorating labor market and potential recession. This economic data, combined with weak manufacturing activities in China, triggered a global selloff in risk assets. However, the jobs report also fueled expectations of deeper interest rate cuts by the U.S. Federal Reserve, starting in September, which could bolster industrial activities and increase metals demand. In China, inventories in Shanghai Futures Exchange-monitored warehouses fell by 7.5% from the previous week. June saw China's refined zinc production rise to 545,800 metric tons, up 1.81% month-on-month but down 1.2% year-on-year. The first half of the year’s output totaled 3.182 million metric tons, slightly higher than expected. Despite increased production in some regions, the overall supply of zinc concentrate remains tight, with refinery raw material inventories being consumed faster than they are replenished. Adding to supply concerns, China's MMG Ltd halted operations at its Dugald River zinc mine in Australia for about two months due to repair work. This stoppage is expected to exacerbate the already tight zinc concentrate market. The global zinc market surplus fell to 8,300 metric tons in May from 15,300 tons in April, with a year-to-date surplus of 193,000 tons compared to 330,000 tons in the same period last year. Technically, the market experienced fresh selling, with a 1.47% increase in open interest to 1,999 as prices declined by 0.3 rupees. Zinc finds support at 245.5, with further support at 243.4 levels. Resistance is likely at 248.8, with potential testing of 250 on the upside.
 

Trading Ideas:
* Zinc trading range for the day is 243.4-250.
* Zinc prices dropped as looming concerns over global economies weighed on sentiment.
* The global zinc market surplus fell to 8,300 metric tons in May from 15,300 tons in April
* Investors were also hoping for more support policy from China



Aluminium
Aluminium prices rose by 1.54% to settle at 214, supported by China's economic stimulus measures, growing expectations of a US Federal Reserve rate cut, and escalating regional conflicts. Aluminium production is increasing while demand remains sluggish. In July, production is expected to reach about 3.68 million metric tons, with social inventory levels high. Improved rainfall in Yunnan enhanced hydropower availability, allowing smelters to restart idled capacity. China's manufacturing activity contracted at a slightly faster pace in July, and services sector growth slowed to an eight-month low. Global primary aluminium output in June rose by 3.2% year-on-year 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% year-on-year to 35.84 million metric tons, driven mainly by higher production in China. China’s first-half aluminium output grew by 7% to 21.55 million tons, with June production reaching the highest level in nearly a decade. Production in Western and Central Europe increased by 2.2% to 1.37 million tons, while Russia and Eastern Europe saw a 2.4% rise to 2.04 million tons. The Gulf region's output increased by 0.7% to 3.10 million tons. Aluminium stocks at three major Japanese ports stood at 317,860 metric tons at the end of June, up about 3% from the previous month. Technically, the market is under short covering, with a 4.24% drop in open interest to 4,272 as prices rose by 3.25 rupees. Aluminium finds support at 210.6, with further support at 207.1 levels, while resistance is expected at 215.9, with potential testing of 217.7 on the upside.
 

Trading Ideas:
* Aluminium trading range for the day is 207.1-217.7.
* Aluminium gains as the Chinese government continues to boost the domestic economy.
* Citi forecasts aluminium recovery to $2,500/t (previously $2,550/t) within three months
* In July, aluminium production is expected to reach around 3.68 million mt, and social inventory is at a high level


Cottoncandy
Yesterday, Cottoncandy settled up by 0.05% at 56,500, driven by profit booking after initial support from supply concerns. The decline in cotton acreage in Punjab, Haryana, and Rajasthan has been significant, with these states reporting a total of 10.23 lakh hectares under cotton, down from 16 lakh hectares last year. Punjab saw a drastic reduction to 97,000 hectares, a far cry from the normal 7.58 lakh hectares in the 1980s and 1990s. Similarly, Rajasthan's cotton area dropped from 8.35 lakh hectares to 4.75 lakh hectares, and Haryana saw a reduction from 5.75 lakh hectares to 4.50 lakh hectares in 2024. Additionally, delays in shipments from the US and Brazil have triggered demand for Indian cotton from mills in neighboring countries. Firm trends in cottonseed prices have held up natural fiber prices, despite the start of the sowing season in southern states like Karnataka, Telangana, and Andhra Pradesh, which have begun receiving monsoon rains. Cotton acreage is expected to rise in Telangana, where some chilli farmers might switch to cotton due to weak spice crop prices. For the 2024/25 U.S. cotton projections, higher beginning and ending stocks are expected compared to last month, with unchanged production, domestic use, and exports. The season average upland farm price has decreased by 4 cents to 70 cents per pound. Global projections show increased beginning stocks, production, and consumption, with world trade unchanged. Consequently, world ending stocks are projected to be 480,000 bales higher than in May at 83.5 million. Technically, the market is under short covering, evidenced by a 0.59% drop in open interest to settle at 168 contracts while prices increased by 30 rupees. Cottoncandy is currently supported at 56,270, with further support at 56,040. Resistance is expected at 56,690, and a move above this level could see prices testing 56,880.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56040-56880.
* Cotton dropped on profit booking after seen supported as area under cotton in North India drops
* 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 -0.32% to settle at 16,452 due to news of increased sowing. However, the downside was limited as farmers are holding back stocks, anticipating further price increases. The current fair prices for turmeric have encouraged increased sowing across all producing states. In Erode, sowing has reportedly doubled compared to last year, while Maharashtra, Telangana, and Andhra Pradesh have seen a 30-35% increase in sowing. Last year, turmeric was sown on about 3-3.25 lakh hectares, which is expected to rise to 3.75-4 lakh hectares this year. The previous year saw unfavorable weather conditions, resulting in lower production of 45-50 lakh bags of turmeric. Despite this, there was an outstanding stock of 35-38 lakh bags. Even with 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 suggests that the availability of turmeric in 2025 will be less than consumption levels. Turmeric exports during April-May 2024 dropped by 20.03% to 31,523.94 tonnes, compared to 39,418.73 tonnes during the same period in 2023. In May 2024, around 17,414.84 tonnes were exported, a 23.43% increase from April 2024 but a 12.17% decrease from May 2023. Conversely, turmeric imports during April-May 2024 surged by 417.74% to 14,637.55 tonnes, compared to 1,387.29 tonnes during the same period in 2023. In Nizamabad, a major spot market, prices dropped by -0.63% to 16,208.2 rupees. Technically, the market is under long liquidation with a 1.61% drop in open interest to 16,502. Turmeric finds support at 16,264, with further support at 16,074 levels. Resistance is likely at 16,616, with potential testing of 16,778 on the upside.
 

Trading Ideas:
* Turmeric trading range for the day is 16074-16778.
* 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 16208.2 Rupees dropped by -0.63 percent.


Jeera
Yesterday, Jeera settled up by 0.14% at 25,900, driven by robust domestic and export demand alongside tight global supplies. However, expectations of higher production limited the downside. Farmers are holding back their stocks anticipating better prices, which has also supported the market. Jeera production is projected to be 30% higher this season, reaching 8.5-9 lakh tonnes due to a substantial increase in cultivation area. Sowing in Gujarat surged by 104%, and in Rajasthan by 16%. Globally, China's cumin output soared to 55-60 thousand tons, significantly up from 28-30 thousand tons, influenced by high prices in the previous season. Increased production is also expected in Syria, Turkey, and Afghanistan. Turkey anticipates 12-15 thousand tons, while Afghanistan’s output could double, weather permitting. These new supplies could lead to a decline in cumin prices. Reduced export trade in cumin has further pressured prices, reflecting a shift in global market dynamics. In India, good prices last year prompted an increase in sowing area by 30-35% in Gujarat and Rajasthan, with Gujarat's total production estimated at a record 4.08 lakh tonnes. Rajasthan’s production also rose by 53%. Favorable weather conditions have led to a significant increase in production compared to last year. Analysts expect a substantial rise in cumin exports, projected to reach 14-15 thousand tonnes in February 2024. Technically, the market is under fresh buying with a 1.91% increase in open interest, settling at 26,100 contracts, while prices rose by 35 rupees. Jeera is currently supported at 25,740, with further support at 25,570. Resistance is expected at 26,110, and a move above this level could see prices testing 26,310.
 

Trading Ideas:
* Jeera trading range for the day is 25570-26310.
* 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 26092.5 Rupees dropped by -0.42 percent.

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