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Gold

Gold prices experienced a modest decline of 0.06%, settling at Rs.70,699, as the market anticipated key U.S. inflation data that could influence the Federal Reserve's future monetary policy decisions. The geopolitical tensions in the Middle East, particularly concerns about the conflict in Gaza escalating into a broader war, added a layer of uncertainty to the market. Despite these concerns, U.S. producer prices in July rose less than expected, indicating a continued moderation in inflation, which has shifted traders' focus to the upcoming U.S. consumer price index data and retail sales figures. On the demand side, global physically backed gold ETFs saw renewed interest, with net inflows of 48.5 metric tons ($3.7 billion) in July, marking the largest monthly inflow since March 2022. This resurgence in ETF demand reflects expectations of nearing rate cuts and growing investor interest in gold as a safe-haven asset. In India, gold demand has seen a slight uptick due to a price correction, though market volatility has led some buyers to delay purchases. Meanwhile, in China, premiums on gold firmed as safe-haven buying increased, with gold bars attracting more interest than jewellry. The World Gold Council noted that India's gold demand in the June quarter fell 5% year-on-year, but it is expected to improve in the second half of 2024, supported by a significant reduction in import taxes and favourable monsoon rains. Technically, the gold market is experiencing fresh selling pressure, with a slight gain in open interest by 0.24% to 17,490 contracts. Gold is currently supported at Rs.70,520, with further downside potential towards Rs.70,340 if this support level is breached. On the upside, resistance is expected at Rs.70,900, and a move above this level could lead to prices testing Rs.71,100.
 

Trading Ideas:
* Gold trading range for the day is 70340-71100.
* Gold steadied ahead of U.S. inflation data that could influence bets around Fed’s monetary policy path.
* U.S. producer prices increased less than expected in July
* Tensions in the Middle East provide support


Silver
Silver prices declined by 0.7% to settle at 81,049 as investors remained cautious ahead of key U.S. inflation data, which could offer crucial insights into the Federal Reserve's future monetary policy direction. Despite recent softer inflation figures for May and June, Fed Governor Michelle Bowman emphasized that inflation remains uncomfortably above the Federal Open Market Committee's (FOMC) 2% target. This has led markets to scale back expectations of aggressive rate cuts, with a higher probability now being assigned to a 25 basis point reduction in September rather than a larger 50 bps cut. In the broader market, the Perth Mint in Australia reported a significant surge in its silver product sales, which rose 91% month-on-month to 939,473 ounces in July, marking the highest level since February. The majority of these sales were US-bound, highlighting the strong demand for silver in the United States, which remains the Mint's largest market. On the economic front, U.S. factory gate prices increased by 0.1% month-over-month in July 2024, following a 0.2% rise in June, and came in below market forecasts of a 0.2% increase. Notably, core producer prices, which exclude food and energy costs, were unchanged from the previous month, reflecting a slowdown from the 0.3% increase observed in June. Technically, the silver market is under fresh selling pressure, with open interest rising by 3.96% to 28,876 contracts. The current support level for silver is at 80,575, with a potential test of 80,105 if the downward trend continues. On the upside, resistance is likely at 81,495, with a move above potentially targeting 81,945.
 

Trading Ideas:
* Silver trading range for the day is 80105-81945.
* Silver fell as investors cautiously awaited crucial US inflation figures
* Fed Governor Michelle Bowman said that despite softer inflation numbers for May and June, inflation remains uncomfortably above the FOMC’s 2% target.
* Factory gate prices in the US increased 0.1% month-over-month in July 2024, following a 0.2% rise in June


Crudeoil
Crude oil prices declined by 0.99%, settling at Rs.6,596, as markets reacted to reduced fears of a broader conflict in the Middle East, which could have threatened crude supply from one of the world's major oil-producing regions. The market sentiment was further influenced by the OPEC cutting its 2024 demand forecast, even as the group and its allies, known as OPEC+, prepare to increase output from October. Meanwhile, the IEA maintained its 2024 global oil demand growth forecast but slightly reduced its 2025 estimate due to the impact of Chinese consumption. The IEA highlighted that the end of a post-COVID economic recovery in China is limiting global oil demand. However, this was offset by robust demand in advanced economies, particularly in the United States, where a significant portion of global gasoline is consumed. The IEA also noted that the ongoing summer driving season in the U.S. is expected to be the strongest since the pandemic, contributing to tightening in the physical market, exacerbated by OPEC+ supply cuts. U.S. crude oil inventories saw a sharper-than-expected decline of 3.728 million barrels for the week ending August 2, 2024, marking the sixth consecutive weekly decline, all of which exceeded market expectations. However, stocks at the Cushing, Oklahoma delivery hub increased by 579 thousand barrels, while gasoline and distillate fuel inventories also rose. Technically, the crude oil market is under long liquidation, with a significant drop in open interest by 37.87% to 8,058 contracts, as prices fell by ?66. Crude oil is currently supported at Rs.6,534, with further downside potential towards Rs.6,472 if this level is breached. On the upside, resistance is expected at Rs.6,697, and a move above this level could lead to prices testing Rs.6,798.
 

Trading Ideas:
* Crudeoil trading range for the day is 6472-6798.
* Crude oil fell as markets saw reduced risk of a wider war in the Middle East.
* IEA kept its 2024 global oil demand growth forecast unchanged but trimmed its 2025 estimate
* OPEC cut its forecast for global oil demand growth in 2024, citing weaker than expected data for the first half of the year


Naturalgas
Natural gas prices declined by 1.47% to settle at 181 as forecasts indicated less intense weather and lower demand over the next two weeks than previously anticipated. Financial firm LSEG projected 233 cooling degree days (CDDs) over the upcoming two weeks, slightly higher than the 228 CDDs estimated earlier but still reflecting a moderation in expected demand compared to initial forecasts. The average for this time of year is 187 CDDs, suggesting that while temperatures remain higher than normal, they may not be as extreme as previously thought. LSEG also forecasted that average gas demand in the Lower 48 states, including exports, would rise from 105.7 billion cubic feet per day (bcfd) this week to 108.3 bcfd next week, driven by the anticipated warmer weather. However, gas output in the Lower 48 states has decreased to an average of 102.7 bcfd so far in August, down from 103.4 bcfd in July, reflecting a decline from the record high of 105.5 bcfd in December 2023. The U.S. Energy Information Administration (EIA) revised its forecast for natural gas output, predicting a larger decline this year than previously estimated due to record-low prices earlier in 2024, which forced producers to curtail production. The EIA now expects U.S. natural gas output to average around 103.3 bcfd in 2024, down slightly from its previous forecast of 103.5 bcfd. Technically, the natural gas market is under fresh selling pressure, with open interest increasing by 0.11% to 41,079 contracts. The price is currently finding support at 178.1, with a potential test of 175.1 if the bearish trend continues. Resistance is expected at 186.2, with a move above potentially leading to a test of 191.3.
 

Trading Ideas:
* Naturalgas trading range for the day is 175.1-191.3.
* Natural gas dropped on forecasts for less hotter weather and lower demand over the next two weeks.
* LSEG said gas output in the Lower 48 states had risen to an average of 102.9bcfd so far in August.
* Asian spot LNG prices remained at their highest level in over seven months.


Copper
Copper prices declined by 0.51%, settling at Rs.786.25, as investors awaited key data releases from the United States and China later this week for clearer market direction. The market was also influenced by news that workers at BHP's Escondida copper mine in Chile, the world's largest, announced a strike after failing to reach an agreement with the company. Additionally, copper production in Peru fell by 11.7% year-on-year in June, reflecting ongoing supply constraints in major producing regions. Compounding supply challenges, Zambia closed its border with the Democratic Republic of Congo, the world’s second-largest copper producer, delaying copper shipments amid escalating trade disputes. On the demand side, the outlook remains muted as the Chinese government refrained from significant stimulus measures during its recent Third Plenum, and weak manufacturing PMIs from both China and the US pointed to ongoing softness in industrial activity. Despite this, lower copper inventories in Shanghai Futures Exchange warehouses, down 23% since June, indicated some return of Chinese physical buyers as prices retreated, offering slight support to the market. The global refined copper market showed a 65,000 metric ton surplus in May, according to the International Copper Study Group (ICSG), further contributing to the bearish sentiment. Meanwhile, China’s unwrought copper imports in July fell 2.9% year-on-year, reflecting subdued demand and high stocks of the metal. Technically, the copper market is under fresh selling pressure, with open interest increasing by 1.05% to 13,289 contracts as prices fell by Rs.4.05. Copper is currently supported at Rs.782, with a potential further decline towards Rs.777.7 if this support is breached. On the upside, resistance is expected at Rs.789.3, and a move above this level could lead to prices testing Rs.792.3.
 

Trading Ideas:
* Copper trading range for the day is 777.7-792.3.
* Copper dropped as investors awaited data from US and China later this week for more clues.
* Workers at BHP's Escondida copper mine will strike after failing to reach agreement
* Peru copper output slides nearly 12% in June


Zinc
Zinc prices declined by 1.6% to settle at 255.9, driven by concerns over rising energy costs, which constitute about 50% of zinc production costs. This price movement was also influenced by a decrease in zinc inventories in warehouses monitored by the Shanghai Futures Exchange, which fell by 8.5% from last Friday. The broader market sentiment was bolstered by inflation data from China, indicating a retreat from deflation, which supported a more positive outlook across equities and commodities. In the U.S., recent job growth data showed a slower-than-expected increase in July, with the unemployment rate rising to 4.3%. This raised concerns about potential vulnerabilities in the economy, particularly in the face of weak manufacturing activity in China, which led to a global selloff in risk assets. However, the weak job report also fueled expectations of deeper interest rate cuts by the U.S. Federal Reserve, possibly starting as early as September. In the global zinc market, the surplus fell to 8,300 metric tons in May, down from 15,300 tons in April, according to the International Lead and Zinc Study Group (ILZSG). Additionally, China’s refined zinc production in July 2024 was down significantly by 10.3% month-on-month and 11.15% year-on-year, due to factors such as heavy rainfall in Sichuan and unexpected production cuts in Yunnan, Guangdong, and Guangxi. Technically, the zinc market is undergoing long liquidation, with open interest dropping by 8.43% to settle at 1,976 contracts. The current support level for zinc is at 254.2, with a potential test of 252.6 if the downward trend continues. Resistance is now expected at 258, with a move above possibly testing 260.2.
 

Trading Ideas:
* Zinc trading range for the day is 252.6-260.2.
* Zinc prices dropped as refined zinc production to slightly increase by 700 mt MoM to 490,300 mt in August.
* Zinc inventories in warehouses monitored by the SHFE fell 8.5% from last Friday.
* U.S. jobs data eased fears of a growth slowdown in the United States



Aluminium
Aluminium prices edged up by 0.37%, settling at Rs.216.05, as the market responded to various supply-side developments. Refined zinc production is expected to increase slightly in August, which could influence broader base metal markets. In the aluminium sector, domestic production in China showed strong growth, with output reaching 3.683 million metric tons in July 2024, marking a 3.22% year-on-year increase. This growth was driven by the full resumption of aluminium smelters in Yunnan Province, new capacity additions in Inner Mongolia, and the restart of scattered capacity in Sichuan Province. On a global scale, primary aluminium output in June rose by 3.2% year-on-year to 5.94 million metric tons, according to data from the International Aluminium Institute (IAI). For the first half of 2024, global output increased by 3.9% to 35.84 million metric tons, with China leading the way. China's aluminium production for the first half of the year was up 7% to 21.55 million metric tons, while the IAI estimated a 5.2% increase to 21.26 million metric tons for the same period. In contrast, aluminium output in Western and Central Europe saw a modest increase of 2.2%, and Russia and Eastern Europe added 2.4% to their production. The aluminium market in Asia has been tightening, reflected in a 16%-19% increase in premiums for shipments to Japanese buyers for the July-September quarter, now set at $172 per metric ton. Aluminium stocks at Japan's three major ports stood at 317,860 metric tons at the end of June, up 3% from the previous month. Technically, the aluminium market experienced short covering, with open interest decreasing by 2.34% to 3,929 contracts as prices rose by Rs.0.8. The support for aluminium is currently at Rs.213.9, with a potential decline to Rs.211.8 if this level is breached. Resistance is expected at Rs.217.5, and a move above this level could see prices testing Rs.219.
 

Trading Ideas:
* Aluminium trading range for the day is 211.8-219.
* Aluminium gains as the Chinese government continues to boost the domestic economy.
* U.S. jobs data eased fears of a growth slowdown in the United States.
* Domestic aluminium production in July 2024 was 3.683 million mt, up 3.22% YoY.


Cottoncandy
Cotton prices rose by 0.56%, settling at Rs.57,220, as concerns over reduced acreage in the current kharif season continued to support the market. The area under cotton cultivation has decreased by around 9% to 110.49 lakh hectares (lh) compared to 121.24 lh during the same period last year. The Cotton Association of India (CAI) anticipates that the total acreage for this year will be approximately 113 lh, down from 127 lh in the previous year. The shift of cotton farmers to other crops, driven by lower yields and high production costs, is a significant factor in this reduced acreage. Additionally, the CAI highlighted that the cotton balance sheet for the next year's opening stocks could be tight due to higher exports to Bangladesh, which have unexpectedly increased from 15 lakh bales to 28 lakh bales. India's cotton production and consumption for 2023-24 are both estimated at around 325 lakh bales, with exports at 28 lakh bales and imports at 13 lakh bales, leading to a reduction of 15 lakh bales from last year’s stock. The available stock for consumption by mills up to September 30 is estimated at 70 lakh bales, with potential tightness if the new crop is delayed. Globally, the 2024/25 cotton balance sheet has seen reductions in production, consumption, and ending stocks, driven by lower production in the United States and India, and reduced consumption in China. World ending stocks are now projected to be 77.6 million bales, down 5.0 million from July. Technically, the cotton market is experiencing fresh buying, with open interest increasing by 2.37% to 173 contracts as prices rose by Rs.320. Cottoncandy is currently supported at Rs.56,680, with further support at Rs.56,140 if breached. Resistance is anticipated at Rs.57,580, and a move above this level could see prices testing Rs.57,940.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56140-57940.
* Cotton prices gains as Cotton acreage trails by 9% at 110 lh
* CAI predicts acreage to be around 113 lh this year, up from 127 lh in the previous year.
* Global cotton production cut by 2.6 million bales; lower in US, India.
* In the global 2024/25 cotton balance sheet, beginning stocks, production and consumption are increased.


Turmeric
Turmeric prices declined by 1.52% to settle at 16,042, driven by limited demand as buyers remained hesitant to make purchases. The market faced further pressure due to increased arrivals last week, as stockists reduced their holdings in anticipation of potential price cuts stemming from the current low demand. Export opportunities are expected to be further complicated by anticipated volatility in Bangladesh, adding to the market's challenges. Additionally, dry weather in Indonesia has accelerated turmeric harvesting, leading to a surge in supply, as many farmers are selling their produce in the wet stage itself, thereby reducing production levels. The combination of increased sowing and low export demand is contributing to the downward pressure on prices. In particular, turmeric sowing has reportedly doubled on the Erode line compared to last year, with similar increases in Maharashtra, Telangana, and Andhra Pradesh. Overall, turmeric was sown on approximately 3 to 3.25 lakh hectares last year, with estimates for this year suggesting an increase to 3.75 to 4 lakh hectares. Despite this, some downside is limited as farmers are holding back stocks in anticipation of future price rises. Technically, the turmeric market is undergoing long liquidation, with open interest dropping by 1.5% to 16,250 contracts. Prices are currently finding support at 15,908, with a potential test of 15,774 if the bearish trend continues. On the upside, resistance is expected at 16,272, with a move above potentially pushing prices towards 16,502. The market remains cautious, with factors like increased sowing and fluctuating demand influencing price movements.
 

Trading Ideas:
* Turmeric trading range for the day is 15774-16502.
* Turmeric prices dropped as demand remains limited, as buyers are reluctant to make purchases.
* Pressure also seen amid news of increased sowing.
* In Indonesia, dry weather has accelerated harvesting, which is currently at peak levels.
* In Nizamabad, a major spot market, the price ended at 15956.1 Rupees dropped by -0.39 percent.


Jeera
Jeera prices declined by 2.73%, settling at Rs.25,625, as expectations of higher production put downward pressure on the market. This season, jeera production is anticipated to increase by around 30%, reaching 8.5-9 lakh tonnes due to a substantial rise in the cultivation area. The sowing area in Gujarat surged by 104%, and in Rajasthan by 16%, leading to record production levels in these regions. Specifically, Gujarat's production is estimated at 4.08 lakh tonnes, surpassing previous records, while Rajasthan's production has increased by 53%. The global cumin market has also seen significant production increases, particularly in China, where output has more than doubled. Additionally, higher production in Syria, Turkey, and Afghanistan is expected to contribute to a further decline in prices as these new supplies enter the market. The reduced export trade in cumin has also added to the downward pressure on prices. Despite the production increase, robust domestic and export demand, along with tight global supplies, provided some support to prices. Jeera exports during April-May 2024 rose by 43.50% compared to the same period in 2023, although there was a notable drop in May's export volumes compared to April. India's overall cumin export volume has seen a decline in 2023, but the increased sowing area and declining international prices are expected to boost exports in 2024. Technically, the jeera market is under long liquidation, with open interest decreasing by 0.43% to 26,485 contracts as prices dropped by Rs.720. Jeera is currently supported at Rs.25,140, with further downside potential towards Rs.24,640 if this level is breached. Resistance is anticipated at Rs.26,310, and a move above this level could see prices testing Rs.26,980.
 

Trading Ideas:
* Jeera trading range for the day is 24640-26980.
* Jeera prices dropped as the expectation of higher production weigh on the prices.
* 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 26419.55 Rupees dropped by -0.18 percent.

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