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Gold

Gold prices surged by 1.07% to settle at Rs.77,717 as the US 10-year Treasury yield hovered near an eight-month low of 4.65%. This rally was supported by market speculation on the Fed’s future policy direction, with hawkish FOMC projections tempering expectations for aggressive rate cuts in 2025. Despite softer core PCE inflation in November, uncertainty around economic conditions and potential monetary policy shifts continues to influence investor sentiment. China's gold imports through Hong Kong in November more than doubled to 33.074 metric tons, with total imports climbing 60% to 45.22 metric tons, the highest in eight months. Rising premiums in China, ahead of the Lunar New Year, signal robust demand. In contrast, India saw gold discounts widen to a three-month high of $14 per ounce due to subdued demand amid elevated prices and a depreciating rupee. Indian gold imports are projected to fall sharply in December in the absence of significant festivals. Central banks recorded 60 metric tons of net gold purchases in October, marking the highest monthly total in 2024. India led the year-to-date buying with 77 metric tons, a five-fold increase from 2023, while Turkey and Poland added 72 and 69 metric tons, respectively. Gold saw fresh buying as open interest rose by 4.66% to 12,883 contracts. Prices gained Rs.824, with support at Rs.77,180 and potential downside to Rs.76,650. Resistance lies at Rs.78,025, with further upside expected to Rs.78,340 on sustained momentum.

Trading Ideas:

* Gold trading range for the day is 76650-78340.

* Gold gains as markets continued to assess the policy outlook for the Fed this year.

* Still, uncertainty remains on whether the economy may drift into a backdrop that could warrant a higher magnitude of rate cuts.

* China's November net gold imports from Hong Kong more than doubled from the prior month

Silver

Silver prices surged by 1.82% to settle at Rs.89,173, supported by heightened geopolitical tensions and strong industrial demand. A deadly New Year’s Day attack in New Orleans, under investigation as a possible terrorist act, heightened investor interest in safe-haven assets like silver. Additionally, the latest U.S. labor data revealed a drop in initial jobless claims to 211,000, the lowest in eight months, underscoring a resilient job market. However, the Federal Reserve’s cautious approach to rate cuts in 2025 could pose challenges, reflecting a hawkish stance influenced by uncertainties around the incoming Trump administration’s policies. On the supply-demand front, the global silver deficit is projected to narrow by 4% to 182 million ounces in 2024, driven by a 2% rise in supply offsetting a 1% growth in demand. Record industrial usage in solar panels, electric vehicles, and electronics, coupled with a recovery in jewelry demand, is set to push total silver demand to 1.21 billion ounces. However, physical investment in silver is expected to decline by 16%. Supply-side factors include a 1% increase in mine production, primarily from Mexico, Chile, and the U.S., and a 5% rise in recycling due to higher silverware scrap. Silver witnessed short covering, with open interest dropping by 3.86% to 32,968 contracts while prices rose by Rs.1,595. Immediate support is seen at Rs.88,440, with a potential downside to Rs.87,705. Resistance is at Rs.89,620, and a break above this level could see prices testing Rs.90,065.

Trading Ideas:

* Silver trading range for the day is 87705-90065.

* Silver prices gained driven by heightened geopolitical tensions and central bank purchases.

* Initial jobless claims in the US slumped by 9,000 from the previous week to 211,000 in the last week of 2024.

* Investors are cautiously monitoring a potential recovery in China's economy, following President Xi Jinping's pledge to prioritize growth.

Crude oil

Crude oil prices rose by 2.07% to settle at Rs.6,299, fueled by optimism over demand recovery and reports of declining U.S. crude inventories. Chinese President Xi Jinping’s New Year address, highlighting confidence in China’s economic recovery, bolstered market sentiment. Supporting this, the American Petroleum Institute reported a 1.4 million-barrel drop in U.S. crude inventories last week, extending a six-week decline in stockpiles. However, the Energy Information Administration (EIA) revealed a smaller-than-expected draw of 1.178 million barrels, compared to forecasts of 2.75 million barrels. Gasoline and distillate stocks rose significantly by 7.717 million and 6.406 million barrels, respectively, signaling potential headwinds. The International Energy Agency (IEA) projected a well-supplied market in 2025, citing a 950,000 barrels per day surplus, even with extended OPEC+ output cuts. Barclays revised its Brent crude forecast for 2025 to $83 per barrel and lowered 2024 demand growth estimates by 140,000 barrels per day to 0.9 million bpd. Weakening economic activity in China and North America contributed to reduced global demand growth forecasts of 1.2 million bpd in 2025, down 300,000 bpd from earlier estimates. Crude oil witnessed fresh buying, with open interest rising by 18.33% to 14,439 contracts as prices gained Rs.128. Immediate support lies at Rs.6,200, with potential downside to Rs.6,100. Resistance is expected at Rs.6,365, and a move above this could test Rs.6,430.

Trading Ideas:

* Crudeoil trading range for the day is 6100-6430.

* Crude oil climbed fueled by optimism about oil demand and a report showing shrinking US crude stockpiles.

* US crude inventories dropped by 1.4 million barrels last week, continuing a trend of declining stockpiles - API

* IEA expects comfortably supplied oil market in 2025 despite demand hike

Natural Gas

Natural gas prices gained 1.08% to settle at Rs.318.6, supported by strong LNG export demand and forecasts of colder January weather. Rising global demand pushed LNG exports to 15.16 billion cubic feet per day (bcfd), while production increased to 103.3 bcfd in December, up from 101.5 bcfd in November. Despite a slight revision in heating degree days to 492, demand in the Lower 48 states is expected to surge from 118.9 bcfd this week to 144.4 bcfd next week, according to LSEG. The U.S. Energy Information Administration (EIA) reported a 93 bcf withdrawal from storage for the week ending December 20, lower than market expectations of 99 bcf. Storage levels remain 0.4% above last year’s levels and 4.9% above the five-year average, highlighting robust supply despite increased demand. The EIA projected a slight decline in U.S. natural gas production to 103.2 bcfd in 2024 but anticipates record consumption of 90.5 bcfd, driven by colder weather and rising export demand. Russia's Gazprom projected a 61 billion cubic meter increase in gas production for 2024, supported by a rise in exports to China to 31 bcm, reflecting shifting market dynamics as European exports decline. Natural gas prices saw short covering with a drop in open interest by 8.41% to 11,251 contracts. Support is now at Rs.306.7, with further downside possible to Rs.294.8. Resistance is pegged at Rs.328.7, and a move above this level could push prices toward Rs.338.8.

Trading Ideas:

* Naturalgas trading range for the day is 294.8-338.8.

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

* U.S. natural gas production will decline in 2024 while demand will rise to a record high, the EIA said.

* A colder January forecast and recent spikes in demand had fueled sharp price increases.

Copper

Copper prices rose marginally by 0.13% to Rs.794.85, supported by optimism over potential proactive growth measures in China. President Xi Jinping indicated that China’s GDP would exceed 130 trillion yuan ($17.8 trillion) in 2024 and emphasized policies to promote growth in 2025. In production updates, Chile's copper output rose by 9.8% YoY to 488,519 metric tons in November, while China’s copper cathode production increased by 0.94% MoM, reaching 4.61% YoY growth. From January to November, cumulative Chinese production rose by 5.02% YoY. Additionally, smelters resuming operations after maintenance added 51,400 metric tons in December, bolstering supply. The global refined copper market showed a deficit of 41,000 metric tons in October, narrowing from 136,000 metric tons in September. For the first 10 months, the market exhibited a surplus of 287,000 metric tons compared to a 9,000 metric tons surplus a year earlier, indicating improving supply conditions. China’s copper imports hit a one-year high in November at 528,000 tons, up 4.3% MoM, driven by lower prices and restocking needs. Copper saw fresh buying interest, with open interest rising by 3.44% to 10,072 contracts. The immediate support is at Rs.791.1, with a potential downside to Rs.787.3. Resistance is now seen at Rs.799.3, and a breakout above could lead prices to test Rs.803.7.

Trading Ideas:

* Copper trading range for the day is 787.3-803.7.

* Copper gains buoyed by expectations of more proactive Chinese policies to promote growth.

* China's gross domestic product is expected to grow by around 5% in 2024, President Xi Jinping said

* China has struggled to recover amid weak consumption and a protracted property crisis.

Zinc

Zinc prices fell by 1.23% to Rs.276.15, pressured by concerns over a deteriorating demand outlook due to weak global manufacturing activity. Uncertainty around potential tariffs from U.S. President-elect Donald Trump further weighed on sentiment, raising fears of trade disruptions that could impact global growth and zinc demand. On the supply front, domestic refined zinc production in China increased by over 20,000 metric tons (mt) or 5% MoM in December 2024. However, cumulative production for the year dropped by more than 6% YoY. The December production surge was attributed to unexpectedly high output from Qinghai, Inner Mongolia, Xinjiang, Hunan, and Shaanxi, while reductions in Henan, Gansu, Sichuan, and Inner Mongolia were less severe than anticipated. Refined zinc production for November grew by over 1,000 mt MoM, marking a 0.3% rise but a significant 12% decline YoY. Globally, the zinc market deficit widened to 69,100 mt in October from 47,000 mt in September, with a cumulative surplus of 19,000 mt for the first 10 months of 2024, significantly lower than the 356,000 mt surplus in 2023. Refined metal production fell 1.7% during this period due to limited concentrate availability, while mine production declined by 3.8% YoY, driven by lower output in Canada, China, South Africa, and Peru. Zinc witnessed fresh selling, with open interest increasing by 5.11% to 3,085 contracts. Immediate support is at Rs.273.8, with a potential downside to Rs.271.5. Resistance is at Rs.280.4, and a break above this level could lead to Rs.284.7.

Trading Ideas:

* Zinc trading range for the day is 271.5-284.7.

* Zinc dropped amid expectations of a deteriorating demand outlook were reinforced by weak manufacturing activity.

* China's factory activity grew in December but at a slower-than-expected pace.

* Manufacturers in the euro zone ended last year on a sour note, with factory activity declining at a faster rate

Aluminium

Aluminium prices declined by 0.58% to settle at Rs.240.3, reflecting subdued sentiment regarding a recovery in China’s economy. However, downside pressure remained limited due to supply concerns in the LME market. The discount for cash contracts over three-month aluminium narrowed to $19 a ton from over $40 in December, while LME-registered aluminium stocks fell by over 40% since May 2023 to 634,650 tons. With 54% of the total stocks as cancelled warrants, more metal is expected to leave LME warehouses shortly. On the supply-demand side, global primary aluminium output in November rose 3% YoY to 6.04 million tons, according to the International Aluminium Institute (IAI). Despite the increase in production, the global refined aluminium market was in a short supply of 40,300 tons in October, with consumption exceeding production. For the first ten months of 2024, refined aluminium production totaled 59.65 million tons, while consumption reached 59.99 million tons, leading to a cumulative supply shortage of 332,600 tons. China, the world’s largest aluminium producer, reported a 3.6% YoY rise in primary aluminium output for November, totaling 3.71 million metric tons. Exports of unwrought aluminium and related products increased by 17% YoY for the first ten months of 2024, with October exports alone rising 31% YoY to 577,000 tons. Aluminium saw long liquidation with open interest dropping 0.08% to 3,533 contracts. Support is seen at Rs.238.9, with a break below potentially testing Rs.237.5. Resistance lies at Rs.242.6, and a move above could push prices to Rs.244.9.

Trading Ideas:

* Aluminium trading range for the day is 237.5-244.9.

* Aluminium dropped as reflecting limited optimism of a recovery in China’s economy.

* However downside seen limited on worries about supplies on the LME market.

* The discount for the cash contract over three-month aluminium to around $19 a ton from more than $40 in December.

Cottoncandy

Cottoncandy prices rose by 0.2% to Rs.54,440, supported by increasing cotton yarn demand from garment industries and robust export orders. Global cotton production for 2024-25 is projected at 117.4 million bales, with higher outputs from India and Argentina. However, a 43% decline in kapas arrivals in Punjab, Haryana, and Rajasthan till November 30 compared to last year has raised supply concerns. Farmers are holding back produce, anticipating better prices, which has led to raw material shortages for ginners and spinners, particularly in Punjab. India’s cotton consumption for 2024-25 remains steady at 313 lakh bales, while pressing estimates are unchanged at 302.25 lakh bales. Cotton imports for 2024-25 are projected to increase to 25 lakh bales, a significant rise from 15.20 lakh bales last year, with about 9 lakh bales arriving at Indian ports by November 30. The closing stock for 2024-25 is expected to decline to 26.44 lakh bales, down from 30.19 lakh bales the previous year. On the global front, U.S. cotton production is revised higher to 14.3 million bales, while world production is up 1.2 million bales due to larger crops in India, Argentina, and Brazil. Consumption forecasts have increased by 570,000 bales, driven by India, Pakistan, and Vietnam, while world trade and ending stocks also see slight increases. The market witnessed fresh buying, with open interest rising by 1.07% to 377 contracts. Cottoncandy prices are supported at Rs.54,360, with further support at Rs.54,280. Resistance is seen at Rs.54,520, and a breach above could push prices to Rs.54,600. 

Trading Ideas:

* Cottoncandy trading range for the day is 54280-54600.

* Cotton gains as Cotton yarn prices in south India increased due to rising demand from garment industries.

* 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 25745.25 Rupees dropped by -0.07 percent.

Turmeric

Turmeric prices declined by 0.49% to settle at Rs.15,288, primarily due to improved crop conditions and higher sowing acreage. The crop is reported to be in good to excellent condition, with minimal weather disruptions, leading to expectations of a significant rise in production. Sowing in major producing states like Maharashtra, Telangana, and Andhra Pradesh has increased by 30-35% compared to last year. Nationwide, turmeric sowing is estimated to rise to 3.75-4 lakh hectares, up from 3-3.25 lakh hectares last year. Despite the improved acreage, prices remain supported by limited supplies until the new crop arrives. Arrivals in key markets like Erode and Hingoli have increased, with 9,030 bags reported, up from 7,965 bags previously. However, delays in harvesting due to prolonged vegetation growth from extended rains may restrict fresh supply timelines. Additionally, export demand has shown strength, with exports from April to October 2024 rising 6.57% year-on-year to 108,879.96 tonnes. October exports were up 57.22% compared to October 2023. On the other hand, imports of turmeric have surged significantly, rising 118.99% year-on-year during the April-October 2024 period. However, October imports declined by 23.53% year-on-year, indicating a possible tapering of external supply pressure. The market witnessed fresh selling as open interest rose by 0.25% to 12,170 contracts, while prices fell Rs.76. Turmeric finds support at Rs.15,050, with further downside testing possible at Rs.14,814. Resistance is seen at Rs.15,452, and a breakout could push prices toward Rs.15,618.

Trading Ideas:

* Turmeric trading range for the day is 14814-15618.

* Turmeric dropped as turmeric crop is reported to be in good to excellent condition.

* 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 14194.75 Rupees gained by 1.1 percent.

Jeera

Jeera prices declined by 0.66% to settle at Rs.24,225 due to profit booking after recent gains. Prices were previously supported by delays in sowing across Gujarat and Rajasthan, the key producing states. Higher temperatures have hampered seeding and germination, with Gujarat reporting jeera sowing in just 57,915 hectares as of November 25, significantly lower than last year's 2.44 lakh hectares. India’s cumin production in 2023-24 reached 8.6 lakh tonnes from 11.87 lakh hectares, up from 5.77 lakh tonnes in the previous year. However, the current season may see a 10-15% decline in Rajasthan's cultivation, while overall production could drop by 10%. Despite this, export demand remains robust, with shipments from April to October 2024 rising 77.37% year-on-year to 135,450.64 tonnes. October exports surged by 161.04% compared to the previous year, driven by heightened demand from Europe and the Middle East amid geopolitical tensions and festive buying. India remains the world's cheapest cumin supplier, with prices at $3,050 per tonne, significantly undercutting Chinese cumin prices by $200-250 per tonne. This cost advantage has made India the preferred source globally. The market witnessed long liquidation as open interest dropped by 3.8% to 1,671 contracts, while prices fell Rs.160. Jeera has support at Rs.24,030, with further downside potential to Rs.23,840. Resistance is expected at Rs.24,430, and a move above this level could see prices testing Rs.24,640.

Trading Ideas:

* Jeera trading range for the day is 23840-24640.

* Jeera dropped on profit booking after 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 24364.15 Rupees gained by 0.02 percent. 

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