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Gold

Gold prices settled up by 0.19% at Rs.76,893, driven by bets on rising inflation tied to potential economic policy shifts as President-elect Donald Trump prepares for office. Market focus remains on upcoming U.S. economic data, including job openings, employment reports, and the Fed's December FOMC meeting minutes, which could shape the 2025 outlook for interest rates and inflation. Federal Reserve Chair Jerome Powell hinted at a cautious approach toward further rate cuts following December’s quarter-point reduction, adding to market speculation. In India, high gold prices and the rupee's record low against the dollar widened gold discounts to $14 an ounce, compared to $8 last week. Meanwhile, Chinese demand has flipped from discount to premium, with dealers charging $2-$5 over global benchmark prices as consumers prepare for the Lunar New Year. Central banks recorded net gold purchases of 60 tons in October, marking the highest monthly tally for 2024. India led these purchases, adding 27 tons in October, bringing its year-to-date acquisitions to 77 tons - a five-fold increase over 2023. Gold is experiencing short covering, as indicated by a 2.97% drop in open interest to settle at 12,309, with prices gaining Rs.145. Support is at Rs.76,730, with a breach possibly testing Rs.76,560. Resistance is expected at Rs.77,000, and a move above this level could see prices testing Rs.77,100.

Trading Ideas:

* Gold trading range for the day is 76560-77100.

* Gold gains on bets President-elect Donald Trump's policies will likely push up inflation.

* China's net gold imports via Hong Kong in November more than doubled from October, marking the highest level in seven months

*  Gold exports from Switzerland rose in November due to a jump in supplies to India and some revival of deliveries to China

Silver

Silver prices climbed by 0.4% to Rs.87,578 as investors assessed the Federal Reserve's hawkish stance and geopolitical tensions. Resilient U.S. labor market data and persistent inflation concerns have led FOMC members to project fewer rate cuts for 2025, affecting non-yielding assets like silver. The Fed’s 100bps rate cuts in 2024, including a 50bps reduction in September, were countered by inflationary pressures, keeping Q4 gains modest. Geopolitical risks, including ongoing conflicts in Ukraine, Gaza, and Iran, have spurred demand for safe-haven assets like silver. On the industrial front, silver faces its fourth consecutive year of a structural market deficit, projected at 182 million ounces for 2024. Total demand is expected to grow by 1% to 1.21 billion ounces, supported by record industrial use in electronics, EVs, and solar panels, as well as a recovery in jewelry demand. However, physical investment in silver is projected to decline by 16%. Supply is forecasted to grow by 2%, driven by a 1% increase in mine output from Mexico, Chile, and the U.S., and a 5% rise in recycling due to higher western silverware scrap. Silver is under fresh buying momentum, with open interest rising by 3.46% to settle at 34,239, and prices gaining Rs.345. Support is at Rs.87,270, with a drop possibly testing Rs.86,960. Resistance is expected at Rs.87,780, and a breakout above this level could push prices to Rs.87,980.

Trading Ideas:

* Silver trading range for the day is 86960-87980.

* Silver gains as investors continued to heed signs of a hawkish Federal Reserve.

* Resilient labor market data per payroll counts and evidence of stubborn inflation drove FOMC members to project fewer rate cuts by the Fed in 2025.

* Markets anticipate signals regarding US economy under the incoming Trump administration and Fed’s interest rate outlook for 2025.

Crude Oil

Crude oil prices rose slightly by 0.08% to Rs.6,171, supported by a larger-than-expected drawdown in U.S. crude inventories. The American Petroleum Institute reported a 3.2 million barrel decline for the week ending December 20, surpassing market expectations of a 2 million barrel drop. Similarly, official data indicated a 4.3 million barrel decline in U.S. crude stocks, marking the fifth consecutive weekly drop. However, gasoline inventories rose by 1.6 million barrels, countering expectations of a drawdown, while distillate stocks fell by 1.7 million barrels. Optimism around China's economic outlook also buoyed crude prices. The World Bank raised its Chinese growth forecasts for 2024 and 2025, while Beijing announced plans to issue special treasury bonds worth 3 trillion yuan ($411 billion) to revitalize the economy. Yet, the EIA's Short-Term Energy Outlook highlighted concerns about global and U.S. demand. Global oil demand is forecast to grow by 1.2 million barrels per day (bpd) to 104.3 million bpd in 2024, down 300,000 bpd from prior estimates, reflecting economic slowdowns in China and North America. Crude oil remains under fresh buying momentum, with open interest surging 12.9% to 12,202 contracts. Prices are supported at Rs.6,154, with a breach likely testing Rs.6,138. On the upside, resistance is seen at Rs.6,186, and a breakout above this level could push prices toward Rs.6,202.

Trading Ideas:

* Crudeoil trading range for the day is 6138-6202.

* Crude oil prices rose buoyed by a larger-than-expected drawdown from U.S. crude inventories last week.

* Optimism over Chinese economic growth has also sparked hopes of higher demand next year from China.

*  Stocks of crude oil in the United States fell by 4.3 million barrels

Natural Gas

Natural gas prices rose by 1.55% to Rs.315.2, driven by increasing demand for liquefied natural gas (LNG) exports and a fresh cold front forecast in the United States. Expectations for colder weather in mid-January led to a sharp rise in gas demand forecasts by 18 billion cubic feet (bcf) over the weekend. Additionally, the U.S. Energy Information Administration (EIA) reported a withdrawal of 93 bcf from natural gas storage in the week ending December 20, marking the sixth consecutive weekly draw, albeit below market expectations of a 99 bcf decline. Despite these withdrawals, U.S. natural gas inventories remain robust at 3,529 bcf, 0.4% higher than last year’s levels and 4.9% above the five-year average. This strength stems from a strong injection season, which left inventories 6% above the five-year average at the start of the winter heating period. The Midwest and East regions saw the largest storage drawdowns due to colder conditions. Global dynamics also supported prices, with reduced likelihood of Russian gas supplies to Europe through Ukraine driving EU nations to increase U.S. LNG imports. Natural gas witnessed short covering, with open interest declining by 35.87% to 12,284 contracts. Prices are supported at Rs.308.3, with further downside testing possible at Rs.301.3. Resistance is now seen at Rs.319.3, and a breakout above this level could propel prices toward Rs.323.3.

Trading Ideas:

* Naturalgas trading range for the day is 301.3-323.3.

* Natural gas gains fueled by an increase in gas flowing to LNG export plants on rising overseas demand.

* US utilities withdrew 93 billion cubic feet of natural gas from storage to lower total stockpiles to 3,529 bcf

* Fresh forecasts of a cold front in the US halfway through January drove the industry to raise demand forecasts.

Copper

Copper prices edged up by 0.08% to Rs.793.85 as market participants awaited economic data from China, the world’s largest consumer of base metals. Supportive measures by Chinese policymakers aim to revitalize the property market, a key driver for copper demand. Additionally, China is preparing for potential tariff increases under U.S. President-elect Donald Trump, which could impact trade dynamics. Despite these efforts, copper inventories in Shanghai warehouses rose 4.7% week-on-week as of December 27, signaling soft near-term demand. On the global front, the refined copper market showed a 41,000 metric ton deficit in October, narrowing from September’s 136,000 metric ton shortfall. For the year’s first 10 months, the market recorded a 287,000 metric ton surplus compared to just 9,000 metric tons in the same period last year, as per ICSG data. Meanwhile, China's copper imports reached a one-year high of 528,000 tons in November, fueled by increased shipments from Africa and domestic restocking. However, copper concentrate imports dipped by 7.8% year-on-year last month but were up 2.2% for the first 11 months of the year. Copper witnessed fresh buying, with open interest rising by 11.5% to 9,737 contracts. Prices are supported at Rs.790.8, with further downside potential to Rs.787.7. Resistance is likely at Rs.795.7, and a breakout above this could target Rs.797.5.

Trading Ideas:

* Copper trading range for the day is 787.7-797.5.

* Copper settled flat as market participants awaited economic data from China.

* Chinese policymakers hope policy support measures introduced late this year will bolster the property market.

* On a week-on-week basis, copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 4.7% on Dec. 27.

Zinc

Zinc prices rose by 0.27% to Rs.279.6, supported by revived hopes for fiscal stimulus in China, including the issuance of $411 billion in special treasury bonds in 2025. However, China's slowing retail sales growth and a 17th consecutive month of declining home prices reflect ongoing economic challenges. On the production front, China's refined zinc output in December is set to increase by over 20,000 metric tons, or 5% month-on-month (MoM), but 2024’s cumulative domestic production declined by over 6% year-on-year (YoY). Smelter activity slightly increased in regions such as Henan, Gansu, Sichuan, and Inner Mongolia, although reductions in these areas were less than anticipated. Globally, the zinc market deficit widened to 69,100 metric tons in October, compared to 47,000 metric tons in September, according to the International Lead and Zinc Study Group (ILZSG). Despite this, the first 10 months of 2024 showed a global surplus of 19,000 tons, down sharply from a 356,000-ton surplus in the same period last year. Refined metal production dropped 1.7% due to limited zinc concentrate availability, with global mine production falling 3.8%, driven by lower output in Canada, China, South Africa, and Peru. Zinc markets exhibited short covering as prices gained Rs.0.75 while open interest remained unchanged at 2,935 contracts. Immediate support is at Rs.278.1, with a further downside to Rs.276.7. Resistance is expected at Rs.280.5, with a breakout potentially targeting Rs.281.5.

Trading Ideas:

* Zinc trading range for the day is 276.7-281.5.

* Zinc gains on revived hopes for additional fiscal stimulus in China.

* China's refined zinc production in December will increase by over 5% MoM.

* Zinc inventories in warehouses monitored by the SHFE fell 24.67% from last Friday

Aluminium

Aluminium prices edged down by 0.08% to Rs.241.7, weighed by robust global production data and a short supply scenario. According to the International Aluminium Institute (IAI), global primary aluminium output rose by 3% year-on-year in November, reaching 6.04 million tonnes. In China, the world's largest aluminium producer, November production climbed 3.6% YoY to 3.71 million metric tonnes, driven by capacity increases despite falling industry profits. Daily output in November averaged 123,667 tonnes, up 3% from October, with year-to-date production reaching 40.22 million tonnes, a 4.6% rise compared to last year. On the supply-demand front, the global refined aluminium market recorded a supply shortfall of 40,300 tonnes in October. For the first ten months of 2024, refined aluminium production totaled 59.65 million tonnes, while consumption reached 59.99 million tonnes, leading to a cumulative deficit of 332,600 tonnes. Adding to the dynamics, China's exports of unwrought aluminium and aluminium products grew by 17% year-on-year in the first ten months, totaling nearly 5.5 million tonnes. October exports alone surged 31% YoY to 577,000 tonnes, showcasing strong overseas demand amid higher domestic production. Aluminium markets exhibited fresh selling as open interest increased by 2.73% to 3,536 contracts. Prices slipped Rs.0.2, with immediate support at Rs.241.3 and a potential test at Rs.241. Resistance is likely at Rs.242.1, with a move above targeting Rs.242.6.

Trading Ideas:

* Aluminium trading range for the day is 241-242.6.

*  Aluminium dropped as Global primary aluminium output in November rose 3% year on year.

* China’s policymakers are planning to boost bond sales.

* Global refined aluminum market in short supply of 40,300 tons in October.

Cottoncandy

Cottoncandy prices slipped by -0.07% to Rs.54,330, pressured by expectations of higher global production and subdued arrivals in key regions. Global cotton production for the 2024-25 cotton year is projected to rise by 1.2 million bales to 117.4 million bales, with India and Argentina contributing significantly to the increase. Despite higher production projections, the three cotton-producing north Indian states - Punjab, Haryana, and Rajasthan - have seen a 43% drop in kapas arrivals till November 30, leading to supply shortages for ginners and spinners, particularly in Punjab. On the domestic front, the Cotton Association of India (CAI) maintained its 2024-25 cotton pressing estimate at 302.25 lakh bales of 170 kg each. Imports are expected to rise to 25 lakh bales, a sharp increase from last year’s 15.20 lakh bales, while closing stock for September 2025 is projected to decline to 26.44 lakh bales. Globally, U.S. cotton production was revised upward by 64,000 bales to 14.3 million bales, and world ending stocks increased marginally due to higher production in India, Argentina, and Brazil. Cottoncandy is experiencing fresh selling pressure, with open interest gaining 1.63% to settle at 373 contracts. Prices have slipped Rs.40, and immediate support is seen at Rs.54,250, with a break likely to test Rs.54,170. On the upside, resistance lies at Rs.54,440, with a move above potentially pushing prices to Rs.54,550. 

Trading Ideas:

* Cottoncandy trading range for the day is 54170-54550.

* Cotton dropped as global cotton production is projected to rise by more than 1.2 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 25697.05 Rupees dropped by -0.08 percent.

Turmeric

Turmeric prices rose sharply by 5.23% yesterday to settle at Rs.15,364, driven by strong buying activity amid concerns of low supplies until the new crop arrives. Despite the current bullish trend, upside potential appears limited due to reports of the turmeric crop being in good to excellent condition, with minimal weather-related disruptions. With low stock levels in the market, prices are expected to remain firm until the new crop becomes available. Turmeric sowing has improved significantly compared to the previous year, with acreage reported to be double in Erode and 30-35% higher in Maharashtra, Telangana, and Andhra Pradesh. Despite this, prolonged rains have led to delays in harvesting, which could impact the timeline of fresh supplies. In terms of export performance, turmeric exports from April to October 2024 surged by 6.57% to reach 108,879.96 tonnes compared to 102,162.90 tonnes during the same period in 2023. October 2024 saw 15,938.21 tonnes of turmeric exported, marking a 57.22% rise from the 10,137.78 tonnes exported in October 2023. Imports during April to October 2024 also increased by 118.99% to 17,692.28 tonnes, reflecting higher demand for turmeric in the domestic and international markets. The turmeric market is under fresh buying, with open interest rising by 0.41% to settle at 12,140. Prices are up Rs.764, and support is observed at Rs.15,066, with a potential test of Rs.14,766. Resistance is seen at Rs.15,650, and a move above could lead to prices testing Rs.15,934.

Trading Ideas:

* Turmeric trading range for the day is 14766-15934.

* Turmeric gains on strong buying activity amid reports of low supplies till the arrival of new crop.

* However upside seen limited as turmeric crop is reported to be in good to excellent condition.

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

* In Nizamabad, a major spot market, the price ended at 14040.3 Rupees gained by 2.82 percent.

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