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Gold

Gold settled down by 0.03% at Rs.80,874 as market participants remained cautious ahead of the U.S. Federal Reserve’s interest rate decision. Investors are weighing the potential impact of President Donald Trump’s trade policies, particularly his push for lower interest rates, which conflicts with the Fed’s independent policy stance. Additionally, Trump’s tariff plans on Canada and Mexico have fueled concerns over inflation, which could pressure the Fed to maintain higher interest rates to control price pressures. On the demand side, China’s net gold imports via Hong Kong in December plunged 84% from November, with imports dropping to 5.26 metric tons from 33.07 tons, as elevated prices dampened demand. In India, jewellers hesitated to make purchases amid speculation that the government may alter import duties in the upcoming budget, leading to discounts of up to $38 per ounce—the biggest in over six months. In China, dealers offered both discounts and premiums of around $10 per ounce, while Hong Kong saw prices range from par to a $2 premium. Meanwhile, global central banks continued their gold accumulation, with Poland’s central bank purchasing 21 tonnes in November, raising its total reserves to 448 tonnes. The Reserve Bank of India extended its buying streak, adding 8 tonnes, bringing its 2024 total to 73 tonnes. China’s central bank also increased its gold reserves for a second consecutive month in December. The market is under fresh selling pressure, with open interest rising by 8.35% to 14,187. Support is seen at Rs.80,720, with a potential test of Rs.80,565. Resistance is at Rs.81,065, and a move above could push prices toward Rs.81,255.
 

Trading Ideas:
* Gold trading range for the day is 80565-81255.
* Gold settled flat as market participants were cautious ahead of the U.S. Fed interest rate decision.
* The Fed kept the funds rate steady at the 4.25%-4.5% range as expected, pausing its rate-cutting cycle
* Trump has called for lower interest rates, conflicting with the Fed's design of setting interest rate policy independently.


Silver
Silver rose by 0.9% to Rs.91,866, with market attention shifting to potential economic impacts of President Trump’s policies, particularly on inflation. In December, the U.S. Federal Reserve signaled only two rate cuts for 2025, while the Bank of Canada reduced its key interest rate to 3% in January, marking a cumulative 200 basis points cut since June 2024. The Canadian central bank also announced the end of quantitative tightening and plans to restart asset purchases in March to support economic activity. The U.S. trade deficit in goods widened to a record $122.11 billion in December, surpassing expectations and up from $103.5 billion in November, possibly due to a surge in imports ahead of potential Trump administration tariffs. Meanwhile, U.S. wholesale inventories fell by 0.5% in December, reflecting weaker demand. On the supply-demand front, the global silver deficit is projected to narrow by 4% to 182 million ounces in 2024, with supply growing by 2% while demand rises by 1%. Record industrial demand and a recovery in jewellery consumption are expected to push total silver demand to 1.21 billion ounces, despite a 16% decline in physical investment. The market is witnessing short covering, with open interest falling by 3.57% to 21,336. Support is seen at Rs.90,890, with a potential test of Rs.89,910. Resistance is at Rs.92,735, and a move above could push prices toward Rs.93,600.
 

Trading Ideas:
* Silver trading range for the day is 89910-93600.
* Silver rose as market focus will shift to any comments regarding President Trump’s policies and their potential economic impact.
* The US trade deficit in goods widened to a record $122.11 billion in December 2024.
* US wholesale inventories fell by 0.5% month-over-month to $898 billion in December 2024.


Crude Oil
Crude oil fell by 0.73% to Rs.6,294, pressured by a rise in U.S. crude inventories and concerns over China’s oil demand outlook. Data from the Energy Information Administration (EIA) showed that U.S. crude stocks increased by 3.463 million barrels, surpassing expectations of a 3.2 million-barrel build. This marks the first increase in ten weeks. Additionally, gasoline inventories surged by 2.957 million barrels, exceeding the anticipated 1.5 million-barrel rise, while distillate stocks fell by 4.994 million barrels, greater than the expected 2.1 million-barrel decline. On the supply side, Canada supplied 3.9 million bpd of oil to the U.S. in 2023, accounting for half of total U.S. imports, followed by Mexico with 733,000 bpd. Kazakhstan is set to decide on oil production cuts after the next OPEC+ meeting, as the country has consistently exceeded its output quota of 1.468 million bpd. Meanwhile, Russia’s crude exports from western ports are expected to decline by 8% in February due to increased refining and tightening U.S. sanctions. The EIA’s Short-Term Energy Outlook predicts oil prices will remain under pressure for the next two years as global production growth surpasses demand. U.S. oil output is expected to reach a record 13.55 million bpd in 2024, with the Permian Basin accounting for more than half of total output by 2026. Fresh selling is observed with open interest rising by 4.61% to 8,016. Support is seen at Rs.6,243, with a break potentially testing Rs.6,193. Resistance is at Rs.6,378, and a move above could push prices toward ?6,463.
 

Trading Ideas:
* Crudeoil trading range for the day is 6193-6463.
* Crude oil dropped after data showed crude inventories in the U.S. rose.
* Concerns about the outlook for oil demand from China continued to weigh on oil prices.
* US crude stocks increased for the first time in ten weeks, along with a rise in gasoline inventories.


Natural Gas
Natural gas rose 1.22% to Rs.273.7, supported by increasing LNG exports as Freeport LNG’s Texas facility resumed operations. Market sentiment was also influenced by lower U.S. gas storage levels, projected to end the winter withdrawal season at a three-year low of 1.763 trillion cubic feet (tcf) by March 31, 2025. This is significantly below the eight-year high of 2.306 tcf recorded at the end of the previous winter. Meanwhile, freezing conditions caused a decline in gas output in the Lower 48 U.S. states, dropping from 103.8 bcfd in December to 102.2 bcfd in January. A sharp freeze-off from January 18-21 further reduced output to 96.9 bcfd, the lowest in a year. Despite these supply-side constraints, meteorologists forecast milder weather through mid-February, leading to expected lower gas demand, which LSEG predicts will fall from 136.8 bcfd this week to 126.0 bcfd next week. U.S. utilities reported a 233 billion cubic feet withdrawal from storage, slightly below the expected 244 bcf. The sharpest storage drops were seen in the South Central (-77 bcf), Midwest (-64 bcf), and East (-56 bcf) regions. The market is witnessing fresh buying, with open interest increasing by 3.16% to 15,128. Support is at Rs.267.8, with a potential test of Rs.262. Resistance is at Rs.277.4, and a break above could push prices toward Rs.281.2.
 

Trading Ideas:
* Naturalgas trading range for the day is 262-281.2.
* Natural gas prices rose as LNG exports are increasing, helped by the restart of Freeport LNG’s Texas facility.
* US natgas end – of – season storage to slide to three – year low in March
* Average gas output in the Lower 48 U.S. states fell from 103.8 bcfd in December to 102.2 bcfd so far in January.


Copper
Copper rose 0.19% to Rs.828.55 on short covering after an earlier decline driven by escalating U.S. tariff threats. U.S. President Donald Trump’s plan to impose tariffs on copper, steel, aluminum, and other goods weighed on market sentiment, raising concerns over potential disruptions in global trade. Meanwhile, traders remained cautious ahead of the February 1 deadline for new U.S. tariffs targeting China, the largest copper consumer. Additionally, Chinese manufacturing activity unexpectedly contracted in January, further dampening demand expectations. With China’s markets closed for the Lunar New Year, trading volumes are expected to remain subdued. On the supply side, Freeport-McMoRan missed its Q4 production targets and warned of a sharp drop in Q1 output, raising supply concerns. Chile revised its copper production forecast to 5.54 million tons by 2034, down from the earlier estimate of 6.34 million tons. However, China’s unwrought copper imports surged 17.8% in December to 559,000 metric tons, indicating refiners are restocking inventories due to rising orders. The global refined copper market showed a deficit of 131,000 metric tons in November, compared to 30,000 metric tons in October, according to the International Copper Study Group (ICSG). The market is witnessing short covering, with open interest dropping by 2.07% to 6,330. Support is at Rs.822.3, with a break possibly testing Rs.816. Resistance is at Rs.832.7, and a move above could push prices toward Rs.836.8.
 

Trading Ideas:
* Copper trading range for the day is 816-836.8.
* Copper gains on short covering after prices dropped amid escalating tariff threats from US President Trump.
* Traders also adopted a cautious stance ahead of the February 1 deadline for the first round of US tariffs targeting China.
* Data showed that Chinese manufacturing activity unexpectedly contracted in January.


Zinc
Zinc rose 0.38% to Rs.266.3, supported by supply concerns as global mined zinc production fell for the third consecutive year in 2024. The supply deficit was further aggravated by a 7% decline in refined zinc output from China, driven by lower processing rates. Additionally, production from Red Dog Mine in Alaska, the world’s largest zinc mine, is expected to slow in 2025, adding to supply constraints. Meanwhile, LME-registered zinc inventories continued to decline, reaching their lowest level since February 2024, further supporting prices. However, demand concerns have limited gains. The latest data from China indicated that the manufacturing sector unexpectedly contracted in January, despite earlier optimism around improved credit demand. On the other hand, industrial output accelerated sharply in December, and credit aggregates strengthened, suggesting that China’s aggressive monetary stimulus is starting to impact economic activity. The global zinc market deficit narrowed to 52,900 metric tons in November from 65,400 tons in October, according to the International Lead and Zinc Study Group (ILZSG). Year-to-date, there was a global zinc deficit of 33,000 tons, compared to a 312,000-ton surplus in 2023. China’s refined zinc production increased by 10,000 mt in December and is expected to rise further by 15,000 mt in January 2025, with new production in Shanxi contributing to the increase.  The market is witnessing fresh buying, with open interest rising by 7.48% to 3,592. Support is at Rs.264, with a potential test of Rs.261.7. Resistance is at Rs.267.9, and a break above could push prices toward Rs.269.5.
 

Trading Ideas:
* Zinc trading range for the day is 261.7-269.5.
* Zinc gains amid supply concerns as global mined zinc production fell for the third consecutive year in 2024.
* However upside seen limited as the pessimistic demand backdrop momentarily outweighed the trend of lower supply.
* LME zinc total stocks were at the lowest since February 2024.


Aluminium
Aluminium jumped 1.88% to Rs.252, driven by supply concerns as the European Commission proposed sanctions on Russian primary aluminium imports in its 16th sanctions package. The ban, aimed at reducing Russia’s war revenue, includes aluminium alloys but allows 275,000 metric tons of imports during a one-year phase-in period. On the supply front, global primary aluminium production rose 3% YoY in December to 6.236 million tonnes, according to the International Aluminium Institute (IAI). Meanwhile, Chinese aluminium output hit a record 44 million tons in 2024, nearing the government's 45-million-ton cap set in 2017 to control excess production and meet carbon emission targets. China’s unwrought aluminium and aluminium product exports surged 17% YoY to 5.5 million tons in the first ten months of 2024, highlighting strong overseas demand. However, the daily aluminium output in December declined by 1.7% MoM to 121,612 tons, despite a 4.2% YoY rise to 3.77 million metric tons. The increase in production was driven by new capacities in Xinjiang, while higher costs led to average industry losses of 687 yuan per ton, the first in three years, according to Antaike. The market is witnessing fresh buying, with open interest rising by 16.17% to 3,455. Support is at Rs.247.6, with a potential test of Rs.243.2. Resistance is at Rs.254.8, and a break above could push prices toward Rs.257.6.
 

Trading Ideas:
* Aluminium trading range for the day is 243.2-257.6.
* Aluminium prices gained amid concerns over supply disruptions.
* The European Commission's proposal to ban Russian primary aluminium imports has fueled bullish sentiment.
* The official manufacturing PMI in China pointed to a sharp contraction in activity during January

 

Cottoncandy
Cottoncandy fell 0.8% to Rs.51,950 as the Cotton Association of India (CAI) revised crop projections upwards by 2 lakh bales to 304.25 lakh bales for the 2024-25 season. Higher output in Telangana (+6 lakh bales) contributed to this increase, although North India’s production is expected to decline by 3.5 lakh bales. The WASDE report also projected higher global production (117.4 million bales), adding to the bearish trend. However, a 43% decline in kapas arrivals in Punjab, Haryana, and Rajasthan has caused supply concerns. Some farmers are holding stocks, while ginners and spinners face shortages, especially in Punjab. Total supplies till December-end stood at 176.04 lakh bales, including 133.85 lakh bales pressed, 12 lakh bales imported, and 30.19 lakh bales opening stock. Consumption has been 84 lakh bales, while exports reached 7 lakh bales, leaving December-end stocks at 85.04 lakh bales. CAI raised its consumption estimate by 2 lakh bales to 315 lakh bales due to higher demand. Meanwhile, cotton yarn prices in South India increased amid rising demand from garment industries and strong export orders, helping to limit further downside. The market is witnessing long liquidation, with open interest falling by 5.05% to 94. Support is at Rs.51,840, with further downside to Rs.51,730. Resistance is at Rs.52,130, and a break above this level could push prices toward Rs.52,310.
 

Trading Ideas:
* Cottoncandy trading range for the day is 51730-52310.
* Cotton dropped as CAI has revised upwards its crop projections by 2 lakh bales
* WASDE report projected higher production and ending stocks for the 2024/25 crop year, adding to the downward momentum.
* Global cotton production is projected to rise by more than 1.2 million bales to 117.4 million bales.
* In Rajkot, a major spot market, the price ended at 25452.35 Rupees dropped by -0.69 percent.

 

Turmeric
Turmeric prices settled up by 2.65% at Rs.13,778, driven by expectations of a 10-15% lower crop yield this year. The Nanded region has been particularly affected by small rhizomes and crop rots, although confirmation of the crop loss is expected only when harvesting picks up in the primary producing regions. Despite these supply concerns, price upside remains limited due to weak demand and marginal improvement in arrivals. With harvesting progressing and the maximum crop expected to arrive in a month, prices may face continued pressure as end consumers struggle to meet their needs. Arrivals in the spot market rose significantly to 13,190 bags, compared to 6,780 bags in the previous session, indicating increased arrivals from key markets like Nizamabad and Hingoli. The new crop arrivals are expected to keep pressure on prices, and farmers have expressed concerns over lower yields. Turmeric exports during April-November 2024 rose by 9.80% to 121,601.21 tonnes, compared to 110,745.34 tonnes in the same period last year. However, exports dropped by 20.18% in November 2024, with around 12,721.25 tonnes shipped, compared to 15,938.21 tonnes in October 2024. Imports also increased significantly by 101.80% during the same period. The market is currently witnessing fresh buying activity, with open interest rising by 1.64% to 11,435 contracts. Support is seen at Rs.13,470, and a break below could lead to a test of Rs.13,164 levels. Resistance is now at Rs.13,966, and a move above this could see prices testing Rs.14,156.
 

Trading Ideas:
* Turmeric trading range for the day is 13164-14156.
* Turmeric prices gained as new crop yields are expected to be 10-15% lower this year.
* Support also seen amid concerns over slow growth of rhizomes and low yield estimates persist.
* With the arrival of new crop likely to increase after Makar Sankranti, supply is expected to increase.
* In Nizamabad, a major spot market, the price ended at 13519.75 Rupees dropped by -0.65 percent.


Jeera
Jeera settled up by 0.41% at Rs.21,780 on low-level buying and a shortage of stocks. While there is some upward movement in prices, the upside remains limited due to weak demand. The current export business is being met from existing stocks, and farmers still hold around 20 lakh bags of cumin, with only 3-4 lakh bags expected to be traded by the end of the season. This would leave a carry-forward stock of 16 lakh bags. The current season’s production is expected to be in line with last year’s levels, as crop conditions remain favorable and sowing has been good. India is currently the cheapest supplier of cumin in the world, with prices quoted at $3,050 per tonne, significantly lower than Chinese cumin. This price advantage has attracted many buyers, including China, helping to support the market. Tensions in the Middle East have further boosted export demand, particularly for cumin exporters from Gujarat. Jeera exports during Apr-Nov 2024 surged by 74.04% to 147,006.20 tonnes, compared to 84,467.16 tonnes in the previous year. However, in November 2024, exports dropped by 28.92% to 11,555.56 tonnes from 16,257.44 tonnes in October 2024, despite a 42.67% increase compared to November 2023. The market is witnessing fresh buying, with open interest rising by 1.85% to 2,484 contracts. Support is at Rs.21,650, with a potential test of Rs.21,520 below that level. Resistance is at Rs.21,860, and a break above could push prices to test Rs.21,940.
 

Trading Ideas:
* Jeera trading range for the day is 21520-21940.
* Jeera gains on low level buying and amid shortage of stocks.
* However upside seen limited as demand is low and the current export business is being met from the available stock.
* The current season is expected to have similar production levels as last year due to better crop conditions and good sowing.
* In Unjha, a major spot market, the price ended at 22508.75 Rupees dropped by -0.31 percent.

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