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Gold

Gold settled up by 0.43% at 69,954 as expectations solidify that the Federal Reserve will reduce interest rates in September. The 10-year US Treasury yield fell to a six-month low near 4.02%, enhancing Gold's appeal due to the reduced opportunity cost. The Fed’s dovish stance, maintaining rates at 5.25%-5.50%, while acknowledging cooling inflationary pressures and easing labor market conditions, has fueled speculation of imminent rate cuts. Fed Chair Jerome Powell hinted at a possible rate cut as early as September if economic conditions remain stable. Geopolitical tensions in the Middle East further supported Gold prices. Iran’s vow for retaliation against Israel for the killing of Hamas leader Ismail Haniyeh has historically increased Gold's appeal as a safe-haven asset. In India, Gold premiums surged to a decade-high following the government's import duty cuts, lowering prices to a near four-month low and sparking demand. Dealers charged a premium of up to $20 an ounce over official domestic prices, the highest since 2014, inclusive of 6% import and 3% sales levies. In China, dealers offered a $10 discount to a $2 premium an ounce on international spot prices, while in Singapore and Hong Kong, Gold was sold at varying discounts and premiums. Japan saw Gold sold at a $3 discount due to overseas ETF inflows driving prices higher. India's gold demand fell by 5% in the June quarter year-on-year, but the World Gold Council expects improved consumption in the second half of 2024 due to price corrections and good monsoon rains. Technically, the market is under short covering with a drop in open interest by -0.24% to 19,635 as prices rose by 299 rupees. Gold finds support at 69,620, with resistance likely at 70,385.
 

Trading Ideas:

*Gold trading range for the day is 69290-70820.
*Gold gains as expectations solidify that Fed will begin reducing interest rates in September.
*Fed signals potential rate cuts in September, boosting Gold's appeal
*Demand for gold from India could stand between 700 metric tons and 750 metric tons in 2024, the lowest in four years.

Silver

Silver prices fell by 1.2% to settle at 82,594, influenced by the rise in the dollar index to 104.3, which rebounded from a 0.4% drop. This movement comes as traders digest the Federal Reserve's monetary policy outlook, with the US central bank maintaining the funds rate at the 5.25%-5.5% range and indicating potential rate cuts in September. Labor costs rose much less than expected in Q2, strengthening bets for three 25bps rate cuts this year. On the fiscal front, the US Treasury maintained its guidance on long-term debt for the second consecutive quarter, favoring shorter-term bills to suppress yields despite Republican opposition. Economic data revealed a mixed labor market, with new unemployment benefit applications reaching an 11-month high, increasing by 14,000 to 249,000 for the week ending July 27. This suggests a potential softening in the labor market, although claims are typically volatile around this period. The ISM Manufacturing PMI dropped to 46.6 in July 2024 from 48.5 in June, marking the sharpest contraction in US factory activity since November 2023. This decline, the 20th in the last 21 periods, highlights the impact of high interest rates on goods demand, further pressured by a contraction in new orders. Technically, the silver market is under long liquidation, as evidenced by a 1.4% drop in open interest to 26,486 while prices fell by 1,002 rupees. Silver finds support at 81,895, with a potential test of 81,190 if this level is breached. Resistance is likely at 83,920, with a move above this level possibly driving prices to test 85,240.

Trading Ideas:

*Silver trading range for the day is 81190-85240.
*Silver dropped as dollar index rose to 104.3, as traders digest the monetary policy outlook.
*Fed hints that it may be ready to commence its cutting cycle in September.
*The number of Americans filing new applications for unemployment benefits increased to an 11-month high last week.

Crudeoil

Crude oil prices declined by 1.35% to settle at 6436, driven by mounting concerns about slowing demand outweighing fears of supply disruptions from the Middle East conflict. The ISM Manufacturing PMI indicated a larger-than-expected contraction in the U.S. manufacturing sector due to weak demand and declining output. Additionally, China's total fuel oil imports dropped by 11% in the first half of 2024, further signaling reduced demand. U.S. crude oil production fell by 61,000 barrels per day (bpd) to 13.18 million bpd in May, marking the first monthly decline since January, with lower output from the Federal Offshore Gulf of Mexico and North Dakota offsetting record production in Texas and New Mexico. In terms of logistics, U.S. crude oil shipments via rail fell by 7,000 bpd in May to 328,000 bpd, with shipments within the U.S. increasing by 34,000 bpd to 274,000 bpd, while shipments from Canada to the U.S. decreased by 41,000 bpd to 54,000 bpd. Crude oil inventories in the U.S. fell by 3.436 million barrels in the week ending July 26, 2024, significantly above market expectations of a 1.6 million barrel draw, marking the fifth consecutive decline. Stocks at the Cushing, Oklahoma delivery hub also fell by 1.1 million barrels, and gasoline stocks decreased by 3.7 million barrels despite lower product supplied. Conversely, distillate fuel inventories unexpectedly rose by 1.5 million barrels due to a sharp decline in product supplied. Technically, the market is under long liquidation with a 1.06% drop in open interest to 8,059 while prices fell by 88 rupees. Crude oil has support at 6373, with a potential test of 6309 if breached, and resistance at 6555, with a move above possibly testing 6673.
 

Trading Ideas:

*Crudeoil trading range for the day is 6309-6673.
*Crude oil dropped amid mounting concerns about slowing demand
*U.S. crude oil production fell by 61,000 bpd to 13.18 mbpd in May, the first monthly decline since January
*U.S. shipments of crude oil via rail in May fell by 7,000 bpd from the previous month to 328,000 bpd

Naturalgas

Natural gas settled down by -2.14% at 168.8 due to rising output and forecasts for less demand next week than previously expected. Prices fell despite a bullish smaller-than-expected weekly storage build and forecasts for record-breaking heat that could boost gas consumption by power generators to an all-time high. The U.S. National Hurricane Center noted a tropical disturbance in the Atlantic Ocean with a 60% chance of becoming a cyclone that could impact Cuba or Florida before moving into the Gulf of Mexico. Gas output in the Lower 48 states increased to an average of 103.4 billion cubic feet per day (bcfd) in July, up from 101.0 bcfd in June, but below the record high of 105.5 bcfd in December 2023. Meteorologists forecast temperatures in the Lower 48 to average 83.4°F on August 1 and 83.5°F on August 2, potentially breaking the daily record high average temperature of 83.0°F set on July 20, 2022, when power demand peaked at an all-time high of 742,600 megawatts. With more heat expected, LSEG forecasts average gas demand in the Lower 48, including exports, to rise from 105.4 bcfd this week to 110.0 bcfd next week. US utilities added 18 billion cubic feet of gas into storage to 3,249 billion cubic feet for the week ending July 26th, 2024, significantly below market expectations of a 31 billion cubic feet build and down from the 22 billion cubic feet build the previous week. Technically, the market is under fresh selling with a gain in open interest by 6% to settle at 54,024 while prices dropped by -3.7 rupees. Natural gas finds support at 165, with a break below potentially testing 161.2, and resistance likely at 175.6, with prices testing 182.4 if surpassed.
 

Trading Ideas:

*Naturalgas trading range for the day is 161.2-182.4.
*Natural gas fell on rising output and forecasts for less demand next week than previously expected.
*Prices fell despite a bullish smaller-than-expected weekly storage build
*US utilities added 18 billion feet of gas into storage to 3,249 billion cubic feet.

Copper

Copper prices fell by 2.12% to 790.3 due to increasing concerns over demand from China. The Chinese government’s decision to forgo targeted economic stimulus and its focus on advanced technologies and new energies instead of construction and industry contributed to market sell-offs in base metals. The PBoC's significant rate cuts and contractionary factory activity indicated by the NBS and Caixin PMIs highlighted weak domestic demand for manufactured goods. Reports of new projects by Chinese smelters to meet output mandates contradicted earlier expectations of a joint production cut, adding to the downward pressure on prices. China’s weak business activity data raised the likelihood of further government stimulus, as manufacturing contracted faster in July and services sector growth hit an eight-month low. The global refined copper market showed a surplus of 65,000 metric tons in May, up from 11,000 metric tons in April, with a total surplus of 416,000 metric tons for the first five months of the year. Refined copper output in May was 2.37 million metric tons, while consumption was 2.31 million metric tons. China’s unwrought copper imports in June fell to a 14-month low, with imports of 436,000 metric tons, down 3% year-on-year and 15% from May. Despite these challenges, Citi Research forecasts copper prices to struggle in the coming weeks but recover to $9,500 per ton within three months and reach $11,000 by early 2025. Technically, copper is under fresh selling pressure, with a 7.56% increase in open interest to 14,248 while prices dropped by 17.1 rupees. Copper finds support at 783.4, with a test of 776.3 possible below this level. Resistance is expected at 803.5, with potential to reach 816.5.

Trading Ideas:

*Copper trading range for the day is 776.3-816.5.
*Copper fell amid mounting demand concerns from China.
*The Chinese government refrained from passing stimulus to target the aggressive slowdown.
*The lack of economic support drove markets to sell off assets and base metals contracts, forcing the PBoC to deliver extraordinary rate cuts.

Zinc

Zinc prices declined by 1.48% to 250.4, driven by weak demand from China and high inventories. Investor sentiment was cautious as they awaited further support policies from China following a private sector survey indicating that the country's manufacturing activity contracted in July for the first time in nine months. This contraction aligns with an official PMI survey showing manufacturing activity at a five-month low. Despite these challenges, Beijing's Politburo emphasized the need for policies to boost wages and domestic consumption. In June, China's refined zinc production increased by 9,700 mt to 545,800 mt, though it was down 1.2% year-on-year. H1 output totaled 3.182 million mt, slightly down 1.39% YoY but higher than anticipated. Zinc alloy production in June fell by 1,800 mt to 93,000 mt. Production exceeded expectations in Guangxi, Gansu, and Guizhou, while some smelters in Shaanxi, Gansu, Yunnan, and Guizhou resumed production post-maintenance. Conversely, smelters in Hunan and other regions faced production cuts due to maintenance shutdowns. The supply of zinc concentrate remains tight, with refinery raw material inventories depleting faster than they are replenished. Domestic refined zinc production is expected to decline in Q3. Zinc ingot inventory in seven regions decreased by 22,800 mt to 169,100 mt as of July 18. Zinc inventories in Shanghai Futures Exchange warehouses fell by 5.1% since last Friday. Additionally, MMG Ltd halted operations at its Dugald River zinc mine in Australia, exacerbating concentrate shortages. Technically, the market is under fresh selling pressure, with a 10.72% increase in open interest to 2,220 and prices down by 3.75 rupees. Zinc finds support at 248.4, with a potential test of 246.3. Resistance is seen at 253.8, with possible price testing at 257.1.

Trading Ideas:

*Zinc trading range for the day is 246.3-257.1.
*Zinc prices dropped dragged down by weak demand from China and high inventories.
*Global zinc market surplus falls in May, ILZSG says
*Citi says on 0-3mth view, see upside for zinc to $2,800/t
 

Aluminium

Aluminium settled down by 1.28% at 211.8 amid poor demand and ample supply. Improved rainfall in Yunnan, a major Chinese production hub, enhanced hydropower availability, allowing smelters to resume operations and boosting primary aluminum output by 6.2% annually in June to 3.76 million tonnes, the highest since November 2014. Despite a 7,000 mt weekly decline in the social inventory of aluminum ingots to 790,000 mt, levels remain 254,000 mt higher YoY. Economic data from China indicated muted domestic demand, with manufacturing activity contracting slightly faster in July and services sector growth slowing to an eight-month low. China's lowered deposit rates and Canada’s rate cut increased global market liquidity, while the Third Plenum of the Communist Party of China aimed to stabilize market confidence through reform expectations. Global primary aluminum output in June rose 3.2% YoY to 5.94 million tonnes, driven by increased production in China. The International Aluminium Institute (IAI) reported a 3.9% rise in global output to 35.84 million metric tons in H1 2024, with China's output growing 7% to 21.55 million tons. The premium for aluminum shipments to Japanese buyers for Q3 was set at $172 per metric ton, reflecting tighter supplies in Asia, with stocks at three major Japanese ports up 3% MoM to 317,860 metric tons by June-end. Technically, the market is under long liquidation, with a 2.32% drop in open interest to 4,551 as prices fell by 2.75 rupees. Aluminium finds support at 210.3, with a test of 208.8 possible if breached, while resistance is likely at 214.5, potentially testing 217.2 if surpassed.
 

Trading Ideas:

*Aluminium trading range for the day is 208.8-217.2.
*Aluminium dropped amid poor demand and ample supply.
*Rainfall in the Chinese production hub of Yunnan improved the availability of hydropower and allowed smelters to bring back idled capacity.
*Citi forecasts aluminium recovery to $2,500/t (previously $2,550/t) within three months

Cottoncandy

Cottoncandy settled down by -0.12% at 56,790 due to profit booking after initial support from declining cotton acreage in Punjab, Haryana, and Rajasthan. These states reported a total of 10.23 lakh hectares under cotton, significantly down from last year’s 16 lakh hectares. Punjab saw a reduction to 97,000 hectares, far below the 7.58 lakh hectares in the 1980s and 1990s. Similarly, Rajasthan's cotton area dropped from 8.35 lakh hectares last year to 4.75 lakh hectares this year, and Haryana saw a decrease from 5.75 lakh hectares to 4.50 lakh hectares in 2024. Further support for Cottoncandy came from delays in shipments from the US and Brazil, triggering demand for Indian natural fiber from neighboring mills. A firm trend in cottonseed prices is also sustaining natural fiber prices, even as sowing for the Kharif 2024 season begins in southern states like Karnataka, Telangana, and Andhra Pradesh, which have started receiving monsoon rains. The trade expects increased cotton acreage in Telangana as some chili farmers shift to cotton due to weak spice crop prices. The 2024/25 US cotton projections indicate higher beginning and ending stocks, with production, domestic use, and exports unchanged. The season average upland farm price dropped by 4 cents to 70 cents per pound. Ending stocks are 400,000 bales higher at 4.1 million. Globally, the 2024/25 balance sheet shows increased beginning stocks, production, and consumption, with world ending stocks projected 480,000 bales higher at 83.5 million. In Rajkot, a major spot market, the price ended at 27,282.4 Rupees, dropping by -0.22%. Technically, the market is under fresh selling with a gain in open interest by 0.58% to settle at 172 as prices fell by -70 rupees. Cottoncandy finds support at 56,600, with a potential test of 56,400 levels. Resistance is expected at 57,000, with prices potentially testing 57,200 if surpassed.
 

Trading Ideas:

 *Cottoncandy trading range for the day is 56400-57200.
 *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 rose by 0.9% to settle at 16,000 as farmers held back stocks, anticipating further price increases. Despite the price rise, the upside was limited due to news of increased sowing. Farmers are expected to sow turmeric extensively across all producing states this year, driven by favorable prices. In regions like Erode, sowing is reported to have doubled compared to last year, and in Maharashtra, Telangana, and Andhra Pradesh, sowing is estimated to be 30-35% higher. Last year, turmeric was sown in about 3-3.25 lakh hectares, which is expected to increase to 3.75-4 lakh hectares this year. Poor weather conditions last year led to an estimated production of 45-50 lakh bags, with an additional outstanding stock of 35-38 lakh bags. Despite the increased sowing, the upcoming crop is projected to be around 70-75 lakh bags, with zero outstanding stock, leading to a potential shortage in 2025. Turmeric exports during April-May 2024 dropped by 20.03% to 31,523.94 tonnes compared to the same period in 2023. However, exports in May 2024 rose by 23.43% from April 2024. Conversely, imports surged by 417.74% to 14,637.55 tonnes during April-May 2024 compared to the previous year, with May 2024 imports showing a significant increase from both April 2024 and May 2023. In the Nizamabad spot market, turmeric prices ended at 16,236.9 rupees, down by 0.89%. Technically, the market is under fresh buying, with a 1.92% increase in open interest to 15,832, and prices rising by 142 rupees. Turmeric currently has support at 15,830, with a potential test of 15,660 if this level is breached. Resistance is expected at 16,122, with a move above this level potentially driving prices to 16,244.
 

Trading Ideas:

*Turmeric trading range for the day is 15660-16244.
*Turmeric gains as farmers are holding back stocks in anticipation of a further rise.
*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 16236.9 Rupees dropped by -0.89 percent.

Jeera

Jeera settled down by -0.5% at 26,700 due to expectations of higher production. However, the downside was limited by robust domestic and export demand and tight global supplies. Farmers holding back stocks in anticipation of better prices also supported prices. This season, jeera production is expected to be 30% higher, reaching 8.5-9 lakh tonnes due to a significant increase in cultivation area, with sowing in Gujarat up by 104% and in Rajasthan by 16%. Globally, cumin production has surged, with China's output rising to 55-60 thousand tons from the previous 28-30 thousand tons. Increased production is also seen in Syria, Turkey, and Afghanistan, potentially lowering prices as new supplies enter the market. Reduced export trade has also pressured prices, indicating shifting global cumin market dynamics. The total cumin production in Gujarat is estimated at a record 4.08 lakh tonnes, with Rajasthan also seeing a 53% increase. Favorable weather has doubled production compared to last year. Trade analysts estimate a significant increase in cumin exports, potentially reaching 14-15 thousand tonnes in February 2024. Despite a volatile 2023 for cumin exports, with a 30-10% decline to 176,011 tonnes, 2024 shows promise due to increased sowing and lower international prices. India's average annual cumin export is about 0.2 million tonnes. The IMD predicts above-average rainfall in August and September, which could boost farm output and economic growth. Technically, the market is under long liquidation with a drop in open interest by -0.88% to 26,620 as prices fell by -135 rupees. Jeera finds support at 26,590, with a potential test of 26,470 if broken, and resistance at 26,840, with prices possibly testing 26,970 if surpassed.
 

Trading Ideas:

*Jeera trading range for the day is 26470-26970.
*Jeera dropped as the expectation of higher production could 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 26719.95 Rupees dropped by -0.15 percent.

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