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gold

Yesterday, gold prices edged up by 0.07% to settle at 71,490 as investors anticipated key US inflation data and the Federal Reserve's policy announcement. Market participants are closely watching for indications of when the Fed might begin reducing rates, especially after a stronger-than-expected payroll report last Friday. Expectations for a Fed easing this year have been scaled back, with a 50% chance of a rate cut now anticipated in September. China's central bank, a major buyer of gold, paused its purchases in May after 18 consecutive months, impacting the market dynamics. Political uncertainty in Europe also influenced the market as far-right gains in the European Parliament elections prompted French President Macron to call for a surprise legislative election. Despite recent volatility, gold has shown resilience, attracting new investors. The World Gold Council reported that global gold-backed exchange-traded funds saw net positive flows in May, ending a year-long streak of outflows and boosting holdings to 3,088 tons, though still 8.2% below the 2023 average. Gold imports to China via Hong Kong fell by 38% in April, totaling 34.6 metric tons compared to 55.8 tons in March. This decline contrasts with the high consumption recorded in China in the first quarter, which saw a 5.94% year-on-year increase. In India, gold continued to trade at a discount for the fifth consecutive week. Indian dealers offered a discount of up to $14 an ounce over official domestic prices, while premiums in China, Singapore, and Japan varied slightly. Technically, the gold market is experiencing short covering, indicated by a 1.22% drop in open interest to 15,218 contracts while prices increased by 52 rupees. Gold is currently supported at 71,090, with a potential test of 70,695 if this support breaks. On the upside, resistance is seen at 71,795, and a move above this level could push prices towards 72,105.

Trading Ideas:
* Gold trading range for the day is 70695-72105.
* Gold steadied as investors awaited US inflation data and Fed’s policy announcement
* Markets scale back expectations for Fed easing, with 50% chance of a cut in September.
* China's central bank paused gold purchases after 18 months.


silver
Yesterday, silver prices fell by 1.51%, closing at 88,663, as a stronger-than-expected U.S. jobs report dampened hopes for a September rate cut. The U.S. economy added 272,000 jobs in May, significantly surpassing expectations of 185,000 and the revised 165,000 in April. Wages also increased by 0.4%, beating expectations of 0.3%. However, the unemployment rate unexpectedly rose to 4%, the highest since January 2022, up from 3.9% in April. Investors are now focused on the U.S. consumer inflation report and the Federal Reserve's policy decision, both due on Wednesday. Despite the strong jobs report, the Fed is not expected to change interest rates this week. Attention will be on comments from Fed Chair Jerome Powell and any changes to economic projections from policymakers. The likelihood of a rate cut in September has decreased from around 70% to 50% following the jobs data. In the industrial sector, the U.S. imposed 50% tariffs on Chinese imports of solar cells, a major industry for silver. This move aims to curb demand for panels across key factories in Asia. Nonetheless, strong domestic demand in China, highlighted by the world's largest solar farm in Xinjiang, prevented a further drop in silver prices. Expectations of major central banks cutting key interest rates in upcoming decisions also trimmed the opportunity cost of holding non-yielding bullion assets. India's silver imports have surged in the first four months of the year, already surpassing the total for all of 2023. India imported a record 4,172 metric tons of silver from January to April, up from 455 tons in the same period last year, with nearly half of these imports coming from the UAE due to lower import duties. Technically, the silver market is experiencing fresh selling pressure, with a 1.49% increase in open interest to settle at 21,614 contracts, while prices dropped by 1,359 rupees. Silver is currently finding support at 88,030, with a potential test of 87,390 if this level is breached. Resistance is expected at 89,440, and a move above this could see prices testing 90,210.

Trading Ideas:
* Silver trading range for the day is 87390-90210.
* Silver dropped as strong economic data in US backed a hawkish outlook for the Federal Reserve.
* Market focus has shifted to the U.S. consumer inflation report, due on Wednesday, the same day as the Fed's policy decision.
* Bets of the Fed cutting rates in September fell to 50% from around 70% before the jobs data.


crude oil
Yesterday, crude oil prices rose by 0.62% to settle at 6,526, driven by optimistic expectations of increasing fuel demand during the summer season, despite the challenges posed by a stronger US dollar and the anticipation of prolonged high interest rates by the Federal Reserve. Analysts from Goldman Sachs predict Brent crude will climb to $86 per barrel in the third quarter, attributing this to robust summer transport demand, which they believe will push the oil market into a third-quarter deficit of 1.3 million barrels per day (bpd). In the United States, there is speculation that the government may accelerate the replenishment of the Strategic Petroleum Reserve, targeting a buy-back price of around $79 per barrel. Meanwhile, OPEC has maintained its forecast for strong global oil demand growth, projecting a rise of 2.25 million bpd in 2024 and 1.85 million bpd in 2025, supported by travel and tourism in the latter half of the year. US crude oil inventories saw an unexpected increase of 1.233 million barrels in the week ending May 31, 2024, against market expectations of a 2.30 million barrel decline, according to the EIA Petroleum Status Report. Additionally, crude stocks at the Cushing, Oklahoma delivery hub rose by 854,000 barrels, reversing the previous week’s draw of 1.766 million barrels. Gasoline stocks also surged by 2.102 million barrels, surpassing the expected 1.95 million barrel rise, and distillate stockpiles increased by 3.197 million barrels, above the forecasted 3.01 million. Technically, the crude oil market is undergoing short covering, as evidenced by a 4.58% decrease in open interest to 7,078 contracts while prices increased by 40 rupees. Currently, crude oil finds support at 6,474, with a potential test of 6,421 if this support level breaks. On the upside, resistance is expected at 6,566, and a move above this level could see prices testing 6,605.

Trading Ideas:
* Crudeoil trading range for the day is 6421-6605.
* Crude oil gains buoyed by hopes of rising fuel demand this summer
* OPEC sticks to 2024 oil demand growth forecast, but trims Q1 view
* OPEC predicts a rise in world oil demand by 2.25 million barrels per day in 2024 and 1.85 million bpd in 2025.


natural gas
Yesterday, natural gas prices surged by 5.77% to settle at 256.5, driven by a recent decline in output and forecasts for hotter weather, which is expected to increase demand for gas-powered air conditioning. This price hike occurred despite projections for reduced demand over the next two weeks, the anticipation of increased gas supplies with the nearing completion of the Mountain Valley Pipeline, and the significant oversupply of gas currently in storage. The U.S. National Hurricane Center reported a tropical disturbance in the Gulf of Mexico, with a 20% chance of becoming a cyclone, potentially influencing gas markets due to possible disruptions. Meteorologists predict an active hurricane season, which could further impact gas production and prices. Gas output in the Lower 48 U.S. states has decreased to an average of 97.8 billion cubic feet per day (bcfd) so far in June, down from 98.1 bcfd in May, and well below the record high of 105.5 bcfd set in December 2023. Meteorologists expect the weather across the Lower 48 states to remain mostly hotter than normal through June 26, which should sustain high demand for natural gas. US utilities added 98 billion cubic feet of gas into storage during the week ending May 31, 2024, exceeding market expectations of an 89 billion cubic feet increase. This increase marked the ninth consecutive week of seasonal storage builds, bringing total stockpiles to 2,893 Bcf, 373 Bcf higher than the previous year and 581 Bcf above the five-year average. Technically, the natural gas market is under short covering, indicated by a 0.26% drop in open interest to 15,812 contracts while prices rose by 14 rupees. Currently, natural gas has support at 251, with a potential test of 245.6 if this support fails. On the upside, resistance is expected at 259.8, and a move above this level could push prices towards 263.2.

Trading Ideas:
* Naturalgas trading range for the day is 245.6-263.2.
* Natural gas prices surged due to a drop in output and forecasts for hotter weather.
* The U.S. National Hurricane Center predicts a 20% chance of a tropical disturbance in the Gulf of Mexico becoming a cyclone in the next seven days.
* Gas output in Lower 48 U.S. states fell to an average of 97.8 billion cubic feet per day in June, down from 98.1 bcfd in May.



copper

Yesterday, copper prices declined by 0.56%, settling at 858.15, reflecting evidence of low demand in the near term. The official manufacturing PMI in May showed a contraction, and trade data indicated a 7.1% annual drop in copper ore imports, despite surging prices. Refiners have turned to scrap to support output, leading to a rise in Chinese inventories to their highest since 2020. This surplus has kept prices of deliveries from Shanghai bonded warehouses at a discount to LME for a month, despite a 13% year-to-date increase fueled by speculative bets of looming shortages. Copper's role in electrification, particularly in grid-scale energy and data-center infrastructure, has spurred speculation, amplified by challenges in starting new projects for fresh ore supply. Chilean miner Codelco's contract agreement with the union at its Andina mine averted a strike, ensuring continued production. The global refined copper market showed a 125,000 metric tons surplus in March, according to the International Copper Study Group (ICSG), compared to a 191,000 metric tons surplus in February. Despite weak physical consumption, China's unwrought copper imports in May rose by 15.8% year-on-year, surpassing market expectations. However, imports of copper concentrate declined by 11.7% compared to last year. Technically, the copper market is experiencing fresh selling pressure, with a 2.68% increase in open interest, settling at 6,582 contracts, and prices decreasing by 4.8 rupees. Copper is currently finding support at 851.1, with a potential test of 843.9 if this level is breached. Resistance is likely at 864.4, and a move above this could see prices testing 870.5.

Trading Ideas:
* Copper trading range for the day is 843.9-870.5.
* Copper prices dropped amid evidence of low demand in the near term.
* The official manufacturing PMI reflected a contraction in May
* Chinese inventories rose to their highest since 2020, beating seasonal factors that favor a drawdown.


zinc
Yesterday, zinc prices declined by 1.44%, settling at 252.45, driven by a firm dollar and subdued physical demand. China's manufacturing PMI falling below expectations signaled a contraction in manufacturing activity, dampening further demand. Soft U.S. economic data strengthened the case for earlier rate cuts by the Federal Reserve, contributing to a rebound in the dollar. In April 2024, China's refined zinc output decreased month-on-month by 3.99% and year-on-year by 6.56%, with cumulative output from January to April down by 0.47%. Domestic zinc alloy production increased in April, but output from smelters declined due to routine maintenance and equipment issues in various regions. Chinese authorities introduced a support package, including lowering minimum mortgage interest rates, boosting hopes for interest rate cuts and bolstering the commodity's industrial outlook. The global zinc market surplus decreased to 52,300 metric tons in March from 66,800 tons in February, with the first three months of the year showing a surplus of 144,000 tons compared to 201,000 tons in the same period last year. Technically, zinc market witnessed fresh selling pressure, with a 4.02% increase in open interest, settling at 3,131 contracts, and prices declining by 3.7 rupees. Zinc is currently finding support at 249.7, with a potential test of 246.9 if this level is breached. Resistance is likely at 256, and a move above this could see prices testing 259.5. Despite short-term challenges, the long-term outlook for zinc remains influenced by factors such as global economic conditions and infrastructure spending.

Trading Ideas:
* Zinc trading range for the day is 246.9-259.5.
* Zinc dropped amid a firm dollar and constraints in physical demand.
* China’s manufacturing PMI came in below market expectations, pointing to a contraction in manufacturing activity
* China's refined zinc output was 504,600 mt, a month-on-month decrease of 20,900 mt or 3.99%



aluminium
Yesterday, aluminium prices experienced a decline of -1.19%, settling at 233, primarily due to high inventories and weak demand. This pressure was evident in the widening discount of the LME cash aluminium contract to the three-month contract, reaching $62.44 per ton, the largest discount since August 2007. Aluminium inventories more than doubled in just a month to 1.1 million tons, exacerbating the downward pressure on prices. The surge in the US dollar, following robust job creation data, also weighed on aluminium prices, as it suggests a potential delay in the Federal Reserve's easing cycle. In China, trade data showed better-than-expected exports, indicating resilience in the manufacturing sector. However, slower growth in imports underscored concerns about domestic consumption. Despite these challenges, shortages of alumina emerged due to lower output from China and disruptions to Rio Tinto's Australian exports, leading to concerns about the supply of this key material. This situation prompted Rio Tinto to declare force majeure on alumina cargoes from its Australian refineries. On a positive note, one global aluminium producer offered Japanese buyers a premium of $175 a metric ton for July-September, reflecting confidence in the demand outlook. Additionally, global primary aluminium output in April rose by 3.3% year-on-year to 5.898 million tonnes, according to data from the International Aluminium Institute. Technically, the aluminium market is witnessing fresh selling pressure, with a 5.87% increase in open interest to settle at 3,461 contracts, while prices decreased by -2.8 rupees. Currently, aluminium finds support at 231.3, with a potential test of 229.5 if this support level is breached. On the upside, resistance is expected at 235.1, and a move above this level could push prices towards 237.1.

Trading Ideas:
* Aluminium trading range for the day is 229.5-237.1.
* Aluminium dropped as high inventories and weak demand pressured prices.
* The discount of the LME cash aluminium contract to the three-month contract expanded to $62.44 a ton
* Global primary aluminium output in April rose 3.3% year on year to 5.898 million tonnes

Cottoncandy

Cottoncandy prices edged up by 0.36% yesterday, closing at 56,340, buoyed by strong demand for Indian cotton from countries like Bangladesh and Vietnam. However, upside potential was limited due to sluggish milling demand and muted yarn demand in the global market. There were anticipations of a better crop in countries such as Australia, which also contributed to the restrained upward movement. The International Cotton Advisory Committee (ICAC) projected increases in the cotton-producing area, production, consumption, and trade for the next season, 2024-25. Additionally, India's cotton stocks are expected to decline by nearly 31% in 2023/24, reaching their lowest level in over three decades, driven by lower production and rising consumption. This reduction in stockpiles is anticipated to constrain exports from the world's second-largest producer and lend support to global prices, potentially lifting domestic prices and impacting the margins of local textile companies. Looking ahead to the 2024/25 marketing year, India's cotton production is estimated to decrease by two percent due to farmers shifting acreage to higher-return crops. However, mill consumption is projected to increase by two percent as yarn and textile demand improve in major international markets. With the recent notification of an import duty recension on extra-long staple (ELS) cotton, imports are estimated to rise by 20 percent. Technically, the cotton market is witnessing fresh buying momentum, with a 0.56% increase in open interest and prices up by 200 rupees. Support for Cottoncandy is at 56,140, with a potential test of 55,930 if this level is breached. Resistance is likely at 56,520, and a move above could see prices testing 56,690. Despite challenges such as fluctuating demand and potential shifts in production, the cotton market remains influenced by global trade dynamics and domestic consumption trends.

Trading Ideas:
* Cottoncandy trading range for the day is 55930-56690.
* Cotton gains as demand for India cotton continues to be strong
* U.S. ending stocks projected 1.3 million bales above 2023/24 level
* Global supplies in 2024/25 projected to be higher than previous year
* In Rajkot, a major spot market, the price ended at 26662.7 Rupees dropped by -0.46 percent.


Turmeric
Turmeric prices saw a rise of 0.86% yesterday, settling at 17,828, driven by farmers holding back stocks in anticipation of further increases. However, the upside potential is limited due to an increase in supplies at the end of the harvesting season. The prevailing heat wave across the country poses a threat to crop yields, exacerbating the supply crunch and bolstering prices. The India Meteorological Department predicts an extended period of hot weather, with rainfall in southern India significantly below normal levels, further straining crop conditions. In 2023-24, turmeric production is estimated at 10.74 lakh tonnes, down from 11.30 lakh tonnes the previous year, according to the Ministry of Agriculture and Farmers’ Welfare. Additionally, demand has been impacted by price surges, leading to demand destruction. However, turmeric growing regions such as Sangli, Basmat, and Hingoli are experiencing increased demand for quality turmeric, driven by expectations of higher sowing areas in the current year. Turmeric exports during April-March 2024 dropped by 4.75% compared to the previous year, totaling 162,018.50 tonnes. In contrast, imports decreased by 12.71% during the same period, amounting to 14,637.55 tonnes. In March 2024, turmeric exports rose by 34.90% compared to February, but declined by 7.37% compared to March 2023. Conversely, imports in March 2024 increased by 32.70% year-on-year. In the major spot market of Nizamabad, turmeric prices ended at 18,111.35 Rupees, gaining 0.18%. Technically, the turmeric market is witnessing fresh buying, with a 4.95% increase in open interest to settle at 18,030 contracts while prices surged by 152 rupees. Currently, turmeric finds support at 17,460, with a potential test of 17,092 if this support level is breached. On the upside, resistance is expected at 18,288, and a move above this level could push prices towards 18,748.

Trading Ideas:
* Turmeric trading range for the day is 17092-18748.
* Turmeric prices gains as farmers are holding back stocks in anticipation of a further rise.
* The current heat wave could severely damage the crop yield, further contributing to the supply crunch.
* The Ministry of Agriculture first advance estimate for turmeric production in 2023-24 is estimated at 10.74 lakh tonnes
* In Nizamabad, a major spot market, the price ended at 18111.35 Rupees gained by 0.18 percent.


Jeera
Jeera prices experienced a decline of 1.7% yesterday, settling at 26,940, primarily due to expectations of higher production which could potentially weigh on prices. However, the downside was limited by robust domestic and export demand, coupled with tight global supplies. Farmers holding back their stocks in anticipation of better prices also contributed to supporting prices. This season, jeera production is anticipated to be 30% higher, reaching 8.5-9 lakh tonnes, driven by a substantial rise in cultivation area, particularly in Gujarat and Rajasthan. Globally, significant increases in production have been observed, notably in China, where cumin output has more than doubled. High prices in the prior season have incentivized increased production in Syria, Turkey, and Afghanistan, with new seeds expected to enter the market in June and July. Consequently, as these new supplies enter the market, cumin prices are expected to decline. In India, the increase in sowing area and favorable weather conditions in major cumin-producing areas have led to a doubling of production compared to the previous year. Trade analysts anticipate a substantial increase in cumin exports, reaching about 14-15 thousand tonnes in February 2024, following a decline in exports during 2023 due to volatile domestic prices. However, jeera exports during April-March 2024 dropped by 13.53% compared to the same period in the previous year, reflecting fluctuations in international demand. Nonetheless, there was a significant rise in exports in March 2024 compared to February 2024 and March 2023. Technically, the jeera market witnessed fresh selling pressure, with a 5.9% increase in open interest and prices declining by 465 rupees. Jeera is currently finding support at 26,620, with a potential test of 26,300 if this level is breached. Resistance is likely at 27,330, and a move above this could see prices testing 27,720.

Trading Ideas:
* Jeera trading range for the day is 26300-27720.
* Jeera dropped as the expectation of higher production could weigh on the prices.
* China's cumin output soared to over 55-60 thousand tons from the previous 28-30 thousand tons.
* Turkey anticipates producing 12-15 thousand tons, while Afghanistan's output could double.
* In Unjha, a major spot market, the price ended at 27745.7 Rupees dropped by -1.08 percent.

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