IGI Logo

Gold

Gold prices increased by 0.89% to settle at 74,367, driven by several macroeconomic and geopolitical factors. Key among these is the rising expectation of Federal Reserve interest rate cuts, which have been bolstered by indications of a slowdown in US consumer inflation and stagnant retail sales. These economic signals have provided the Fed with more flexibility to consider monetary easing, despite no official policy shift yet. Market participants are already anticipating rate reductions in 2024. Additionally, geopolitical tensions have further reinforced gold's appeal as a safe-haven asset. Central bank buying has also significantly supported the gold market, with notable purchases from China as part of its strategy to reduce dependence on the US dollar. On the demand front, retail demand in China is expected to remain robust, especially after the government announced initiatives to stabilize the troubled property sector. However, high prices have started to deter physical purchases in top-consuming countries. In China, dealers have responded by offering lower premiums, and in India, discounts have deepened following a major gold-buying festival. Indian gold imports more than doubled in April to $3.11 billion from $1.53 billion in March, yet dealers offered discounts of up to $10 per ounce, compared to $7 the previous week. In China, premiums ranged from $16-$30 per ounce over benchmark spot prices, down from $26-$35 the previous week. From a technical perspective, the market is experiencing short covering, with a notable 1.76% drop in open interest to 10,494, while prices rose by 656 rupees. Currently, gold finds support at 73,840, and a decline below this level could see a test of 73,305. On the upside, resistance is expected at 74,675, and surpassing this could push prices towards 74,975.
 

Trading Ideas:
* Gold trading range for the day is 73305-74975.
* Gold rose buoyed by increased expectations of Federal Reserve interest rate cuts.
* Furthermore, the upward trend was supported by strong central bank buying
* India's April gold imports more than doubled to $3.11 billion, compared with $1.53 billion in March.

silver

Yesterday, silver prices surged by 4.66%, settling at 95267, driven by strong investment and industrial demand. While ETFs have shown limited interest, physical sales of silver have increased, reflecting its perceived undervaluation. In January, the gold-to-silver ratio exceeded 90, the widest gap since September 2022, but it has since narrowed to around 80 and is expected to further decrease to 70 if the Federal Reserve cuts rates and the US economy remains resilient. Recent US consumer inflation data and a key monthly jobs report have increased the likelihood of Fed rate cuts in 2024. However, this optimism is tempered by rising export and import prices and hawkish comments from policymakers. Silver also benefits from its critical role in solar panel production, expected to reach a record high this year, pushing the silver market into its fourth consecutive deficit. The global silver deficit is projected to increase by 17% to 215.3 million troy ounces in 2024, driven by a 2% rise in demand, led by strong industrial consumption, and a 1% decline in total supply, according to the Silver Institute. Global supply has remained steady at approximately 1 billion ounces, while industrial demand experienced an impressive 11% growth. Stocks held in commodity exchange depositories and London vaults fell by 5% last year, amounting to nearly 15 months of global supply at the end of 2023. From a technical perspective, the market is experiencing short covering, as indicated by a 4.39% drop in open interest, settling at 30148 while prices increased by 4243 rupees. Currently, silver has support at 92760, with potential testing at 90250 if it falls below this level. Resistance is anticipated at 96630, with a move above possibly pushing prices to 97990.
 

Trading Ideas:
* Silver trading range for the day is 90250-97990.
* Silver climbed to all time high fueled by robust investment and industrial demand.
* US consumer inflation data and key monthly jobs report bolstered the chances of Fed rate reductions in 2024.
* Prices continued to benefit from its use in solar panels, and push the market into its fourth consecutive deficit.

Crude oil

Crude oil prices decreased by 0.72% to settle at 6,579, reflecting a market sentiment that does not currently foresee significant disruptions to oil supply. Recent data from the US EIA revealed a second consecutive weekly decline in US crude stockpiles, falling by 2.508 million barrels and surpassing expectations of a 1.362 million barrel draw. This decline in inventories indicates a tightening supply, which typically supports prices. April data indicating a slowdown in US consumer inflation has fueled expectations of Federal Reserve rate cuts, which could stimulate economic growth and subsequently increase energy demand. Despite this potential boost, the IEA has lowered its global demand growth forecast for 2024 by 140,000 barrels per day to 1.1 million barrels per day. This adjustment suggests a more subdued outlook for oil demand growth. The Organization of the Petroleum Exporting Countries (OPEC) reported that member nations exceeded their production caps by 568,000 barrels per day in April. Despite this, OPEC maintains robust demand forecasts of 2.25 million barrels per day in 2024 and 1.85 million barrels per day in 2025, indicating confidence in future demand growth.  The EIA also noted an expected rise in US oil output from top shale-producing regions, projected to reach 9.85 million barrels per day in June, marking the highest level in six months. Technically, the crude oil market is experiencing fresh selling pressure, with a notable 19.54% increase in open interest to 5,562, while prices declined by 48 rupees. Currently, crude oil finds support at 6,538, and a fall below this level could see a test of 6,497. On the upside, resistance is expected at 6,651, and a move above this level could push prices towards 6,723.
 

Trading Ideas:
* Crudeoil trading range for the day is 6497-6723.
* Crude oil dropped as markets don’t appear too worried about oil supply
* EIA data showed that US crude stockpiles fell by 2.508 million barrels last week, declining for the second straight week.
* Azerbaijan oil production drops to 476,000 bpd in April, ministry says

Natural Gas

Yesterday, natural gas prices rose by 4.75%, settling at 227.1, driven by an increase in feedgas to liquefied natural gas (LNG) export plants, notably with the expected return of Freeport LNG's export plant in Texas to full service after a brief reduction. However, the substantial surplus of gas in storage has tempered this price increase. According to financial firm RSEG, gas output in the Lower 48 U.S. states has averaged 97.2 billion cubic feet per day (bcfd) so far in May, down from 98.2 bcfd in April, and significantly lower than the monthly record high of 105.5 bcfd in December 2023. On a daily basis, output is on track to decline by about 1.7 bcfd over the past five days to a preliminary 96.5 bcfd. This puts U.S. gas production down approximately 9% in 2024 after several energy companies, including EQT and Chesapeake Energy, delayed well completions and reduced drilling activities due to the sharp drop in prices to 3-1/2-year lows in February and March. EQT is currently the largest U.S. gas producer, and Chesapeake is poised to become the largest producer following its merger with Southwestern Energy. Meteorologists predict that the weather across the Lower 48 states will remain mostly warmer than normal through June 1, potentially increasing demand for natural gas. From a technical perspective, the natural gas market is under short covering, as evidenced by a 10.35% drop in open interest, settling at 19269 while prices increased by 10.3 rupees. Currently, natural gas has support at 220.9, with potential testing at 214.7 if it drops below this level. Resistance is anticipated at 231.1, with a move above potentially pushing prices to 235.1.
 

Trading Ideas:
* Naturalgas trading range for the day is 214.7-235.1.
* Natural gas climbed with an increase in the amount of feedgas to LNG export plants.
* Keeping that price increase in check has been the tremendous surplus of gas in storage.
* Gas output in the Lower 48 U.S. states fell to an average of 97.2 billion cubic feet per day (bcfd) so far in May.


Copper

Copper prices surged by 2.15% to settle at 936.5, driven by heightened demand expectations in China, the world's largest copper consumer. The Chinese government's recent announcement to purchase unsold housing inventory aims to combat oversupply and mitigate defaults among distressed developers, marking one of Beijing's most significant measures to boost economic activity. This move, coupled with a substantial CNY 1 trillion stimulus through long-dated bond issuance aimed primarily at infrastructure, has bolstered bullish sentiments regarding copper consumption, given its crucial role in various electrification projects, including grid-scale energy storage and data-center infrastructure. The anticipated increase in copper demand is juxtaposed against supply-side constraints. Additionally, hopes for new mine supply are dimming as high project costs drive major mining companies toward mergers and acquisitions rather than new project developments, as evidenced by BHP's renewed attempt to acquire Anglo American. Further supporting the bullish outlook, the Chilean Copper Commission has raised its average copper price estimates for this year and next, citing supply deficits. Cochilco now forecasts average copper prices at $4.30 per pound for this year, up from $3.85, and $4.25 per pound for the next year, up from $3.90. They project a supply deficit of 364,000 metric tons of copper this year and a deficit of 278,000 tons in 2025. From a technical perspective, the copper market is experiencing short covering, indicated by an 11.88% drop in open interest to 4,695, while prices increased by 19.75 rupees. Currently, copper finds support at 925.3, with a decline below this level potentially testing 914.1. On the upside, resistance is expected at 942.6, and a move above this level could push prices towards 948.7.
 

Trading Ideas:
* Copper trading range for the day is 914.1-948.7.
* Copper rallied as bets of higher demand in China magnified concerns of supply deficits.
* Low copper availability hampered output forecasts for smelters in China, responsible for over half of global supply
* Chile's Cochilco raises 2024, 2025 copper price estimates

Zinc

Yesterday, zinc prices rose by 3.13%, settling at 275.05, driven by China's recent stimulus measures aimed at boosting future construction demand. As zinc is an essential building material, it has faced challenges due to China's property crisis, where unsold home inventories have reached an eight-year high. To combat the real estate slump, Chinese authorities unveiled a significant support package, including lowering the minimum mortgage interest rate to 15% for first-time buyers and 25% for second-time buyers. Additionally, Beijing encouraged local governments to purchase homes at "reasonable" prices and convert them into affordable housing. In April 2024, China's retail sales rose by 2.3% year-on-year, missing market forecasts of 3.8% and slowing from a 3.1% growth in the previous month. This marked the 15th consecutive month of increase in retail trade but was the softest gain in the sequence. Meanwhile, China's industrial production expanded by 6.7% year-on-year in April, faster than the previous month's 4.5% growth and exceeding market forecasts of 5.5%, driven by stronger growth across all activities. However, new home prices in China declined by 3.1% year-on-year in April, a steeper decline than the 2.2% fall in the previous month, marking the 10th consecutive month of decrease and the fastest pace since July 2015, despite various support measures from Beijing. From a technical perspective, the zinc market is experiencing fresh buying, as evidenced by a 0.47% increase in open interest, settling at 2542 while prices rose by 8.35 rupees. Currently, zinc has support at 269.6, with potential testing at 264.2 if it drops below this level. Resistance is expected at 277.9, with a move above possibly pushing prices to 280.8.
 

Trading Ideas:
* Zinc trading range for the day is 264.2-280.8.
* Zinc gains amid China’s recent stimulus measures for clues on future construction demand.
* China's industrial production expanded by 6.7% year-on-year in April 2024, faster than a 4.5% growth in the previous month.
* China's retail sales rose by 2.3% year-on-year in April 2024


Aluminium

Aluminium prices rose by 1.13% to settle at 242.45, driven by broad-based gains in base metals following China’s announcement of new support measures for its struggling property sector. The market also responded to a significant increase in on-warrant LME stocks at Malaysian Port Klang, which surged ahead of the key delivery deadline of May 15th. This surge reflects trading giants leveraging new contract rules after the US and UK's sanctions on Russian aluminium, raising concerns about supply availability for major Western clients. China’s primary aluminium production in April increased by 7.2% year-over-year, reaching 3.58 million metric tons, according to the National Bureau of Statistics (NBS). The average daily output for April was 119,333 tons, up from 115,806 tons in March. Rising aluminium prices both domestically and globally have supported this production growth. Additionally, a report by Antaike noted that average profits for China’s aluminium industry have risen to 3,615 yuan per ton, nearly double the levels from a year ago and 48% higher than the previous month. In Yunnan, China’s fourth-largest aluminium producing region, some operations resumed in April, though the production outlook remains uncertain due to drought and reduced rainfall affecting hydropower supply. For the first four months of the year, China’s aluminium production totaled 14.24 million tons, marking a 7.1% increase from the same period last year, as per NBS data. Technically, the aluminium market is experiencing fresh buying, with a 2.04% increase in open interest to 2,400 as prices rose by 2.7 rupees. Currently, aluminium finds support at 239.8, with a decline below this level potentially testing 237. On the upside, resistance is expected at 244.1, and a move above this level could push prices towards 245.6.
 

Trading Ideas:
* Aluminium trading range for the day is 237-245.6.
* Aluminum rose after China announced fresh support for its ailing property sector.
* On-warrant LME stocks in Malaysian Port Klang continued to soar, extending concerns of uncertain supply
* China's primary aluminium production in April rose 7.2% from a year earlier, official data showed

Cotton Candy

Yesterday, cotton candy prices settled with a marginal increase of 0.04% at 56100, driven by continued strong demand for Indian cotton from buyers in countries like Bangladesh and Vietnam. However, upside potential remained limited due to sluggish milling demand amid muted yarn demand in the global market. Prospects of a better crop in countries such as Australia also weighed on prices. The International Cotton Advisory Committee projected increases in the cotton-producing area, production, consumption, and trade for the next season, 2024-25. India's cotton stocks are expected to decline by nearly 31% in 2023/24, reaching their lowest level in over three decades, due to lower production and rising consumption.  For MY 2024/25, India's cotton production is estimated to decrease by two percent to 25.4 million 480 lb. bales, with a shift in acreage to higher return crops. However, mill consumption is expected to increase by two percent as yarn and textile demand improve in major international markets. Additionally, with the recent recension of import duties on extra-long staple (ELS) cotton, imports are forecasted to rise by 20 percent. In China, cotton imports for MY 2024/25 are forecasted at 2.4 million metric tons, driven by higher domestic and international demand for textile and apparel products. Production is expected to remain stable in Xinjiang but decline in other regions. From a technical perspective, the market is experiencing short covering, with a 1.4% drop in open interest while prices increased by 20 rupees. Currently, cotton candy has support at 55900, with potential testing at 55700 if it falls below this level. Resistance is expected at 56300, with a move above possibly pushing prices to 56500.
 

Trading Ideas:
* Cottoncandy trading range for the day is 55700-56500.
* Cotton remained firm  as demand for India cotton continues to be strong
* U.S. ending stocks projected 1.3 million bales above 2023/24 level
* Global supplies in 2024/25 projected to be higher than previous year
* In Rajkot, a major spot market, the price ended at 27201.55 Rupees dropped by -0.1 percent.

Turmeric

Turmeric prices saw a slight decline of -0.6% to settle at 17,880, largely driven by profit booking after recent gains, despite ongoing concerns about supply shortages. Farmers are holding back stocks in anticipation of further price increases, while the current heat wave across India threatens to damage crop yields, exacerbating the supply crunch and supporting prices. However, any relief from the hot weather seems unlikely, with the India Meteorological Department predicting more heat wave days than usual for May. Despite the bullish factors, profit booking and increased supplies towards the end of the harvesting season have capped the upside potential for turmeric prices. Rainfall in southern India was significantly below normal in April, further adding to concerns about crop yields. The Ministry of Agriculture and Farmers’ Welfare's estimate for turmeric production in 2023-24 indicates a slight decrease compared to the previous year. Additionally, demand destruction has been observed as prices surged, with many consumers adopting a hand-to-mouth approach. In terms of trade, turmeric exports during Apr-Mar 2024 declined by 4.75% compared to the previous year, while imports dropped by 12.71%. However, there was a notable increase in imports in March 2024 compared to the same period last year. Technically, the turmeric market is experiencing long liquidation, with a 2.91% drop in open interest to settle at 16,505, accompanied by a decrease in prices by -108 rupees. Currently, turmeric finds support at 17,556, with a potential test of 17,232 below this level, while resistance is likely at 18,252, with a possible upward movement towards 18,624.
 

Trading Ideas:
* Turmeric trading range for the day is 17232-18624.
* Turmeric dropped on profit booking after prices gained as farmers are holding back stocks.
* The current heat wave could severely damage the crop yield, further contributing to the supply crunch.
* The Ministry of Agriculture first advance estimate for turmeric production in 2023-24 is estimated at 10.74 lakh tonnes
* In Nizamabad, a major spot market, the price ended at 17313.9 Rupees gained by 0.1 percent.

Jeera

Jeera prices saw a marginal increase of 0.04% yesterday, settling at 27840, as the arrival pace slowed down due to stockists and farmers holding back their stocks for better price realization. The arrival of jeera at major APMC mandies across India increased slightly in the first week of May, indicating a stable supply. Export demand is expected to rise at current rates, supporting the upward movement in jeera prices. Robust export demand, coupled with aggressive buying by stockists, also contributed to the market's support. Global buyers are preferring Indian jeera due to tightening global supplies, further bolstering prices. The sowing area for cumin in major producing regions like Gujarat and Rajasthan increased significantly this year, leading to a record production of cumin in Gujarat. Rajasthan also saw a substantial increase in cumin production, resulting in a two-fold increase in production compared to the previous year. This surge in production is expected to lead to a substantial increase in cumin exports in 2024, following a decline in exports in 2023 due to domestic price volatility. Despite the overall decline in jeera exports during Apr-Mar 2024 compared to the previous year, there was a significant increase in exports in March 2024 compared to February 2024 and March 2023. From a technical standpoint, the market is witnessing fresh buying, with a 3.16% increase in open interest while prices rose by 10 rupees. Currently, jeera has support at 27560, with potential testing at 27280 if it falls below this level. Resistance is expected at 28210, with a move above potentially pushing prices to 28580.
 

Trading Ideas:
* Jeera trading range for the day is 27280-28580.
* Jeera prices gained as arrival pace has started slowed down.
* Global buyers preferred Indian jeera with tightening global supplies.
* New arrivals have started in Gujarat since last 20-25 days and new arrivals have started in Rajasthan also since last 15 days.
* In Unjha, a major spot market, the price ended at 29422.7 Rupees gained by 0.66 percent.