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Gold

Gold exhibited a notable increase of 0.87% yesterday, settling at 68928, despite headwinds posed by a strong U.S. dollar and expectations of higher U.S. interest rates. This upward momentum was attributed to demand from momentum-following funds, which overshadowed the impact of a strengthening dollar and positive U.S. manufacturing data, indicating growth for the first time in 1-1/2 years in March. The shift in sentiment was reflected in traders' reduced bets of a June interest rate cut to 62%, according to the CME Group's FedWatch Tool. However, challenges persist in the physical gold market, particularly in Europe and India. European investors are selling gold wholesale back to dealers, while Indian demand has plummeted due to sustained high prices. In India, where gold is traditionally in high demand, the ongoing rally in prices has disrupted the usual busy wedding season, with dealers offering heavy discounts to stimulate demand. Consequently, gold imports in India are anticipated to plummet by more than 90% in March compared to February, hitting their lowest level since the onset of the COVID-19 pandemic. This reduction in imports could potentially limit the global rally in gold prices, which reached a record high earlier this month amid expectations of Federal Reserve rate cuts. Technically, the gold market indicates fresh buying, with open interest rising by 2.6% to settle at 24155, and prices increasing by 597 rupees. Gold is currently supported at 68620, with further support at 68320 levels, while resistance is anticipated at 69180, with a potential move above signaling prices testing 69440.

Trading Ideas:

* Gold trading range for the day is 68320-69440.
* Gold prices hit a record high due to momentum-following fund demand.
* Strong U.S. dollar offsets potential higher-for-longer U.S. rates.
* U.S. manufacturing growth in March for the first time in 1-1/2 years.

Silver

Silver surged by 1.99% yesterday, settling at 77036, driven by a combination of factors including assessments of major economies and their monetary policy outlooks. In Europe, improved inflation readings and upward revisions in Manufacturing PMIs alleviated recession concerns and bolstered expectations of rate cuts by the European Central Bank (ECB). Conversely, mixed signals from US economic data, with a strong ISM survey contrasting with cautious optimism from the PCE readout, led to a slight decrease in market projections of a Fed rate reduction in June from 70% to around 60%. The industrial use of silver received support from upbeat factory activity figures in China and a boost from solar demand following the IKEA Foundation's $100 million grant for electric vehicle (EV) initiatives. Federal Reserve Chair Powell acknowledged that while recent inflation data aligns with the Fed's expectations, it falls short of the levels seen last year. Powell emphasized the Fed's patience in assessing the need for interest rate cuts, indicating a willingness to wait for more confidence before implementing any adjustments. Technically, the silver market indicates fresh buying, with open interest rising by 15.58% to settle at 27226, and prices climbing by 1504 rupees. Silver is currently supported at 75860, with further support at 74685 levels, while resistance is expected at 77660, with a potential move above signaling prices testing 78285. Technically, the market's bullish momentum suggests potential for further price gains, with identified support and resistance levels guiding investors' decision-making.

Trading Ideas:

* Silver trading range for the day is 74685-78285.
* Silver prices increased due to monetary policy outlook assessments in major economies.
* In Europe, inflation readings indicated cooling price pressures and revised Manufacturing PMIs.
* US economic data showed mixed signals, with a 60% chance of Fed rate reduction in June.

Crude oil

Crude oil surged by 1.14% yesterday, closing at 7077 amid multiple factors contributing to market optimism. Foremost among these were expectations of tightened supply stemming from OPEC+ cuts, compounded by drone attacks on Russian refineries and bolstered by positive Chinese manufacturing data. The extended commitment by OPEC+ to maintain production cuts until the end of June is anticipated to alleviate concerns about oversupply, particularly during the summer months in the Northern Hemisphere. Russian Deputy Prime Minister Alexander Novak's announcement regarding a shift towards reducing output rather than exports in the second quarter aligns with this sentiment, further tightening global crude supply. The disruptions caused by drone attacks from Ukraine on Russian refineries are likely to have ramifications for Russia's fuel exports, exacerbating supply concerns. In Europe, oil demand exceeded expectations, defying projections of a contraction in 2024. This unexpected resilience, combined with softer U.S. supply growth following adverse weather conditions, offsets some of the downside risks associated with China's tepid demand. Notably, U.S. crude oil production dipped by 6% in January due to freezing weather, according to data from the Energy Information Administration. From a technical standpoint, the market is experiencing fresh buying momentum, evidenced by a notable increase in open interest. Prices have also risen, with support levels identified at 7013 and 6948, while resistance is anticipated at 7133, potentially leading to a test of 7188.

Trading Ideas:

* Crudeoil trading range for the day is 6948-7188.
* Crude oil prices rise amid OPEC+ cuts and Russian refineries attacks
* Russia’s Novak plans to focus on reducing output rather than exports in Q2 to spread production cuts.
* Drone attacks from Ukraine have knocked out Russian refineries, reducing Russia's fuel exports.

Natural gas

Natural gas experienced a notable uptick, settling 1.75% higher at 156.6, primarily attributed to a combination of declining output and revised forecasts indicating increased demand in the forthcoming week. This upward price movement defied expectations of reduced demand for the current week, alongside forecasts of mild weather persisting until mid-April. Despite ample gas reserves and diminished LNG exports due to ongoing plant repairs, market dynamics favored bullish sentiment. Speculative activity reflected a shift, with net short futures and options positions decreasing for a fifth consecutive week to their lowest levels since late January. The reduction in output, down by approximately 6% over the past month, further underscored the tightening supply conditions. Energy companies like EQT and Chesapeake Energy contributed to this decline through delayed well completions and scaled-back drilling operations. Lower gas output in the Lower 48 U.S. states, averaging 100.8 bcfd in March compared to 104.8 bcfd in February, emphasized the ongoing supply constraints. Meteorological projections pointed towards predominantly warmer-than-normal conditions until mid-April, albeit with intermittent cold spells from April 3-6. Consequently, LSEG forecasted a dip in gas demand from 104.0 bcfd to 101.1 bcfd over the coming week, inclusive of exports. Technically, the market exhibited signs of short covering, with a drop in open interest by -3.88% to settle at 51312. Despite this, prices surged by 2.7 rupees. Support levels are identified at 151.5, with a potential downward test to 146.5. Conversely, resistance is anticipated at 159.5, with a breakthrough possibly leading to a price test at 162.5.

Trading Ideas:

* Naturalgas trading range for the day is 146.5-162.5.
* Natural gas rose on a continuing decline in output and forecasts for more demand
* Speculators cut their net short futures and options positions for the fifth week in a row
* Energy firms like EQT and Chesapeake Energy delayed well completions and reduced drilling activities.

Copper

Copper prices saw a modest increase of 0.44% yesterday, settling at 769.3, supported by positive signals from China, the world's largest consumer of the metal. Both official and Caixin PMI data indicated expansion in factory activity during March, surpassing market expectations. This uptick suggests a potential rebound in the sector after facing challenges due to subdued demand in China's manufacturing sector. Furthermore, the outlook for reduced supply as Chinese copper smelters consider joint output cuts amidst lower ore supplies added to the bullish sentiment. However, despite these optimistic factors, concerns persist regarding raw material supplies, as muted bidding by factories led to a significant surge in copper stocks. The Yanghsan copper premium is expected to decline sharply, reflecting lower demand for physical copper from factories. The International Copper Study Group reported an 84,000 metric ton surplus in the global refined copper market for January, compared to a surplus of 27,000 metric tons in December. This surplus, when adjusted for changes in inventory in Chinese bonded warehouses, indicates a tightening market compared to the previous month. From a technical perspective, the market is experiencing fresh buying momentum, as evidenced by a modest increase in open interest. Prices have also risen, with support levels identified at 766.1 and 762.9, while resistance is anticipated at 772, potentially leading to a test of 774.7. However, the market remains sensitive to shifts in demand and supply dynamics, particularly from China, which could influence price movements in the near term.

Trading Ideas:

* Copper trading range for the day is 762.9-774.7.
* Copper rose supported by improving demand from China.
* China's manufacturing activity expanded for the first time in six months in March.
* Prices also remained supported by the outlook of lower supply as Chinese copper smelters moved closer to a joint output cut amid lower ore supplies.

Zinc

Zinc demonstrated resilience in its price performance, settling 1.1% higher at 220.1, buoyed by robust factory data from China which spurred buying activity. Encouraging signals from China's manufacturing sector, with the first expansion in six months and growth in new export orders after a prolonged contraction, injected optimism into the market. Moreover, geopolitical tensions between Russia and Ukraine, coupled with expectations of an interest rate cut by the European Central Bank, contributed to a bullish sentiment across commodity markets. Fundamentally, while expectations for increased production in May exist, uncertainties loom due to the drought situation in Yunnan, potentially impacting supply dynamics. However, the onset of the traditional peak season and supportive policy measures aimed at boosting demand have propelled operating rates in various processing sectors. In the aluminum market, China's output witnessed a notable increase in February, despite temporary closures or reduced production by downstream processing companies during the Chinese New Year holidays. Notably, an aluminum smelter in Inner Mongolia faced production disruptions due to a power outage, expected to affect output in March. However, apart from this incident, there were no significant production suspensions or resumptions reported. From a technical standpoint, short covering was evident as indicated by a drop in open interest by -3.83% to settle at 3187, alongside a price increase of 2.4 rupees. Support levels are identified at 217.9, with a potential test at 215.5. Conversely, resistance is anticipated at 222.6, with a break above potentially leading to a price test at 224.9.

Trading Ideas:

* Zinc trading range for the day is 215.5-224.9.
* Zinc gains as strong factory data from China triggered buying.
* Support also seen amid concerns over slow recovery in production in China's Yunnan province.
* China’s manufacturing activity expanded for the first time in six months in March

Aluminium

Aluminium prices rallied by 1.48% yesterday, closing at 212.65, buoyed by optimistic sentiments largely fueled by higher premiums in Japan and robust economic indicators from China and the United States. The increased premiums paid by Japanese buyers injected positivity into the market, while stronger-than-expected economic data from China helped alleviate concerns over waning demand from the world's largest consumer of aluminium. Additionally, the expansion of U.S. manufacturing for the first time in 1-1/2 years in March, coupled with growing expectations of an interest rate cut by the European Central Bank, contributed to the positive momentum. The escalating tensions between Russia and Ukraine also lifted the commodity market. Fundamentally, there are expectations for increased production in May, although uncertainties loom due to the drought situation in Yunnan. However, the traditional peak season and continuous policy efforts to drive demand have boosted operating rates across various processing sectors. China's aluminium output in February registered a significant year-on-year increase of 7.81%, reflecting steady operations by domestic smelters. However, disruptions such as the power outage-induced shutdown of an aluminium smelter in Inner Mongolia may impact output in March. On the pricing front, a Japanese aluminium buyer agreed to pay a premium of $145 per metric ton over the benchmark price for shipments in April to June, marking a substantial increase from the previous quarter. This premium surge underscores the tightness in the aluminium market and suggests strong demand dynamics. From a technical standpoint, the market is witnessing fresh buying activity, with a notable increase in open interest. Support levels are identified at 210.1 and 207.5, while resistance is expected at 214.3, potentially leading to a test of 215.9.

Trading Ideas:

* Aluminium trading range for the day is 207.5-215.9.
* Aluminium gains as higher premiums Japanese buyers having to pay boosted sentiment.
* Support also seen amid stronger-than-expected economic data from China
* U.S. manufacturing expanded for the first time in 1-1/2 years in March.

Cotton

Cotton candy prices experienced a marginal decline of -0.06%, settling at 62480, driven by revised upward production estimates from key producing countries, including India and Australia. The Cotton Association of India (CAI) and Cotton Corporation of India (CCI) both raised their production estimates for the current season, contributing to increased supply expectations. Additionally, Cotton Australia's upward revision in production forecasts further added to the market sentiment of ample supply. However, amidst the increased supply outlook, demand concerns emerged, particularly from textile mills in southern India. The Southern India Mills’ Association (SIMA) urged mills not to purchase cotton in panic, citing significant price hikes in the domestic market. The surge in cotton prices, especially for the widely-used Shankar-6 variety, raised concerns about domestic consumption and export competitiveness. On the global front, despite higher production and consumption estimates, cotton ending stocks were projected to decrease, indicating potential tightening of supply-demand dynamics. Increased imports by China offset lower estimates for other countries, contributing to higher world trade figures. From a technical perspective, the market witnessed fresh selling pressure, with a slight increase in open interest by 0.47% to settle at 432. Despite a decrease in prices by -40 rupees, support levels were identified at 62360, with a potential test at 62240. Conversely, resistance was anticipated at 62600, with a break above potentially leading to further price testing at 62720. The technical overview suggests a cautious approach, with market participants closely monitoring supply-demand fundamentals and price movements for trading decisions.

Trading Ideas:

* Cottoncandy trading range for the day is 62240-62720.
* Cotton dropped as CAI has revised its production estimates upwards to 309.70 lakh bales
* CCPC raised crop production for the current season to 323.11 lakh bales
* Cotton Australia raised its estimate for Australian production this year to "at least" 4.5 million bales
* In Rajkot, a major spot market, the price ended at 29193.1 Rupees gained by 0.04 percent.

Turmeric

Turmeric prices saw a marginal uptick of 0.05% yesterday, closing at 16544, driven by below-normal supplies and active festive demand, which maintained a positive bias in the market. The impact of lower production has significantly reduced arrival rates compared to the previous year, indicating prevailing supply tightness. This scarcity is expected to encourage stockists to capitalize on any price dips, further supporting prices. Moreover, the seasonality of turmeric suggests higher prices during March, primarily due to festive buying, with upcoming festivals and the commencement of the wedding season likely to sustain active buying interest. Production forecasts indicate a significant drop of about 14% year-on-year, attributed to reduced cultivation area and declining yields. This production decline adds to the supply constraints and reinforces the bullish sentiment in the market. On the export front, turmeric exports during April-January 2024 witnessed a slight decline of 3.52% compared to the previous year, with January 2024 exports showing a modest increase from December 2023 but a notable drop from January 2023. Conversely, turmeric imports during April-January 2024 decreased by 22.34% compared to the same period in 2023, with January 2024 imports showing a decrease from December 2023 but an increase from January 2023. In Nizamabad, a major spot market, turmeric prices ended slightly higher, reflecting the overall positive sentiment in the market. From a technical standpoint, the market witnessed short covering, indicated by a significant drop in open interest. Support levels are identified at 16188 and 15834, while resistance is anticipated at 16798, with a potential upward movement to test 17054. Traders should monitor supply dynamics and demand trends closely for further insights into turmeric price movements.

Trading Ideas:

* Turmeric trading range for the day is 15834-17054.
* Turmeric prices seen supported amid below normal supplies
* Festivals ahead in coming months and commencement of wedding season demand is likely to keep buyers engage.
* Production is likely to be dropped by about 14% Y-o-Y due to lower area under turmeric.
* In Nizamabad, a major spot market, the price ended at 16392.65 Rupees gained by 0.01 percent.

Jeera

Jeera prices remained stagnant, showing no change at 23465, amidst mounting pressure from increased arrivals in the market. With daily arrivals ranging from 10000 to 12000 bags in Rajkot Mandi and surpassing demand, the market faced challenges in maintaining price stability. The surge in arrivals can be attributed to the ongoing harvest season, with new produce flooding in from Gujarat and Rajasthan, where favorable weather conditions and expanded sowing areas led to record production levels. In Gujarat alone, cumin production reached an estimated 4.08 lakh tonnes, setting a new record and marking a significant increase from the previous year's 2.15 lakh tonnes. Similarly, Rajasthan witnessed a 53% surge in cumin production. This surge in production, coupled with subdued international demand, resulted in a decline in exports during April-January 2024 by 25.33% compared to the same period in the previous year. However, January 2024 saw a notable increase in exports, rising by 53.99% compared to January 2023. Despite the recent decline in exports and stagnant domestic prices, analysts anticipate a rebound in exports driven by increased production and declining international prices. The area sown in key producing regions like Gujarat and Rajasthan has expanded, potentially boosting exports in the coming months. From a technical standpoint, the market witnessed long liquidation, with a drop in open interest by -3.79% to settle at 2361. Despite unchanged prices, support levels are identified at 23290, with a potential test at 23120 in case of a downturn. Resistance is anticipated at 23640, with a breakthrough potentially leading to further price testing at 23820.

Trading Ideas:

* Jeera trading range for the day is 23120-23820.
* Jeera settled flat as there is a possibility of further increase in arrivals pressure in the market.
* There will be a huge increase in cumin exports, which will reach about 14-15 thousand tonnes in February 2024.
* New arrivals have started in Gujarat since last 20-25 days and new arrivals have started in Rajasthan also since last 15 days.
* In Unjha, a major spot market, the price ended at 24543.05 Rupees dropped by -0.14 percent.

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