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Gold

Gold prices settled marginally lower by 0.03% at ?73,496, as investors awaited the Federal Reserve's upcoming monetary policy announcement. Market sentiment suggests a growing expectation of a 50 basis point interest rate cut, with Fed fund futures indicating a 59% probability for such a move, while a 25 basis point reduction has a 41% chance, according to CME’s FedWatch Tool. This comes after recent data revealed further softening in the US labor market, highlighted by weak August payroll figures and rising initial jobless claims. Additionally, while US inflation continues to trend lower, some persistent inflationary pressures remain, particularly in the services sector. Gold also saw support from the European Central Bank’s (ECB) decision to cut its main interest rate by 25 basis points, reflecting increased confidence that inflation in Europe is on a sustained downward path. However, soaring gold prices deterred retail buyers in key Asian markets such as India and China, where deep discounts were offered by dealers. In India, discounts reached up to $22 an ounce over official prices, while Chinese dealers offered discounts between $8.6 and $10. Demand in both regions remains subdued but is expected to pick up by October-November as prices stabilize. Technically, the gold market is experiencing long liquidation, as reflected by a 4.53% drop in open interest, settling at 14,758 contracts. Prices declined by ?19, with immediate support at ?73,325. A break below this level could see prices testing ?73,155. On the upside, resistance is expected at ?73,710, and a move above this could push prices toward ?73,925, signaling potential upward momentum.
 

Trading Ideas:
* Gold trading range for the day is 73155-73925.
* Gold settled slightly lower as investors awaited the Federal Reserve's monetary policy announcement.
* Recent data also showed that US inflation is trending lower, though some stickiness remains.
* Fed fund futures indicate that investors are increasingly betting the Federal Reserve will opt for a 50 basis point cut

Silver

Silver settled up by 0.48% at ?89,609 as the dollar weakened in anticipation of a potential U.S. interest rate cut next week. Speculation about an outsized rate cut by the Federal Reserve also provided support. Recent data showed mixed price pressures for U.S. producers, with headline PPI reflecting a deeper-than-expected slowdown, while core PPI remained sticky. These conflicting signals added uncertainty about the state of the U.S. economy ahead of the crucial FOMC meeting on September 17-18, where expectations lean toward a 25-bps rate cut. Market participants also anticipate a series of rate cuts before the year ends. Producer prices in the U.S. grew 1.7% year-on-year in August, down from a revised 2.1% in July, reflecting softer inflation. The CME Group’s FedWatch Tool suggests that rates could decrease by at least a full percentage point following the Fed's December meeting. 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 investors seeking better returns compared to gold. India imported 4,554 metric tons of silver in the first half of 2024, a significant jump from just 560 tons a year ago. Industrial buyers, concerned about rising prices, have been stockpiling silver. Technically, the market is witnessing short covering as open interest dropped by 0.1% to settle at 25,915, while prices rose by ?429. Silver has immediate support at ?89,000, and a break below this level could see a test of ?88,395. On the upside, resistance is likely at ?90,305, with prices potentially testing ?91,005 if that level is surpassed.
 

Trading Ideas:
* Silver trading range for the day is 88395-91005.
* Silver prices gained amid prospects of a U.S. interest rate cut.
* The latest data showed U.S. producers saw mixed price pressures last month.
* Traders' expectations are for a 63% chance of a cut of 50 basis points, according to the CME FedWatch tool.

Crude oil

Crude oil prices surged by 2.03% to settle at ?5,887, driven by ongoing disruptions to US Gulf oil production due to Hurricane Francine, which has taken nearly 20% of Gulf of Mexico oil output offline. Additionally, expectations of a US Federal Reserve interest rate cut, possibly as large as 50 basis points, fueled hopes of increased economic activity, which could boost oil demand. However, concerns persist over slowing demand, especially after Chinese data showed the longest industrial slowdown since 2021, casting doubt on China’s ability to meet its 5% growth target. In Libya, oil exports were significantly reduced amid stalled UN-led negotiations over central bank control. The International Energy Agency (IEA) lowered its 2024 oil demand growth forecast by 70,000 barrels per day (bpd) to 900,000 bpd, citing slowing Chinese demand and increased adoption of electric vehicles. Chinese oil demand growth is now expected to rise by only 180,000 bpd in 2024. US crude oil inventories rose by 0.833 million barrels in the week ending September 6, 2024, below market expectations of a 1 million barrel rise, while gasoline and distillate stockpiles increased more than forecasted. Crude stocks at Cushing, Oklahoma, dropped by 1.704 million barrels, highlighting ongoing supply issues. Technically, the crude oil market is witnessing short covering, as indicated by a 10.14% drop in open interest, settling at 8,986 contracts. Prices rose by ?117, with immediate support at ?5,791, and a break below this could lead to testing ?5,694. Resistance is seen at ?5,959, and a move above this level could push prices towards ?6,030, signaling potential upside momentum.
 

Trading Ideas:
* Crudeoil trading range for the day is 5694-6030.
* Crude oil rose driven by ongoing disruptions to US Gulf oil infrastructure and expectations of a US interest rate cut.
* Also, investors are increasingly betting on a larger 50-bps rate cut by Fed, which could boost economic activity.
* However, concerns persist over slowing demand after Chinese data showed the longest stretch of industrial slowdown since 2021.

Natural gas

Natural gas prices rose by 2.84% to settle at ?199.4, supported by increased demand forecasts and a recent drop in production due to Hurricane Francine, which prompted oil and gas producers to reduce output. Around 53% of natural gas production in the U.S. Gulf of Mexico was shut down due to the storm, though it was later downgraded to a post-tropical cyclone. In September, gas output in the Lower 48 U.S. states averaged 102.1 billion cubic feet per day (bcfd), down from 103.2 bcfd in August, according to LSEG. Meanwhile, demand is forecasted to rise from 99.4 bcfd this week to 100.3 bcfd next week. U.S. natural gas producers are preparing to further reduce production in the second half of 2024 following a nearly 40% drop in prices over the past two months. The U.S. Gulf of Mexico contributes 2% to domestic natural gas output and 15% to oil production. The Energy Information Administration (EIA) has projected that dry gas production will decline slightly from a record 103.8 bcfd in 2023 to 103.4 bcfd in 2024. However, demand is expected to rise to a record 89.9 bcfd in 2024. U.S. utilities added 40 billion cubic feet of gas into storage for the week ending September 6, 2024, below market expectations of a 49 bcf increase. Stockpiles now stand at 3,387 Bcf, which is 198 Bcf higher than a year ago and 296 Bcf above the five-year average. Technically, the market is experiencing short covering as open interest dropped by 2.5% to settle at 32,827 contracts. Support is seen at ?192.9, and a break below could test ?186.4, while resistance is likely at ?203.6, with prices potentially testing ?207.8 if that level is breached.
 

Trading Ideas:
* Naturalgas trading range for the day is 186.4-207.8.
* Natural gas prices gained supported by higher demand forecasts and a drop in output.
* Hurricane Francine prompted oil and gas producers to cut production.
* The U.S. EIA said utilities added 40 billion cubic feet (bcf) of gas into storage.


Copper

Copper prices rose by 0.89% to settle at ?809.3, driven by optimism that economic stimulus in China will boost demand. Chinese President Xi Jinping's call for authorities to strive for the country’s annual economic goals has raised expectations for more supportive policies. The reduced supply also contributed to the upward trend, as copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 13.9% from the previous week, down 45% over the past three months to their lowest level since February at 185,520 tons. Additionally, the import discount for copper in China shifted to a premium, reaching $65 per ton, signaling tighter supply conditions. On the supply side, Chile’s state miner Codelco saw a 10.7% year-on-year decline in production in July, while output at the BHP-controlled Escondida mine rose 29%. Despite this, Chile’s copper commission Cochilco lowered its forecast for the average copper price in 2024 to $4.18 per pound due to economic weakness in key markets. The global refined copper market showed a surplus of 95,000 metric tons in June, up from 63,000 tons in May. Imports of unwrought copper into China fell to a 16-month low in August, reflecting weaker demand, although copper concentrate imports rose slightly for the year. Technically, the copper market saw short covering, evidenced by a 13.07% drop in open interest, settling at 8,869 contracts. Prices are supported at ?800.2, with further support at ?791. Resistance is now expected at ?816.4, and a move above this level could see prices testing ?823.4, suggesting potential for continued upward momentum.
 

Trading Ideas:
* Copper trading range for the day is 791-823.4.
* Copper gains amid hopes that economic stimulus in China will boost demand.
* Chile state miner Codelco produced 111,400 metric tons of copper in July, down 10.7% from a year earlier.
* Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 13.9% from last Friday.

Zinc

Zinc prices rose by 0.78% to settle at ?270, driven by hopes of further stimulus in China as President Xi Jinping urged efforts to achieve the country’s annual economic targets. This optimism comes amid expectations for additional measures to bolster China’s slow economic recovery. Adding to the bullish sentiment, Swedish miner Boliden announced delays and cost overruns in the expansion of its Odda zinc smelter in Norway. The expansion, intended to increase production capacity from 200,000 tonnes to 350,000 tonnes annually, will now be delayed by three months, with full output expected in 2025. On the supply side, the global zinc market surplus decreased to 8,700 metric tons in June from 44,000 tons in May, according to the International Lead and Zinc Study Group (ILZSG). However, in the first six months of 2024, the global surplus stood at 228,000 tons, down from 452,000 tons in the same period last year. In China, refined zinc production in July 2024 was 489,600 mt, a drop of 10.3% month-on-month and 11.15% year-on-year, due to production disruptions caused by heavy rainfall and maintenance across several regions. Additionally, domestic zinc alloy production fell slightly in July. Technically, the zinc market is experiencing fresh buying, with open interest rising by 0.99% to settle at 2,342 contracts. The immediate support for zinc is at ?267.2, and if this level is breached, it could test ?264.4. On the upside, resistance is expected at ?271.8, and if prices break through this level, they could reach ?273.6.
 

Trading Ideas:
* Zinc trading range for the day is 264.4-273.6.
* Zinc gains lifted by hopes of stimulus in China
* President Xi Jinping pushed for the country to achieve its annual economic target.
* Boliden said the expansion of its Odda zinc smelter in Norway will take longer than expected due to a delay in construction work.


Aluminium

Aluminium prices climbed by 1.31% to settle at ?231.8, supported by tightening supply, a weaker dollar, and expectations of a significant interest rate cut from the U.S. Federal Reserve. The supply constraints are evident, with inventories in LME-registered warehouses dropping to 820,850 tons, marking an 18% decline over the past three months. Additionally, aluminium inventories in LME warehouses have fallen 22% over the same period, reaching 877,950 tons, the lowest since May 8. The traditional peak season for aluminium demand is approaching, further boosting sentiment as consumption recovers and inventories continue to decline. On the global front, China's August aluminium output reached a 21-year high at 3.73 million metric tons, driven by higher prices and steady profitability, with production rising 2.5% year-on-year. Meanwhile, global primary aluminium output in July increased by 2.4% compared to the same period last year, reaching 6.194 million metric tons, with China contributing 3.69 million tons. Despite this robust output, concerns about global economic growth, particularly in China, where manufacturing data hit a six-month low, are limiting further upside potential for aluminium prices. Technically, the aluminium market is under short covering, as indicated by an 8.35% drop in open interest, settling at 2,646 contracts. Prices rose by ?3, with immediate support at ?229.7, and a break below this level could lead to a test of ?227.5. On the upside, resistance is seen at ?233.5, and a move above this could push prices towards ?235.1, signaling potential continued bullish momentum in the near term.
 

Trading Ideas:
* Aluminium trading range for the day is 227.5-235.1.
* Aluminium gains supported by lower inventory, a weaker dollar
* Prices have been boosted by a shrinking aluminium supply that has fallen to its lowest in 18 weeks.
* The inventory in LME's registered warehouses dropped to 820,850 tons, having fallen 18% over the last three months.

Cotton

Cotton candy prices settled down by 0.05% at ?58,570 as new raw cotton arrivals commenced in Punjab's mandis. The USDA has revised India's cotton production forecast for the 2024-25 season down to 30.72 million bales due to crop damage from excessive rains and pest issues, while ending stocks have also been reduced to 12.38 million bales. Cotton acreage this kharif season is down by approximately 9% compared to the previous year, with 110.49 lakh hectares under cultivation compared to 121.24 lakh hectares last year. Cotton exports for the 2023-24 crop year, ending in September, are projected at around 28 lakh bales, an 80% increase driven by strong demand from countries such as Bangladesh and Vietnam. In contrast, last year's exports were 15.50 lakh bales. Imports have also risen to 16.40 lakh bales, up from 12.50 lakh bales the previous year. According to the Cotton Association of India (CAI), closing stocks as of September 30, 2024, are estimated at 23.32 lakh bales, down from 28.90 lakh bales a year ago. The consumption during this crop year is projected at 317 lakh bales, with 291 lakh bales already consumed by the end of August. In the U.S., cotton production for 2024/25 has been revised down to 14.5 million bales, reflecting lower yields in the Southwest. Globally, cotton production, consumption, and trade estimates have been reduced, with world ending stocks revised down by 1.1 million bales to 76.5 million bales. Technically, the market is experiencing long liquidation, with open interest dropping by 9.3% to settle at 117 contracts. Support for cotton candy is currently at ?58,400, with a potential test of ?58,220. Resistance is seen at ?58,770, and a move above this could lead to prices testing ?58,960.
 

Trading Ideas:
* Cottoncandy trading range for the day is 58220-58960.
* Cotton settled flat as raw cotton has started arriving in mandis of Punjab.
* Cotton exports for the 2023-24 crop year or season ending September are estimated at about 80 per cent at 28 lakh bales
* The U.S. cotton balance sheet for 2024/25 shows lower production, exports, and ending stocks compared to last month.
* In the global 2024/25 cotton balance sheet, beginning stocks, production and consumption are increased.

Turmeric

Turmeric prices rose by 1.99% to settle at ?14,426, supported by tighter supplies in the market and increased buying interest from stockists. Farmers are holding back their stocks in anticipation of further price rises, contributing to the supply constraints. However, upward momentum is limited by reports of increased sowing. In Indonesia, dry weather has accelerated harvesting, leading to higher turmeric supply, but attractive prices have prompted many farmers to sell turmeric in its wet stage, reducing production levels. Turmeric sowing in key regions like Erode, Maharashtra, Telangana, and Andhra Pradesh has increased by 30-35% compared to last year. Overall, turmeric acreage in India is estimated to have risen to 3.75-4 lakh hectares this year, compared to 3-3.25 lakh hectares last year. Despite this increase, unfavorable weather last year resulted in a lower production of 45-50 lakh bags in 2024. Even with higher sowing this season, turmeric production in 2025 is expected to remain around 70-75 lakh bags, with no carryover stock from 2024, potentially leading to a supply shortage. Turmeric exports during April-June 2024 dropped by 19.52%, with June exports down 18.43% compared to the same month last year. Meanwhile, imports surged by 485.40% during the same period. Nizamabad, a key turmeric market, saw prices rise by 0.84%. Technically, the market is experiencing short covering, with open interest dropping by 2.09% to 14,060 contracts. Turmeric has immediate support at ?14,120, and a break below could test ?13,816. On the upside, resistance is expected at ?14,664, with potential to test ?14,904 if resistance is breached.
 

Trading Ideas:
* Turmeric trading range for the day is 13816-14904.
* Turmeric gains amid tighter supplies in the market and emerging buying from stockists.
* Some support also seen as farmers are holding back stocks in anticipation of a further rise.
* In Indonesia, dry weather has accelerated harvesting, which is currently at peak levels.
* In Nizamabad, a major spot market, the price ended at 14484.15 Rupees gained by 0.84 percent.

Jeera

Jeera prices rose by 0.88% to settle at ?25,715, supported by strong domestic and export demand, alongside tight global supplies. Farmers are holding back stocks in anticipation of better prices, further boosting the market. However, expectations of higher production are limiting the upside. Sowing areas in Gujarat increased by 104% and in Rajasthan by 16%, leading to a projected 30% rise in jeera production this season, reaching 8.5-9 lakh tonnes. Global jeera production has also surged, with China’s output doubling to over 55-60 thousand tons. Increased production in Syria, Turkey, and Afghanistan is expected to contribute to lower cumin prices in the coming months. Despite reduced export trade earlier, analysts predict a significant rise in jeera exports, with estimates of reaching 14-15 thousand tonnes by February 2024.The favorable weather conditions in major cumin-producing regions of India, coupled with increased sowing areas, are expected to lead to record production. In Gujarat alone, production is estimated at 4.08 lakh tonnes, surpassing the previous record of 3.99 lakh tonnes. Rajasthan’s production has increased by 53%. Technically, jeera is witnessing fresh buying, with a 22.05% increase in open interest, settling at 2,358 contracts. The price gain of ?225 reflects strong market momentum. Support is currently at ?25,400, and a break below this could lead to a test of ?25,080. On the upside, resistance is likely at ?25,920, and a move above this could push prices toward ?26,120, indicating potential further gains in the near term.
 

Trading Ideas:
* Jeera trading range for the day is 25080-26120.
* Jeera prices gains amid robust domestic and export demand besides tight global supplies.
* Farmers holding back their stocks on expectation of better prices too bolstered prices.
* Turkey anticipates producing 12-15 thousand tons, while Afghanistan's output could double.
* In Unjha, a major spot market, the price ended at 25437.6 Rupees gained by 0.21 percent.

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