IGI Logo

Gold

Gold settled down by a marginal -0.01% at 71,732, influenced by data indicating subdued U.S. economic activity. This data, including minimal growth in U.S. retail sales for May and significant downward revisions for April, has maintained hopes for at least one interest rate cut by the Federal Reserve this year. The CME FedWatch tool reflected this sentiment, showing a 67% probability of a rate cut in September, up from 61% the previous day. Dallas Federal Reserve Bank President Lorie Logan commented on the recent cooling inflation data, stating it is a positive sign but emphasized the need for more consistent data to confidently predict a return to the 2% inflation target. In the global market, gold imports to China via Hong Kong dropped by 38% in April compared to March, according to the Hong Kong Census and Statistics Department. Despite a recent price correction, gold demand in India remained weak as buyers delayed purchases due to the absence of major festivals, and the nearing end of the wedding season meant jewelers were not urgently replenishing inventories. Consequently, Indian dealers offered discounts up to $10 per ounce over official domestic prices. In China, dealer premiums over international spot prices decreased to $18-$26 per ounce from $27-$32 the previous week, reflecting weak consumer sentiment and high spot prices. Technically, the gold market is experiencing fresh selling pressure with a 0.41% increase in open interest, settling at 14,559 contracts while prices dipped by 7 rupees. Support for gold is now at 71,605, with a potential test of 71,470 if this level is breached. Resistance is anticipated at 71,880, and a move above this could see prices testing 72,020.
 

Trading Ideas:
* Gold trading range for the day is 71470-72020.
* Gold steadied after data lacklustre U.S. economic activity
* U.S. retail sales barely rose in May and figures for the prior month were revised considerably lower, data showed.
* The odds of a Federal Reserve rate cut in September to 67% from 61% a day earlier, the CME FedWatch tool showed.


Silver
Silver prices rose by 0.44%, settling at 89475, driven by lackluster U.S. economic activity, which reinforced expectations of Federal Reserve interest rate cuts this year. The dollar's weakness, coupled with mixed U.S. economic data, played a significant role in this movement. While May's U.S. industrial production and manufacturing output exceeded expectations, retail sales showed only a marginal increase and April's figures were notably revised downward. This combination led to lower Treasury yields and strengthened the market's belief in at least two interest rate hikes this year. Boston Fed President Susan Collins emphasized patience regarding rate cuts, despite encouraging inflation data. Fed Governor Adriana Kugler highlighted renewed progress in inflation control, and Dallas Fed President Lorie Logan affirmed the Fed's patient stance. St. Louis Fed President Alberto Musalem suggested that interest rates should only be cut after sustained decreases in inflation. On the supply side, India's silver imports have surged in the first four months of 2024, surpassing the total imports for all of 2023. This increase is driven by the solar panel industry's demand and investors' expectations of silver outperforming gold. India, the world's largest silver consumer, imported a record 4,172 metric tons from January to April, significantly up from 455 tons in the same period last year. Nearly half of these imports came from the United Arab Emirates, benefiting from lower import duties. Technically, the silver market is experiencing short covering, evidenced by a 1.17% drop in open interest, settling at 19,820 contracts while prices increased by 395 rupees. Current support is at 88950, with potential further support at 88425 if breached. Resistance is expected at 89760, with the possibility of testing 90045 if surpassed, indicating a cautiously optimistic outlook for silver prices in the near term.
 

Trading Ideas:
* Silver trading range for the day is 88425-90045.
* Silver gains as lacklustre U.S. economic activity fuelled expectations that Fed would cut interest rates this year.
* Dollar fluctuated due to lackluster US economic activity in Q2.
* Fed officials stressed commitment to based on incoming economic data.


Crude oil
Crude oil prices increased by 0.46% to settle at 6733, driven by heightened geopolitical tensions in Eastern Europe and the Middle East, which reignited supply concerns. A Ukrainian drone strike causing a fire at a major Russian oil terminal and an Israeli official's warning of potential war with Hezbollah have contributed to these worries. Additionally, strong global demand growth forecasts from OPEC, the IEA, and the US EIA support oil prices, with predictions of robust demand in the latter half of the year. OPEC+ members, including Russia and Iraq, reaffirmed their commitment to production quotas, while Saudi Arabia expressed readiness to adjust output based on market conditions. Despite an unexpected increase in US crude inventories by 2.264 million barrels, contrary to the anticipated 2.2 million barrel draw, investor sentiment has been bolstered. The Middle East tensions continue to provide a floor under the market, with potential disruptions to global oil supplies if the Israel-Hamas conflict in Gaza escalates. US crude oil stocks rose by 3.730 million barrels in the week ending June 7, 2024, exceeding the market consensus of a 1.55 million barrel decline. Gasoline stocks also surged by 2.566 million barrels, surpassing expectations, and distillate stockpiles increased by 0.881 million barrels, higher than the projected rise. Technically, the crude oil market is experiencing fresh buying, with a significant increase in open interest by 17.93%, settling at 4249 contracts. Prices rose by 31 rupees, indicating strong upward momentum. Crude oil is currently supported at 6701, with a potential test of 6669 if this support level is breached. Resistance is likely at 6769, and a move above this could see prices testing 6805.
 

Trading Ideas:
* Crudeoil trading range for the day is 6669-6805.
* Crude oil gains as escalating conflict in Eastern Europe and the Middle East reignited supply worries.
* Oil prices were also supported recently by robust global demand growth forecasts.
* OPEC, the IEA and US EIA all predicting solid oil demand growth in the second half of this year.


Natural gas
Natural gas prices experienced a slight decline of 0.04%, settling at 241.9, driven by forecasts for a sharper increase in supply and a shift towards greater coal use in the U.S. energy mix. Meteorologists predict that temperatures across the Lower 48 states will remain hotter than normal through at least July 3, which typically boosts energy demand for cooling. According to LSEG, gas production in the Lower 48 states has averaged 96.9 billion cubic feet per day (bcfd) in June, down from 98.1 bcfd in May and significantly lower than the record 105.5 bcfd in December 2023. Heat is expected to increase gas demand in the Lower 48, including exports, from 96.5 bcfd this week to 102.4 bcfd next week. Gas flows to the seven major U.S. LNG export plants have held steady at 12.9 bcfd in June, matching May’s figures but remaining below the record high of 14.7 bcfd set in December 2023. This is due to ongoing maintenance at several facilities in Louisiana, including Cameron LNG, Cheniere Energy's Sabine Pass, and Venture Global's Calcasieu Pass. U.S. utilities added 74 billion cubic feet of gas to storage for the week ending June 7, 2024, slightly below market expectations of a 75 billion cubic feet increase. Technically, the natural gas market is undergoing long liquidation, with open interest dropping by 28.74% to settle at 7,814 contracts while prices fell by 0.1 rupees. Support for natural gas is currently at 238.6, with further support at 235.3 if breached. Resistance is expected at 245.3, with the possibility of testing 248.7 if surpassed, suggesting a cautious outlook with attention to key support and resistance levels guiding near-term movements.
 

Trading Ideas:
* Naturalgas trading range for the day is 235.3-248.7.
* Natural gas dropped on forecasts for a steeper than previously expected rise in gas supply
* Meteorologists projected weather across the Lower 48 states would remain hotter than normal through at least July 3.
* Gas output in the Lower 48 U.S. states had fallen to an average of 96.9 bcfd so far in June


Copper
Copper prices rose by 0.35% to settle at 854.55 amid concerns over potential capacity reductions among Chinese smelters facing low treatment charges, indicating heightened reliance on smelting. This trend coincided with LME warehouse stockpiles reaching a six-month high, reflecting subdued demand prospects alongside a strengthened dollar. A notable delivery of 19,175 metric tons of copper to Asian destinations contributed to LME-approved warehouse inventories climbing to 155,850 tons. China's increased copper scrap imports, driven by shortages in concentrate essential for refined metal production in sectors like construction and power, contrasted with a potential pause in US shipments due to record-high prices. The concentrate scarcity stemmed partly from disruptions like First Quantum losing operating rights for its Cobre mine in Panama, impacting global supply by 1% in 2022. Chinese copper waste and scrap imports surged 25% to 783,004 tonnes in the first four months of 2024 compared to the same period last year. The International Copper Study Group reported a refined copper market surplus of 125,000 metric tons in March, down from 191,000 metric tons in February. In May, China's unwrought copper imports rose by 15.8% year-on-year, surpassing expectations despite weak physical consumption trends. Imports totaled 514,000 metric tons, marking a 17.4% increase from April. Over the first five months of 2024, China imported 2.33 million tons of unwrought copper, an 8.8% rise from the same period in 2023. Technically, the copper market saw short covering with a 14.25% decrease in open interest to settle at 4,051 contracts, paired with a modest price increase of 3 rupees. Support levels are observed at 850.9, potentially testing 847.1, while resistance stands at 858.2, with potential upward movement to 861.7 upon breach.
 

Trading Ideas:
* Copper trading range for the day is 847.1-861.7.
* Copper gains amid concerns that Chinese smelters may reduce capacity.
* Stockpiles in LME warehouses climbed to a six-month high amid a subdued demand outlook.
* Inventory at LME-approved warehouses rose to 155,850 tons, pointing to lackluster demand


Zinc
Zinc prices rose by 0.64% to settle at 260.85, driven by concerns over shortages exacerbated by increased fund buying. In China, zinc concentrate imports fell by 24% in the first four months of the year, highlighting a tightening raw materials market. Spot treatment charges for imported zinc concentrates dropped sharply to $30-50 per ton, which has led many Chinese smelters to rely more on domestic sources due to unsustainable processing costs. Global zinc production has been on a downward trend, with mines reporting a 2% decline in 2022 followed by another 1% drop in 2023. The International Lead and Zinc Study Group (ILZSG) reports a further 3% year-on-year decrease in production for the first quarter of this year. Additionally, restarts of idled smelter capacity in Europe have reduced concentrates available on the spot market, exacerbating supply constraints. London Metal Exchange (LME) zinc stocks, which had depleted to 30,475 tons, rebounded significantly throughout 2023, reaching 255,900 tons by the current year. Despite fluctuation due to warehouse arbitrage activities, stocks have largely remained within a range of 250,000-260,000 tons since April. From a technical standpoint, the zinc market has witnessed short covering, with open interest dropping by 16.45% to settle at 1,498 contracts while prices increased by 1.65 rupees. Current support levels are identified at 259.6, with a potential test of 258.3 if breached. Resistance is anticipated at 262.1, and a move above this level could push prices to test 263.3.
 

Trading Ideas:
* Zinc trading range for the day is 258.3-263.3.
* Zinc gains as focus switched to shortages while fund buying added momentum.
* In China, zinc concentrate imports decreased by 24% in the first four months of this year compared to the previous year.
* There has been no recovery so far this year, output sliding another 3% year-on-year in the first quarter.


Aluminium
Aluminium prices edged up by 0.37% to settle at 230.95, driven by short covering following recent declines triggered by disappointing industrial output figures from China, the world's largest consumer of the metal. China's aluminium production increased by 7.2% year-on-year to 3.65 million tonnes in May, continuing a robust growth trend seen in the first five months of the year, with total production reaching 17.89 million tonnes, up 7.1% from the same period last year. Despite this, China's aluminium imports surged by 61.1% in May compared to a year earlier, driven by increased shipments from Russia amidst Western sanctions impacting supply dynamics. The rise in Russian aluminium exports to China, which totaled 310,000 metric tons last month, underscores shifting trade patterns influenced by geopolitical factors. Russian shipments to China soared by 91.6% in the first four months of the year, reaching 500,741 tons, highlighting Russia's strategic response to sanctions. Demand indicators remained robust as well, with aluminium premiums for shipments to Japan marking a significant increase of 25-31% over the LME cash price for July-September contracts. This reflects solid demand from Japanese buyers despite global supply challenges. Technically, the aluminium market experienced short covering, with open interest declining by 6.11% to settle at 2,412 contracts while prices rose by 0.85 rupees. Current support levels are established at 229.3, with a potential downside test to 227.5 if breached. Resistance is anticipated at 232.9, and a break above this level could lead prices towards 234.7. These technical indicators suggest a cautious optimism in the aluminium market, influenced by supply dynamics from China and geopolitical impacts on trade flows, alongside strong demand signals from major consuming regions like Japan.
 

Trading Ideas:
* Aluminium trading range for the day is 227.5-234.7.
* Aluminium gains on short covering after prices dropped amid disappointing May industrial output from China.
* China aluminium production up 7.2 % to 3.65 mln tonnes in May
* China's May aluminium imports surge 61% year – on – year


Cotton
Cotton prices, represented by Cottoncandy, rose by 1.05% to settle at 56,960 amid increased demand triggered by delays in shipments from major producers like the US and Brazil. This delay has bolstered demand for Indian cotton from mills in neighboring countries. Additionally, firm cottonseed prices have contributed to the strength in natural fiber prices, despite ongoing sowing activities for the kharif 2024 season in southern states like Karnataka, Telangana, and Andhra Pradesh, which have started receiving monsoon rains. In India, the dynamics of cotton planting are shifting regionally. Telangana is expected to see an increase in cotton acreage as some chilli farmers are likely to switch to cotton due to weaker prices in the spice crop. Conversely, North India is facing a potential decrease in cotton acreage due to challenges such as increased pest infestations and rising labor costs. Internationally, the US cotton projections for the 2024/25 season show higher beginning and ending stocks compared to previous forecasts, with stable production, domestic use, and exports. The global balance sheet for cotton in the same period reflects higher beginning stocks, production, and consumption, with world trade remaining unchanged. Ending stocks are projected to increase, influenced by adjustments in production and consumption across various regions. Technically, the Cottoncandy market is experiencing fresh buying momentum, with a notable 1.87% increase in open interest to settle at 382 contracts. Prices surged by 590 rupees, indicating strong bullish sentiment. Support levels are identified at 56,520, with potential downside to 56,070 if support is breached. Resistance is currently at 57,210, and a break above this level could see prices testing 57,450.
 

Trading Ideas:
* Cottoncandy trading range for the day is 56070-57450.
* Cotton gains amid delay in arrival of shipments from US, Brazil, triggers demand for Indian fibre.
* China's agriculture ministry raised its forecast for cotton imports in the 2023/24 crop year by 200,000 metric tons
* The 2024/25 U.S. cotton projections show higher beginning 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 experienced a minor decline of -0.29% to settle at 18300, primarily driven by profit booking after recent gains fueled by farmer withholding of stocks in anticipation of higher prices. However, the upside was capped due to increased supplies marking the end of the harvesting season. The prevailing heat wave across India poses a threat to crop yields, exacerbating the supply crunch and providing underlying support to prices. The India Meteorological Department's forecast of continued hot weather suggests limited relief, with southern regions experiencing significantly below-normal rainfall in April. The Ministry of Agriculture and Farmers’ Welfare’s estimate for 2023-24 indicates a reduction in turmeric production to 10.74 lakh tonnes from 11.30 lakh tonnes the previous year. This decline, coupled with demand destruction as prices surged, has influenced market dynamics. Key turmeric growing regions like Sangli, Basmat, and Hingoli are witnessing strong demand for quality produce amidst expectations of expanded sowing areas in the current year. In terms of trade dynamics, turmeric exports in April 2024 decreased by 19.07% compared to March 2024 and by 27.98% compared to April 2023. Conversely, imports surged in April 2024, rising by 192.36% from March 2024 and by 570.31% from April 2023, indicating shifting global demand patterns and domestic market dynamics. Technically, the turmeric market saw long liquidation as open interest dropped by 1.64% to settle at 21050 contracts, paralleled by a price decline of -54 rupees. Current support levels are identified at 18100, with a potential test of 17902 if breached. Resistance is expected around 18448, with a breakout potentially pushing prices towards 18598.
 

Trading Ideas:
* Turmeric trading range for the day is 17902-18598.
* Turmeric settled flat on profit booking after prices gained as farmers are holding back stocks.
* 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 18220.25 Rupees dropped by -0.07 percent.


Jeera
Jeera prices saw a slight decline of -0.18% to settle at 28,245 amid expectations of higher production in the upcoming season, which could potentially weigh on prices. Despite this, the downside was limited due to robust domestic and export demand coupled with tight global supplies. Farmers holding back their stocks in anticipation of better prices also supported the market. The current jeera production outlook for the season suggests a significant increase of 30% to reach 8.5-9 lakh tonnes, driven by substantial expansions in cultivation areas in Gujarat and Rajasthan. Gujarat alone saw a remarkable 104% increase in sowing area, while Rajasthan recorded a 16% rise. Globally, cumin production has surged, notably in China where output doubled due to favorable pricing conditions from the previous year. Similarly, countries like Syria, Turkey, and Afghanistan are expected to ramp up production with new crops anticipated by June and July, contributing to a potential oversupply scenario and downward pressure on prices. In the export market, April 2024 showed a notable increase in jeera exports compared to both March 2024 and April 2023, reflecting strong international demand despite local production pressures. However, the overall export performance for 2023 was lower due to domestic price surges impacting competitiveness. Technically, the jeera market is currently under fresh selling pressure with a 4.98% increase in open interest, settling at 3,291 contracts, while prices dipped by -50 rupees. Support levels are identified at 27,980, with potential downside to 27,710 if support is breached. Resistance stands at 28,460, and a break above could lead prices towards 28,670.
 

Trading Ideas:
* Jeera trading range for the day is 27710-28670.
* 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 28938 Rupees dropped by -0.33 percent.

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views.