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Gold

Gold prices settled up by 0.12% at 72,122, buoyed by firmer expectations of US rate cuts this year and rising geopolitical risks. Investors are closely monitoring the upcoming Personal Consumption Expenditures (PCE) data, the Fed's preferred inflation gauge, which could influence future monetary policy decisions. According to the CME FedWatch tool, there is a 71.5% chance of a 25-basis-point rate cut in September and a 28.5% probability of a larger 50-basis-point reduction, driving some of the recent bullish sentiment in the gold market. In China, gold demand is anticipated to improve in the coming months as consumers adjust to higher prices. Economic uncertainty and concerns about currency weakness are driving investment flows into gold, which could further support the ongoing rally in global prices. Notably, China’s net gold imports via Hong Kong in July rose by 17% from June, highlighting a resurgence in demand. In contrast, discounts were observed in major Asian hubs, with dealers offering deeper discounts to attract buyers. For instance, dealers in China were offering discounts of $18 to $3 per ounce, compared to a smaller discount range last week. In India, gold demand in the June quarter fell by 5% year-on-year, but the World Gold Council (WGC) expects a recovery in the second half of 2024, driven by a correction in local prices following a reduction in import duties and a good monsoon season. Technically, the gold market is under fresh buying pressure, with a 0.58% increase in open interest to settle at 17,067 contracts. Gold is currently supported at 71,850, with a potential test of 71,585 levels if support breaks. Resistance is expected at 72,270, and a move above this level could see prices testing 72,425.
 

Trading Ideas:
* Gold trading range for the day is 71585-72425.
* Gold remained supported amid firmer expectations of US rate cuts this year and rising geopolitical risks.
* Odds of 25 bps US rate cut in Sept at 71.5% – CME FedWatch
* China's gold demand expected to rebound as economic jitters spur buying


Silver
Silver prices slightly declined by 0.01%, settling at 85,658, pressured by higher U.S. bond yields as markets awaited key inflation data that could influence the Federal Reserve's anticipated interest rate cut next month. In his recent Jackson Hole address, Fed Chair Jerome Powell indicated that the time has come to adjust monetary policy in light of rising risks to the labor market, while also expressing confidence in the Fed's ability to bring inflation back to its 2% target. Supporting this outlook, U.S. durable goods orders for July exceeded expectations, further shaping market expectations. As the market looks ahead to the upcoming initial jobless claims and the Fed-preferred PCE price index report, the path for future rate adjustments remains under scrutiny. Fed officials, including San Francisco Fed President Mary Daly and Richmond Fed President Thomas Barkin, echoed Powell's dovish tone, suggesting that the time to "dial down" interest rates has arrived, particularly in response to a cooling labor market. Geopolitical tensions in the Middle East have also spurred demand for safe-haven assets, including silver. On the domestic front, India's silver imports are on track to nearly double this year, driven by increased demand from the solar panel and electronics sectors, as well as investor interest in silver as a potentially higher-return investment compared to gold. Technically, silver is experiencing long liquidation, with a notable drop in open interest by 11.75%, settling at 15,874 contracts. The metal currently finds support at 85,140, with a potential test of 84,630 if this level is breached. On the upside, resistance is anticipated at 86,065, with a move above possibly testing 86,480.
 

Trading Ideas:
* Silver trading range for the day is 84630-86480.
* Silver eased weighed down by higher U.S. bond yields
* Fed Chair Powell emphasized the need to adjust policy amid labor market risks.
* Fed’s Daly and Barkin support "dialing down" interest rates due to labor market cooling.


Crudeoil
Crude oil prices declined by -2.01% to settle at 6,353, driven by profit booking after recent gains fueled by supply concerns stemming from escalating tensions in the Middle East and potential disruptions in Libya's oil production. Libya's eastern-based government announced the closure of all oil fields, halting production and exports, which added to the market's anxiety. Despite this, the Waha Oil Company, a subsidiary of Libya's National Oil Corporation (NOC), indicated plans to gradually reduce output, warning of a possible complete halt to the country's production. Another NOC subsidiary, Sirte Oil Company, also announced a partial reduction in production. Libya's oil production stood at approximately 1.18 million barrels per day in July, according to OPEC's secondary sources. On the inventory front, the Energy Information Administration (EIA) reported significant declines in U.S. crude stocks, gasoline, and distillate inventories for the week ending August 16. Crude inventories fell by 4.6 million barrels to 426 million barrels, surpassing expectations of a 2.7 million-barrel draw. Stocks at the Cushing, Oklahoma hub decreased by 560,000 barrels, while refinery crude runs increased by 222,000 barrels per day. U.S. gasoline stocks dropped by 1.6 million barrels to 220.6 million barrels, and distillate stockpiles fell by 3.3 million barrels to 122.8 million barrels, both exceeding market expectations. Technically, the crude oil market is experiencing long liquidation, with a 7.91% decrease in open interest, settling at 7,103 contracts. Crude oil is currently supported at 6,291, with a potential test of 6,229 levels if support breaks. Resistance is likely at 6,464, and a move above this level could see prices testing 6,575.
 

Trading Ideas:
* Crudeoil trading range for the day is 6229-6575.
* Crude oil dropped on profit booking after prices rose on supply concerns
* Crude oil inventories at Cushing have fallen to six-month lows.
* U.S. crude inventories were expected to have fallen by about 3 million barrels last week


Naturalgas
Natural gas prices fell by 3.44%, settling at 174.2, as forecasts indicated less hot weather over the next two weeks than previously expected, reducing the need for gas-fired power generation to run air conditioners. Despite smaller-than-normal weekly storage builds in 13 of the past 14 weeks, U.S. gas storage levels remain about 12% above the seasonal average. This surplus continues to weigh on prices, even as supply constraints emerge. In August, gas output in the Lower 48 U.S. states averaged 102.4 billion cubic feet per day (bcfd), down from 103.4 bcfd in July, according to financial firm LSEG. Although the weather remains hotter than normal, the approach of autumn is bringing cooler temperatures, which will likely reduce demand. LSEG forecasts that gas demand, including exports, will decline from 104.6 bcfd this week to 101.2 bcfd next week. U.S. LNG exports increased in August, with flows to the seven major U.S. LNG export plants rising to 12.9 bcfd, up from 11.9 bcfd in July. This is still below the record high of 14.7 bcfd set in December 2023. The U.S. Energy Information Administration (EIA) has revised its forecast for natural gas production this year, predicting a slight decline to an average of 103.3 bcfd, down from last year’s 103.8 bcfd. The EIA also expects consumption to average 89.8 bcfd this year, slightly higher than previously forecast. Technically, the natural gas market is under fresh selling pressure, with open interest increasing by 28.34% to 52,614 contracts. Prices are currently supported at 171.4, with a potential test of 168.5 if this level is breached. Resistance is expected at 178.6, and a move above this level could see prices testing 182.9.
 

Trading Ideas:
* Naturalgas trading range for the day is 168.5-182.9.
* Natural gas prices fell due to forecasts for less hot weather in the next two weeks.
* Despite 12% more gas in storage than usual, weekly builds have been smaller than normal in 13 of the past 14 weeks.
* LSEG reported a drop in gas output in Lower 48 U.S. states to an average of 102.4 bcfd in August.


Copper
Copper prices rose by 0.65% to settle at 819.1, driven by optimism surrounding a potential U.S. interest rate cut in September, which could boost demand for the red metal. A notable factor supporting the market was the decline in copper inventories in warehouses monitored by the Shanghai Futures Exchange, which fell by 4.3% from the previous Friday. However, the broader market sentiment remains cautious due to the impact of an unusual surge in Chinese exports, which has led to a significant reduction in bullish positions and a 16% drop in prices from the record highs seen in May. China, the world's largest copper buyer, exported an unprecedented 158,000 metric tons of refined copper in June, contributing to the bearish sentiment. However, this export burst appears to be tapering off, with shipments falling to 70,000 tons in July. Despite this, Shanghai Futures Exchange (ShFE) stocks have continued to decline since the start of July, now standing 75,000 tons below the June peak at 262,206 tons. The global refined copper market showed a 95,000 metric tons surplus in June, up from a 63,000 metric tons surplus in May, according to the International Copper Study Group (ICSG). For the first half of the year, the market surplus reached 488,000 metric tons, significantly higher than the 115,000 metric tons surplus recorded in the same period last year. Technically, the market is experiencing short covering, with a slight 0.36% drop in open interest to 9,932 contracts, while prices rose by 5.25 rupees. Copper is currently supported at 814.7, with a potential test of 810.2 levels if support breaks. Resistance is likely at 822, and a move above this level could see prices testing 824.8.
 

Trading Ideas:
* Copper trading range for the day is 810.2-824.8.
* Copper gains supported by optimism over a potential U.S. interest rate cut in September that could help lift demand.
* Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 4.3% from last Friday.
* China produced 5.9 million tons of refined copper in the first half of the year.


Zinc
Zinc prices edged higher by 0.44%, settling at 271.35, supported by concerns over reduced supply and an anticipated seasonal increase in demand in the coming months. The recent price rally was sparked by a decision from 14 major Chinese zinc smelters to cut production in response to plummeting treatment charges (TCs), which have severely impacted profitability. Treatment charges for zinc concentrates have fallen to historically low levels due to tight supply, prompting smelters to already scale back production in July and August. As a result, China’s zinc output dropped for the second consecutive month in July, decreasing by 9.2% from June to 536,000 tons, the lowest monthly output in a year. Looking ahead, production cuts may reduce output by 30,000 to 40,000 tons each month from September to December, potentially lowering total annual zinc ingot output by 3-4%. This aligns with the global zinc market, where the surplus fell to 8,700 metric tons in June from 44,000 tons in May, according to the International Lead and Zinc Study Group (ILZSG). Despite the first six months of 2024 showing a surplus of 228,000 tons, this was a significant reduction from the 452,000-ton surplus in the same period last year. In July 2024, China's refined zinc production fell by 10.3% month-on-month to 489,600 metric tons, reflecting a significant year-on-year decline of 11.15%. This drop was driven by heavy rainfall in Sichuan and unexpected production cuts in Yunnan, Guangdong, and Guangxi, alongside concentrated maintenance in other regions. Technically, the zinc market is under fresh buying pressure, with open interest increasing by 3.07% to 2,420 contracts. The current support level for zinc is at 268.7, with potential downside testing at 266.1 if breached. On the upside, resistance is anticipated at 272.9, and a move above could see prices testing 274.5.
 

Trading Ideas:
* Zinc trading range for the day is 266.1-274.5.
* Zinc climbed underpinned by prospects of reduced supply and a seasonal uplift in demand in the coming months.
* Smelters have already curbed production in July and August, with China's zinc output falling for a second straight month in July
* Treatment charges for zinc concentrates have fallen to historical lows amid tight supply.


Aluminum
Aluminum prices rose by 0.49% to settle at 233.55, supported by tight supply of raw materials and expectations of a U.S. interest rate cut next month. The market has been buoyed by strong demand for alumina and limited bauxite supply, pushing prices to a more than six-week high on the London Metal Exchange (LME). The tightening supply is also reflected in the shrinking discount of LME cash aluminum to the three-month contract, which narrowed to $17.08 per ton, the smallest since May 1. Additionally, LME aluminum inventories have dropped by 22% over the past three months, reaching 877,950 tons, the lowest level since May 8. In China, aluminum production saw significant growth, with July output rising by 6% year-on-year to 3.68 million metric tons, marking the highest monthly output since 2002. This increase is attributed to new projects coming online in Inner Mongolia and continued strong production in other major regions, driven by profitable market conditions. Meanwhile, China's alumina exports rose by 9.6% in July, with the majority flowing to Russia, further highlighting the strong demand for raw materials. Globally, primary aluminum output in July increased by 2.4% year-on-year to 6.194 million metric tons, with China's production rising by 2.5% to 3.69 million tons. The rest of Asia also saw a 3.3% increase in output. Technically, the aluminum market is experiencing short covering, with a slight 0.42% drop in open interest to 3,108 contracts while prices rose by 1.15 rupees. Aluminum is currently supported at 231.1, with a potential test of 228.5 levels if support breaks. Resistance is anticipated at 235.2, and a move above this level could see prices testing 236.7.
 

Trading Ideas:
* Aluminium trading range for the day is 228.5-236.7.
* Aluminium inched higher buoyed by tight supply of raw material and expectation of a U.S. interest rate cut next month.
* The discount of LME cash aluminium to the three-month contract tightened to $17.08 a ton, indicating tightening nearby supply.
* LME aluminium inventory has dropped 22% in three months to 877,950 tons, the lowest since May 8.


Cottoncandy
Cottoncandy prices rose by 0.57% yesterday, closing at ?58,020, driven by concerns over reduced acreage in the current kharif cropping season. The area under cotton cultivation has decreased by approximately 9% to 110.49 lakh hectares (lh) compared to 121.24 lh last year, with the Cotton Association of India (CAI) projecting an even lower total acreage of around 113 lh for this year, down from 127 lh in the previous year. This reduction is largely attributed to farmers shifting to other crops due to lower yields and high production costs. The CAI has also highlighted a tighter cotton balance sheet for the upcoming season, driven by higher-than-expected exports to Bangladesh, which have surged 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. However, the gap created by higher exports and imports will tighten the availability of cotton stocks, with an estimated 70 lakh bales available for consumption up to September 30. If the new crop is delayed, this could further strain supply for mills. Globally, the 2024/25 cotton balance sheet shows reductions across production, consumption, and stock levels, with world production down by 2.6 million bales due to lower output in the United States and India. Consumption has also decreased, particularly in China, leading to a reduction in world ending stocks to 77.6 million bales. Technically, the Cottoncandy market is experiencing fresh buying, with open interest increasing by 0.57%. The price finds immediate support at ?57,940, with further support at ?57,870. On the upside, resistance is likely at ?58,090, with potential testing of ?58,170 if the upward momentum continues.
 

Trading Ideas:
* Cottoncandy trading range for the day is 57870-58170.
* Cotton prices gained 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 2.58%, settling at 13,616, as demand remained subdued with buyers hesitant to make purchases. Export opportunities are expected to face further complications due to anticipated volatility in Bangladesh. In Indonesia, dry weather has accelerated harvesting, leading to a peak in supply as many farmers are selling their turmeric at the wet stage, contributing to reduced production. The combination of increasing acreage and low export demand is exerting downward pressure on prices. Additionally, reports of increased sowing have added to the bearish sentiment. However, the downside is limited as farmers are holding back stocks, anticipating a future price rise. Turmeric sowing in key regions like Erode has reportedly doubled compared to last year, while states like Maharashtra, Telangana, and Andhra Pradesh are estimated to have 30-35% higher sowing than the previous year. Last year, turmeric was sown on about 3 to 3.25 lakh hectares, with expectations of an increase to 3.75 to 4 lakh hectares this year. Despite the increased sowing, the overall availability of turmeric in 2025 is expected to be less than consumption, as the outstanding stock from 2023 is depleting. Turmeric production last year was estimated at 80-85 lakh bags, with an additional carryover stock of 25-30 lakh bags. However, this year, production is expected to be around 70-75 lakh bags, with no carryover stock, suggesting tighter supplies in the coming year. Technically, the market is undergoing long liquidation, with open interest dropping by 6.54% to settle at 17,370 contracts. Turmeric finds support at 13,216, with a potential test of 12,818 if breached. Resistance is anticipated at 14,016, and a move above could see prices testing 14,418.
 

Trading Ideas:
* Turmeric trading range for the day is 12818-14418.
* Turmeric 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 14819.3 Rupees dropped by -5.93 percent.


Jeera
Jeera prices edged up by 0.36% to settle at 25,435, supported by robust domestic and export demand, as well as tight global supplies. However, the upside was limited by expectations of higher production, which weighed on prices. Farmers holding back their stocks in anticipation of better prices also contributed to the price support. This season, jeera production is expected to be 30% higher, reaching 8.5-9 lakh tonnes due to a substantial increase in cultivation area. The sowing area in Gujarat surged by 104%, while in Rajasthan, it increased by 16%. Globally, jeera production has seen significant increases, with China leading the surge, doubling its output to over 55-60 thousand tons. Increased production is also expected from Syria, Turkey, and Afghanistan, which could lead to a decline in cumin prices as new supplies enter the market. Despite this, jeera exports from India have risen significantly, with a 46.56% increase in exports during April-June 2024, compared to the same period in 2023. However, exports saw a 29.12% drop in June 2024 compared to May 2024, though they were still up 60.13% compared to June 2023. In the Unjha spot market, jeera prices ended slightly lower at 25,479.45 rupees, down by 0.03%. Technically, the market is under fresh buying, with open interest increasing by 4.71% to settle at 2,466 contracts. Jeera prices are currently supported at 25,100, with a potential test of 24,770 levels if support breaks. Resistance is anticipated at 25,710, and a move above this level could see prices testing 25,990.
 

Trading Ideas:
* Jeera trading range for the day is 24770-25990.
* 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 25479.45 Rupees dropped by -0.03 percent.

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