IGI Logo

Gold

Gold prices edged lower by 0.28% to settle at Rs.76,653, pressured by a stronger U.S. dollar and rising Treasury yields. Investors are focused on the Federal Reserve's upcoming interest rate decision, with expectations of a cautious approach to monetary easing in 2024. While a 25 bps rate cut is widely anticipated this week, the probability of further reductions in January remains low at just 17%, according to CME’s FedWatch tool. India’s gold imports are expected to decline sharply in December after record volumes in November. Discounts in India widened to $9 per ounce, the highest in over two months, as domestic prices rebounded during the wedding season, curbing demand. Similarly, in China, discounts ranged between $19.4-$25, while other Asian hubs like Singapore and Hong Kong reported moderate premiums. Central bank demand for gold surged, with 60 tons of net purchases recorded in October, the highest in 2024. India led the buying spree, adding 27 tons, bringing its year-to-date purchases to 77 tons, a five-fold increase from 2023. According to the World Gold Council (WGC), global gold demand, excluding OTC trading, was stable at 1,176.5 metric tons in Q3 2024, supported by higher investment flows despite weaker jewellery demand. The market saw long liquidation with open interest dropping by 0.18% to 12,857 contracts. Gold has support at Rs.76,485, with further downside potential to Rs.76,310. Resistance is seen at Rs.76,915, and a break above this could push prices to Rs.77,170, depending on Fed cues and data outcomes.

Trading Ideas:

* Gold trading range for the day is 76310-77170.

* Gold settled down on expectations of a cautious Fed next year

* Fed cut rates for 3rd time, points to 2 reductions in 2025

* The Fed also signaled it will probably only lower rates twice more in 2025 by a total of 50 bps

Silver

Silver prices fell by 0.54%, settling at Rs.90,380, pressured by expectations of a measured pace of easing by the US Federal Reserve next year. The Fed implemented a widely anticipated 25 bps rate cut, marking the third consecutive reduction this year and bringing rates to the 4.25%-4.5% range. Robust US retail sales data, which rose by 0.7% MoM in November, further underscored strong consumer spending during the holiday season, adding weight to silver’s decline. Global demand uncertainty persisted, with weaker-than-expected retail sales growth and a prolonged property sector slump in China, the world's largest consumer of metals. Although Beijing announced new stimulus measures, their lack of specificity failed to boost market sentiment. The Silver Institute noted a 4% reduction in the global silver deficit to 182 million ounces in 2024, driven by a 2% supply increase and 1% demand growth. Despite record industrial demand and rising jewellery consumption, physical investment is projected to decline by 16%, while mine production and recycling are expected to rise by 1% and 5%, respectively. India, the largest silver consumer, has nearly doubled its imports this year due to strong demand from solar panel and electronics industries, alongside investor optimism about silver's returns compared to gold. The market experienced fresh selling, with a 3.46% rise in open interest to 29,897 contracts. Silver has support at Rs.89,995, with further downside potential to Rs.89,600. Resistance is seen at Rs.90,860, and a break above could test Rs.91,330.

Trading Ideas:

* Silver trading range for the day is 89600-91330.

* Silver fell weighed down by concerns about a more measured pace of easing from the US Federal Reserve next year.

* Pressure also seen amid ongoing demand uncertainty in China.

* The Fed announced another 25bps cut to the federal funds rate as expected

Crude oil

Crude oil prices rose 1.1% to settle at Rs.5,995, driven by supply concerns stemming from additional sanctions on Iran and Russia. Saudi Arabia's crude exports in October reached a four-month high, rising to 5.925 million barrels per day (bpd), an increase of 0.174 million bpd from September, according to JODI data. Kazakhstan plans to boost production by 190,000 bpd next year, more than doubling its output under the OPEC+ agreement. Barclays revised its fair value estimate for Brent oil in 2025 to $83 per barrel, down from $85, citing low inventories and backwardation reflecting short-term supply tightness. Meanwhile, U.S. crude oil stocks fell by 934,000 barrels in the second week of December, less than the expected 1.7 million-barrel decline, while gasoline inventories surged by 2.348 million barrels. Distillate fuel stocks plunged by 3.18 million barrels, indicating shifts in refining outputs. Global oil demand growth projections for 2024 were reduced by 300,000 bpd to 1.2 million bpd, with weaker economic activity in China and North America as key factors, per the EIA. U.S. oil production forecasts for 2025 were also lowered to 13.54 million bpd, reflecting slower output growth. Technical Overview: The market witnessed short covering, with open interest dropping by 11.28% to 9,160 contracts, while prices rose Rs.65. Support is seen at Rs.5,938, with further downside potential to Rs.5,882. Resistance lies at Rs.6,056, and a move above could test Rs.6,118 levels.

Trading Ideas:

* Crudeoil trading range for the day is 5882-6118.

* Crude oil gains as additional sanctions on Iran and Russia ratcheted up supply worries

* Stocks of crude oil in the United States edged lower from the previous week in the second week of December

* Kazakhstan will break its commitment to OPEC+ production limitations in 2025, by raising oil output next year.

Natural Gas

Natural gas prices surged 6% to settle at Rs.286.2, driven by higher demand due to extreme cold weather and increased LNG export flows. Utilities are expected to have withdrawn more gas from storage for the second consecutive week, marking the seasonal peak of heating demand. The United States entered the winter heating season with the highest storage levels since 2016, ending the injection season with 3,922 billion cubic feet (bcf), 6% above the five-year average despite lower injections throughout the season. Average natural gas output in the Lower 48 U.S. states rose to 103.1 billion cubic feet per day (bcfd) in December, up from 101.5 bcfd in November but below the record of 105.3 bcfd in December 2023. LNG export flows increased to 14.0 bcfd in December, compared to 13.6 bcfd in November, nearing the record high of 14.7 bcfd from December 2023. Gas demand, including exports, is projected to rise from 124.0 bcfd this week to 129.1 bcfd next week as colder weather persists. U.S. utilities withdrew 190 bcf from storage during the week ending December 6, exceeding market expectations of a 170 bcf draw. However, inventories remain 1.8% higher than the previous year and 4.6% above the five-year average. The market witnessed short covering as open interest dropped by 6.73% to 13,799 contracts, while prices gained Rs.16.2. Support is at Rs.275.3, with further downside potential to Rs.264.5. Resistance is seen at Rs.294.6, and a move above could test Rs.303.1.

Trading Ideas:

*  Naturalgas trading range for the day is 264.5-303.1.

* Natural gas climbed on rising flows to the nation's LNG export plants and expectations utilities pulled more gas

* Average gas output in the Lower 48 U.S. states rose to 103.1 bcfd so far in December, up from 101.5 bcfd in November.

* Meteorologists projected weather in the Lower 48 states would remain mostly warmer than normal through Jan. 1.

Copper

Copper prices rose 0.16% to settle at Rs.808.45, supported by a decline in China’s refined copper production, which fell 1.6% in November to 1.13 million tons. Similarly, Peru’s copper production dropped 1.4% in October, totaling 236,797 metric tons, due to reduced output from key mines like Cerro Verde and Antamina. In contrast, Chile's copper production remains steady, projected to range between 5.4-5.6 million tons in 2025, with state-run Codelco producing 127,900 metric tons in October. On the demand side, China's copper imports surged to a one-year high of 528,000 tons in November, a 4.3% increase from October, driven by restocking and lower prices. However, the global refined copper market showed a 131,000 metric ton deficit in September, reversing from a 43,000 metric ton surplus in August. For the first nine months, the market remains in a 359,000 metric ton surplus, suggesting mixed signals for long-term demand. Analysts at BNP Paribas predict a 491,000-ton surplus in 2025, the largest since 2020, revising the average copper price forecast for 2025 to $9,020, a 5% downgrade. This surplus may keep copper prices vulnerable to dollar strength. The market witnessed short covering as open interest dropped by 7.39% to 5,590 contracts, while prices rose Rs.1.3. Copper finds support at Rs.804.7, with potential downside to Rs.800.9. Resistance is now seen at Rs.811.4, and a move above could test Rs.814.3.

Trading Ideas:

* Copper trading range for the day is 800.9-814.3.

* Copper recovered as China's refined copper production fell 1.6% to 1.13 million tons in November

* Peru's copper production in October fell 1.4% compared to the same month last year

* Retail sales growth in China slowed more than expected in November, reflecting weakening consumption.

Zinc

Zinc prices fell 0.48% to settle at Rs.282.1, pressured by persistent demand uncertainty in China. Retail sales growth in November slowed more than expected, and new home prices fell for the 17th consecutive month, underscoring challenges in China’s property sector. Beijing’s recent stimulus pledges lacked details, failing to inspire significant optimism among investors. Additionally, China’s refined zinc production in November increased marginally by 0.3% MoM but declined nearly 12% YoY, reflecting supply chain adjustments. On the supply side, Shanghai Futures Exchange zinc inventories fell 4.4% last week, but domestic production surged. December refined zinc production is expected to rise by over 20,000 mt or 5% MoM, despite cumulative 2024 production showing a 6% YoY decline. Production recovery across regions like Inner Mongolia, Qinghai, and Hunan contributed significantly to the increase, and high production levels are anticipated through January 2025. Globally, the zinc market remains in a delicate balance. October saw a 69,100 metric ton deficit, up from 47,000 tons in September, according to ILZSG. Despite this, the first ten months of 2024 reported a 19,000-ton surplus, sharply lower than the 356,000-ton surplus in the same period last year, with mine production down 3.8% YoY. Zinc witnessed long liquidation, with open interest dropping by 14.21% to 1,871 contracts, while prices fell Rs.1.35. Support is now at Rs.280.6, with further downside to Rs.278.9. Resistance is pegged at Rs.283.6, and a breakout could test Rs.284.9.

Trading Ideas:

* Zinc trading range for the day is 278.9-284.9.

* Zinc dropped pressured from ongoing demand uncertainty in China

* In China, new home prices fell for the 17th consecutive month, highlighting ongoing challenges in the property sector.

*  Beijing's latest stimulus pledges have failed to generate significant investor optimism

Aluminium

Aluminium prices edged lower by 0.14%, settling at Rs.242.1, driven by rising production in China and ongoing concerns about global trade dynamics. China’s aluminium output surged by 3.6% YoY in November, reaching 3.71 million metric tons, supported by increased capacities despite declining industry profits. Daily production in November averaged 123,667 tons, a 3% rise from October. From January to November 2024, cumulative production totaled 40.22 million metric tons, up 4.6% YoY. Chinese aluminium exports also grew significantly. From January to October, exports of unwrought aluminium and related products reached 5.5 million tons, a 17% YoY increase. In October alone, exports rose 31% YoY to 577,000 tons. However, changes in export tax rebates and higher alumina costs are adding pressure, prompting some producers to plan maintenance. For December, capacity ramp-ups and resumptions are anticipated, although smelter maintenance in Guangxi, Sichuan, and Chongqing could limit output growth. Meanwhile, inventory levels provide mixed signals. Aluminium inventories monitored by the Shanghai Futures Exchange fell 4.4% last week, while Japanese buyers agreed to pay a 30% higher premium for January-March shipments, reflecting regional supply concerns. The market saw long liquidation, with open interest declining by 5.84% to 1,692 contracts, while prices dropped Rs.0.35. Aluminium has support at Rs.241.4, with a further downside to Rs.240.7. Resistance is seen at Rs.243.1, and a breakout could lead prices to test Rs.244.1.

Trading Ideas:

* Aluminium trading range for the day is 240.7-244.1.

* Aluminium prices settled weak amid rising output in China.

* Beijing braces for more U.S. trade tariffs under a second Donald Trump administration.

* China’s industrial output grew ahead of expectations.

Cottoncandy

Cottoncandy prices fell by 0.64%, settling at Rs.54,180, amid expectations of higher global production for the 2024-25 cotton year. Global output is projected to rise by 1.2 million bales, reaching 117.4 million bales, driven by larger crops in India and Argentina. However, the supply chain in India faces challenges, with North Indian states witnessing a 43% decline in kapas arrivals till November 30, 2024, compared to last year. Farmers are holding back their produce in hopes of higher prices, while ginners and spinners, especially in Punjab, face raw material shortages. India's cotton imports are estimated to increase significantly by 9.8 lakh bales to 25 lakh bales during the 2024-25 season, with 9 lakh bales already arriving at Indian ports by the end of November. The Cotton Association of India (CAI) has maintained its pressing estimate at 302.25 lakh bales and projected a closing stock of 26.44 lakh bales for September 2025, down from 30.19 lakh bales last year. On the global front, U.S. cotton production is revised up to 14.3 million bales, while world consumption is raised by 570,000 bales due to increased demand in India, Pakistan, and Vietnam. Ending stocks globally are projected higher, supported by increases in Argentina, the U.S., and Pakistan. The market saw fresh selling with a 0.29% rise in open interest to 343 contracts, while prices dropped by Rs.350. Immediate support is seen at Rs.54,090, with further downside to Rs.53,990. Resistance is expected at Rs.54,300, and a breakout could test Rs.54,410.

Trading Ideas:

* Cottoncandy trading range for the day is 53990-54410.

* Cotton dropped as Global cotton production is projected to rise by more than 1.2 million bales to 117.4 million bales

* India's cotton production in 2024/25 is likely to fall by 7.4% from a year ago

* Cotton production is projected to increase in China, Brazil, and Argentina, more than offsetting reductions in the US and Spain – USDA

* In Rajkot, a major spot market, the price ended at 25540.2 Rupees dropped by -0.17 percent.

Turmeric

Turmeric prices dropped by 3.9% to settle at Rs.13,806, as reports indicated favorable crop conditions with minimal weather disruptions. However, the downside remains limited due to strong buying activity amid low supplies until the arrival of the new crop. Turmeric arrivals increased to 9,030 bags, compared to 7,965 bags in the previous session, with significant activity in major trading centers like Erode, while Hingoli markets were closed. Despite improved acreage, delayed harvesting due to prolonged vegetation growth might postpone fresh supplies. Sowing activity has significantly increased, particularly along the Erode line, where it is reported to have doubled compared to last year. In Maharashtra, Telangana, and Andhra Pradesh, sowing is estimated to be 30-35% higher. Nationally, turmeric sowing has risen from 3-3.25 lakh hectares last year to an estimated 3.75-4 lakh hectares this year. Last year’s unfavorable weather led to reduced production, estimated at 45-50 lakh bags, alongside outstanding stocks of 35-38 lakh bags. Export demand remains subdued, with turmeric exports during April-September 2024 increasing marginally by 0.96% to 92,911.46 tonnes. However, imports surged by 184.73%, reaching 15,742.12 tonnes, signaling changing demand dynamics. The market is witnessing fresh selling pressure, with open interest increasing by 7.23% to 11,200 contracts, reflecting bearish sentiment. Turmeric finds support at Rs.13,554, with further downside testing possible at Rs.13,302. Resistance is positioned at Rs.14,204, and a breach could lead to testing Rs.14,602, supported by seasonal demand and supply constraints.

Trading Ideas:

* Turmeric trading range for the day is 13302-14602.

* Turmeric dropped as turmeric crop is reported to be in good to excellent condition, with minimal weather-related disruptions.

* However downside seen limited on strong buying activity amid reports of low supplies till the arrival of new crop.

* In Indonesia, dry weather has accelerated harvesting, which is currently at peak levels.

* In Nizamabad, a major spot market, the price ended at 13874.75 Rupees gained by 0.38 percent.

Jeera

Jeera prices settled marginally higher by 0.06% at Rs.24,040, as sowing delays in Gujarat and Rajasthan continued to concern the market. Adverse weather conditions and elevated temperatures have impacted seeding and germination in key producing regions. In Gujarat, sowing progress has been sluggish, with only 57,915 hectares seeded till November 25, compared to 2.44 lakh hectares during the same period last year. This represents just 15% of the normal cropping area of 3.81 lakh hectares, as per state agriculture department data. India’s cumin production in 2023-24 increased to 8.6 lakh tonnes from 11.87 lakh hectares, up from 5.77 lakh tonnes in 2022-23. However, production for the upcoming season is projected to decrease by 10%, with Rajasthan facing an estimated 10-15% drop in cultivation. Strong domestic and international demand, coupled with competitive pricing, continues to support prices. Jeera exports rose significantly, with shipments during April-September 2024 increasing by 70.02% to 119,249.51 tonnes, compared to 70,139.89 tonnes during the same period in 2023. Exports in September 2024 surged by 162.34% year-on-year, highlighting robust global demand, especially amid Middle East tensions and festive season buying. Technical Overview: The market saw fresh buying with open interest rising by 4.21% to 2,526 contracts, reflecting sustained bullish sentiment. Jeera prices find support at Rs.23,890, with further downside possible to Rs.23,720. Resistance is now positioned at Rs.24,180, and a breakout above this could test levels of Rs.24,300, driven by demand optimism and limited sowing progress.

Trading Ideas:

* Jeera trading range for the day is 23720-24300.

* Jeera prices gained as sowing has been delayed

* Higher day temperatures in the past few weeks has impacted the seeding of jeera and has also led to poor germination in various places.

* In Gujarat, jeera sowing has taken place in only 57,915 hectares till November 25 during the rabi 2024-25 cropping season.

* In Unjha, a major spot market, the price ended at 24448.75 Rupees dropped by -0.12 percent.

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views