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Gold

Gold recorded a substantial gain of 1.04%, settling at 63678, driven by market expectations of an early initiation of interest rate cuts by the Federal Reserve (Fed) in the first quarter of 2024. This surge in gold prices was prompted by a significant decline in the United States core Personal Consumption Expenditure price index (PCE) in November, reinforcing hopes of imminent rate cuts by the Fed. Investors are currently pricing in the first rate cut in March, followed by a second cut in May, marking a shift from the central bank's recent trend of historically rapid rate-tightening. The expectation of rate cuts is influenced by a change in Fed policymakers' stance, as they may now support an early reduction in borrowing costs to address the prolonged tightening of interest rates. This shift is seen as a potential driver for overall employment and economic conditions. The buoyant sentiment around rate cuts has also contributed to a rise in home prices, which had remained subdued from February 2022 until June. Additionally, the stronger-than-expected 5.4% growth in new orders for durable goods in November, compared to a contraction of 5.1% in October, adds to the positive economic indicators. Technically, the market is experiencing fresh buying, with a 5.48% increase in open interest, settling at 16,354. Support for gold is identified at 63330, with a potential test of 62990, while resistance is likely at 63860. A breakthrough could lead to testing 64050.
Trading Ideas:
* Gold trading range for the day is 62990-64050.
* Gold prices crept up on market expectations Fed will start cutting interest rates in the first quarter of 2024.
* The core PCE price index declined more than expected to 3.2% in November.
* Market participants are pricing in the first rate cut by the Fed in March, and second in May after two years.

Silver

Silver exhibited a notable gain of 0.83%, settling at 75647, driven by a more substantial-than-expected decline in the United States core Personal Consumption Expenditure (PCE) price index data. The core PCE softened to 3.2%, slightly below estimates of 3.3% and the previous reading of 3.5%. On a monthly basis, the underlying inflation data grew by only 0.1%, missing the projected 0.2%. Notably, the Federal Reserve's own forecast in its Summary of Projections (SOP) released last week had anticipated the core PCE price index at 3.2% by the year-end, achieving its 2023 inflation target. The greater-than-projected decline in the Fed's preferred inflation measure is fueling speculation of earlier-than-expected rate cuts by the Fed. Market participants, as per the CME FedWatch tool, are now pricing in a more than 71% chance of an interest rate cut in March, with a likelihood of a second cut in May exceeding 68%. This shift in expectations comes as the Fed may find itself in a better position to achieve a soft landing for the economy in 2024, ensuring price stability without triggering a recession. Technically, the market is witnessing fresh buying, with a 4.96% increase in open interest, settling at 15,504. Support for silver is identified at 74955, with a potential test of 74265, while resistance is likely at 76080. A breakthrough could lead to testing 76515. The technical overview suggests a bullish trend, with investors closely monitoring inflation indicators and Fed actions for further insights into the trajectory of interest rates, which will likely continue influencing silver prices in the near term.
Trading Ideas:
* Silver trading range for the day is 74265-76515.
* Silver gains as a sharper-than-projected decline in US PCE data has fuelled bets in favour of early rate cuts by the Fed.
* Till now, Fed policymakers have been pushing back rate cut expectations, citing the need for a restrictive interest rate policy for a longer period
* As per the CME Fedwatch tool, market participants are pricing in a more than 71% odds chance of an interest rate cut in March.

Crude oil

Crude oil prices experienced a decline of -1.65%, settling at 6211, driven by major shipping firms' resumption of operations in the Red Sea despite ongoing attacks and geopolitical uncertainties in the Middle East. Denmark's Maersk and France's CMA CGM announced a return to the Red Sea following the establishment of a US-led maritime task force mandated to protect commercial vessels in the region. This development alleviated concerns about disruptions to oil flows. On a broader scale, oil prices had surged nearly 3% earlier, fueled by cooling US inflation reinforcing expectations of interest rate cuts by the Federal Reserve in the coming year. The anticipation of rate cuts boosted the global growth and energy demand outlooks. However, fears of a prolonged Gaza war raised geopolitical tensions in the Middle East, introducing an element of uncertainty that could potentially disrupt oil flows in the region. Meanwhile, the US Energy Information Administration (EIA) reported that US oil output from key shale-producing regions is set to decline for the third consecutive month in January 2024. The estimated drop to 9.692 million barrels per day from December's 9.693 million barrels per day is attributed to lower production in the Anadarko basin, Appalachia basin, and Eagle Ford basin. Technically, the market is undergoing fresh selling, with a 4.7% increase in open interest, settling at 11,609. Support for crude oil is identified at 6164, with a potential test of 6118, while resistance is likely at 6285. A breakthrough could lead to testing 6360.
Trading Ideas:
* Crudeoil trading range for the day is 6118-6360.
* Crude oil dropped as major shipping firms began returning to the Red Sea
* Denmark’s Maersk and France’s CMA CGM said they were resuming passage through the Red Sea
* U.S. oil output from top shale-producing regions is set to decline in January for the third consecutive month

Natural gas

Natural gas prices registered a decline of -2.6%, settling at 202.1, influenced by seasonal demand patterns and increased exports. The robust domestic production of natural gas in the United States, reaching record-breaking levels, has contributed to an 8.5% surplus in current reserves compared to the seasonal average. This surplus is attributed to higher production levels and milder winters, which have reduced heating demand, according to the Energy Information Administration (EIA). In December, the average gas output in the lower 48 U.S. states rose to 108.6 billion cubic feet per day (bcfd) from a previous record of 108.3 bcfd in November. Meteorologists are projecting warmer-than-normal weather until December 30, followed by a shift to near or colder-than-normal conditions from December 31 to January 6. Notably, U.S. pipeline exports to Mexico declined in December, while gas flows to the seven major U.S. LNG export plants increased. The U.S. Energy Information Administration's Short-Term Energy Outlook (STEO) foresees record-high natural gas production and demand in 2023 and 2024. Dry gas production is projected to rise to 103.67 bcfd in 2023 and 104.91 bcfd in 2024, up from the 2022 record of 99.60 bcfd. Technically, the market is undergoing long liquidation, with open interest remaining unchanged at 33,075, while prices have decreased by -5.4 rupees. Natural gas is finding support at 198.1, with a potential test of 194.1, while resistance is likely at 205.5. A move above could lead to testing 208.9.
Trading Ideas:
* Naturalgas trading range for the day is 191.7-222.1.
* Natural gas surged due to seasonal demand and increased exports.
* Record-breaking domestic natural gas production in the US has allowed utilities to stock up.
* This surplus is attributed to higher production and milder winters reducing heating demand according to the EIA.

Copper

Copper prices saw a gain of 0.91%, settling at 739.3, driven by robust demand and growing concerns over supply disruptions. Industrial profit gains in China, the top metals consumer, contributed to the positive sentiment, with additional support from expectations of Chinese economic policy support amid worries of supply disruptions due to shipping constraints in the Red Sea. According to the International Copper Study Group (ICSG), the global refined copper market reported a deficit of 53,000 metric tons in October, slightly narrowing from a 56,000 metric tons deficit in September. Refined copper output in October was 2.34 million metric tons, while consumption reached 2.39 million metric tons. Adjusted for changes in inventory in Chinese bonded warehouses, there was a 52,000 metric tons deficit in October, compared to a 62,000 metric tons deficit in September. On the supply side, disruptions were noted at key mines, contributing to supply concerns. The Cobre Panama mine, responsible for 1.5% of the world's supply, suspended its activity due to disputes with the Panamanian government. Additionally, strikes at the Las Bambas mine in Peru and persistent threats of activity suspension in BHP’s Chilean mines added to the worries, supporting upward price movements. Technically, the market is witnessing fresh buying, with a 1.87% increase in open interest, settling at 5,128. Copper is finding support at 734.8, with a potential test of 730.3, while resistance is likely at 742. A breakthrough could lead to testing 744.7.
Trading Ideas:
* Copper trading range for the day is 730.3-744.7.
* Copper rose amid robust demand and increasing threats to supply.
* Support also seen buoyed by industrial profit gains in China
* Copper market in 53,000 metric tons deficit in Oct 2023 – ICSG

Zinc

Zinc prices surged by 1.4%, settling at 232.4, driven by positive factors such as industrial profit gains in China and an improved industrial outlook for the upcoming year. The optimism in the industrial sector stems from expectations of early interest rate cuts by major central banks and a fuller economic recovery in China, the top consumer of zinc. Despite another month of factory-gate deflation in China, the Caixin China General Manufacturing PMI rose to 50.7 in November 2023, signaling a gradual rebound in the sector. Expectations of additional stimulus measures from Beijing and monetary easing by the People's Bank of China (PBOC) further contributed to the positive sentiment. However, zinc is on track to end the year 13% lower due to a larger-than-anticipated supply and weaker demand, leading to a surplus in the market after two years of shortfall. According to the International Lead and Zinc Study Group, the global refined zinc market is projected to experience a surplus of 248,000 metric tons in 2023, a significant shift from the April projection of a 45,000-ton deficit. In November 2023, China's refined zinc output decreased month-on-month by 4.23% to 579,000 metric tons but exhibited a year-on-year increase of 10.62%. Notably, domestic zinc alloy output in November faced a reduction due to production halts and overhauls by smelters in Shaanxi, Hunan, and Yunnan. Technically, the market is undergoing fresh buying, with a 9% increase in open interest, settling at 4,954. Zinc is finding support at 230.2, with a potential test of 227.9, while resistance is likely at 233.8.
Trading Ideas:
* Zinc trading range for the day is 227.9-235.1.
* Zinc prices rose buoyed by industrial profit gains in China.
* The global refined zinc market was headed for a surplus of 248,000 metric tons this year, compared with an April's projection of 45,000 tons deficit.
* Smelters in Shaanxi, Hunan and Yunnan stopped production and overhauled, resulting in significant output reductions.


Aluminium

Aluminium prices surged by 2.09%, settling at 212.05, driven by falling inventories in China and supply disruptions in upstream feed material. A fuel shortage in major bauxite producer Guinea intensified bauxite tightness in China, raising concerns of potential alumina capacity cuts that could lead to a reduction in aluminium supply. The tight supply conditions were further exacerbated by a drop in aluminium inventories in China, the world's leading aluminium consumer, which reached 443,000 tons, the lowest level since January 2017. In China, the Big Five banks announced interest rate cuts on certain deposits, interpreted by the market as a move to pave the way for additional policy rate reductions to support the economy. The situation was compounded by disruptions in metals shipping routes, as maritime carriers avoided the Red Sea due to vessel attacks by the Yemeni Houthi militant group, causing trade disruptions through the Suez Canal, which handles about 12% of global trade. Aluminium inventories in warehouses monitored by the Shanghai Futures Exchange witnessed an 8.8% decline from the previous Friday, indicating tightening supply conditions. Global primary aluminium output in November rose by 2.7% year-on-year to 5.893 million tonnes, according to data from the International Aluminium Institute (IAI). Technically, the market is experiencing fresh buying, with a notable 25.66% increase in open interest, settling at 4,882. Aluminium is finding support at 208.6, with a potential test of 205.2, while resistance is likely at 214.1. A breakthrough could lead to testing 216.2.
Trading Ideas:
* Aluminium trading range for the day is 205.2-216.2.
* Aluminium gains on falling inventories in China and supply disruptions in upstream feed material.
* Lower inventories in China, helped raise prices.
* Aluminium inventories in China, dropped to 443,000 tons, the lowest since January 2017.

Cotton

Cotton prices, represented as Cottoncandy, showed a modest uptick of 0.07%, settling at 56420. The Cotton Association of India (CAI) maintained its pressing estimate for the 2023-24 season at 294.10 lakh bales, based on inputs from cotton-growing state associations and trade sources. The total supply till the end of November was estimated at 92.05 lakh bales, comprising market arrivals, imports, and opening stocks. Reports on pink bollworm infestation in cotton crops indicate a decline from 30.62% in 2017-18 to 10.80% in 2022-23. Certified cotton stocks for delivery against contracts witnessed a significant drop from 87,770 bales on December 1st to 6,325 bales on December 5th. Brazilian cotton shipments increased in November but slightly decreased compared to the same period last year. The International Cotton Advisory Committee (ICAC) projects global cotton production to exceed consumption for the second consecutive year. Global cotton lint production is anticipated to grow by 3.25% in the 2023-2024 season, reaching 25.4 million metric tons, while consumption is expected to marginally decline to 23.4 million metric tons. Sluggish demand, reflected in a 5-week low in global cotton bookings, has exerted downward pressure on cotton futures. In the U.S., the cotton balance sheet for 2023/24 shows slightly lower consumption but higher production and ending stocks. From a technical standpoint, the market is experiencing fresh buying, with a 2.56% increase in open interest, settling at 200. Despite a price increase of 40 rupees, Cottoncandy finds support at 56240, with a potential test of 56050 on the downside. On the upside, resistance is expected at 56580, and a breakthrough could lead to testing 56730.
Trading Ideas:
* Cottoncandy trading range for the day is 56050-56730.
* Cotton gains as Cotton output may decline by 8%
* Total supply till end November was estimated at 92.05 lakh bales, which consisted market arrivals of 60.15 lakh bales
* 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 26166.8 Rupees dropped by -0.05 percent.

Turmeric

Turmeric prices experienced a marginal decline of -0.98%, settling at 14140, driven by slower buying activities ahead of the anticipated release of stocks before the new crops in January 2024. The market faced pressure due to favorable weather conditions contributing to improved crop conditions. However, concerns about potential yield losses due to unfavorable weather conditions provided a limiting factor to the downside. Notably, the Turmeric Board initiative by PM Modi in Telangana has sparked concerns among farmers in Maharashtra regarding the headquarters location. Despite satisfactory crop conditions, the harvest is expected from January to March, supporting price stability with current buying levels and decreasing supplies. Improved export opportunities have contributed to a 25% increase in turmeric exports, reflecting growing demand in both developed and emerging nations. The expectation of a 20–25% decline in turmeric seeding this year, particularly in Maharashtra, Tamil Nadu, Andhra Pradesh, and Telangana, is attributed to shifting priorities among farmers. Turmeric exports during April-October 2023 showed a modest increase of 2.63%, reaching 1,02,162.94 tonnes compared to 99,585.88 tonnes in the same period last year. From a technical perspective, the market is currently witnessing fresh selling with a 0.78% increase in open interest, settling at 12250. Despite the price decline by -140 rupees, turmeric finds support at 13992, with a potential downside test at 13842. On the upside, resistance is anticipated at 14302, and a breakthrough could lead to testing 14462.
Trading Ideas:
* Turmeric trading range for the day is 13842-14462.
* Turmeric dropped as buying activities has been slower ahead of commencement of new crops
* Pressure also seen amid improved crop condition due to favorable weather condition.
* However, downside seen limited due to the potential for yield losses caused by the crop's unfavourable weather.
* In Nizamabad, a major spot market, the price ended at 13233.15 Rupees dropped by -0.37 percent.

Jeera

Jeera (cumin) prices experienced a significant decline of -5.99%, settling at 33715, primarily due to higher production expectations in key cultivating regions such as Gujarat and Rajasthan. The surge in Jeera cultivation is evident, with Gujarat witnessing a remarkable 102% increase in sown area, reaching 544,099.00 hectares compared to 268,775.00 hectares in the previous year. Rajasthan also saw a 13% rise in cumin cultivation, reaching 6.32 lakh hectares. The surge in production, however, comes at a time when global demand for Indian Jeera is waning, as buyers are turning to alternative sources like Syria and Turkey due to comparatively higher prices in India. Consequently, Indian Jeera exports during April-October 2023 plummeted by 34.02%, amounting to 76,367.90 tonnes, compared to 115,748.90 tonnes in the same period last year. October 2023 exports, specifically, witnessed a notable decline of 46.77% compared to October 2022. From a technical standpoint, the market is currently witnessing long liquidation, indicated by a 3.01% drop in open interest, settling at 2805. Despite the decline in prices by -2150 rupees, Jeera finds support at 33130, with a potential downside testing at 32530. On the upside, resistance is anticipated at 34910, and a breakthrough could propel prices towards 36090.
Trading Ideas:
* Jeera trading range for the day is 32530-36090.
* Jeera prices dropped due to higher production prospects
* In Gujarat, Cumin sowing witnessed very strong growth by nearly 103% with 530,030.00 hectares against sown area of 2022
* Stockists are showing interest in buying on recent downfall in prices triggering short covering.
* In Unjha, a major spot market, the price ended at 38500.9 Rupees gained by 0.55 percent.

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