IGI Logo

Gold

Gold prices rose by 0.68% to 71,572 as the yield on the US 10-year Treasury note fell toward 4.3%. This drop in yield was driven by a mix of economic data that hinted at the Federal Reserve’s potential policy moves ahead of the key PCE update for May. Notably, the Department of Labor reported a rise in recurring unemployment claims to their highest level since 2021, suggesting a softening labor market and strengthening the case for a rate cut by the Fed in September. Meanwhile, US GDP growth saw a slight upward revision, and durable goods orders unexpectedly increased in May. Additionally, the Reserve Bank of India's gold reserves held overseas dropped to the lowest in six years, with only 47% of the total remaining abroad by the end of March. This shift aligns with a broader trend of central banks repatriating gold amid geopolitical tensions, such as the Russia-Ukraine war. In China, gold imports via Hong Kong fell by 38% in April compared to the previous month, reflecting a slowdown in demand after a robust first quarter. Physical bullion demand in India slowed as gold prices neared record highs, with Indian dealers offering discounts up to $13 an ounce over official domestic prices. In other regions, Singapore and Hong Kong saw gold sold at par to slight premiums, while Japan reported par to $0.5 premiums. Technically, the gold market is under short covering, with open interest dropping by 1.35% to 14,210, while prices rose by 483 rupees. Gold finds support at 71,065, with a potential test of 70,555 if it falls below this level. Resistance is anticipated at 71,890, and a move above this could see prices testing 72,205.
 

Trading Ideas:
* Gold trading range for the day is 70555-72205.
* Gold gains as yield on the US 10-year Treasury note fell toward the 4.3% mark
* Markets parsed a batch of economic data for hints on the Fed’s policy stance ahead of tomorrow’s key PCE update for May.
*  Data showed that recurring unemployment claims rose to their highest level since 2021 in the second week of June.


Silver
Yesterday, silver settled up by 0.1% at 87,048 as the dollar index fell, influenced by economic data suggesting the Federal Reserve might have room to cut interest rates this year. Initial jobless claims fell for the second consecutive week, but continuing claims rose to their highest level since 2021, indicating a cooling labor market. Orders for non-defense capital goods excluding aircraft unexpectedly dropped by 0.6%, compared to expectations of a 0.1% rise. GDP growth, however, was revised slightly higher to 1.4% from 1.3% in the second estimate. The likelihood of a rate cut in September is around 64%, with traders anticipating the Fed may reduce borrowing costs twice this year. Fed Governor Michelle Bowman reiterated her view that inflation will decline further with the policy rate held steady. Pending home sales in the United States decreased by 2.1% in May 2024, extending the 7.7% slump from April, contrary to market expectations of a 2.5% increase. Traders are currently pricing in about a 62% chance of a rate cut in September, according to the CME FedWatch Tool. In India, silver imports in the first four months of 2024 have already surpassed the total for all of 2023, driven by rising demand from the solar panel industry and investor bets on silver outperforming gold. Almost half of this year's imports have come from the United Arab Emirates, benefiting from lower import duties. Technically, the market is under short covering, with a significant drop in open interest by 18.64% to settle at 10,189 contracts while prices rose by 83 rupees. Silver is currently supported at 86,440, with potential testing of 85,825 levels if it falls below this support. Resistance is expected at 87,680, with a potential move above this level seeing prices testing 88,305.
 

Trading Ideas:
* Silver trading range for the day is 85825-88305.
* Silver gains as dollar fell after a batch of economic data reinforced the view the Fed has room to cut interest rates this year.
* Initial jobless claims fell for a second week but continuing claims rose to 2021-highs.
* Fed Bowman reiterated her baseline view that "inflation will decline further with the policy rate held steady."


Crudeoil
Crude oil prices settled virtually unchanged at 6804, reflecting a mixed sentiment influenced by various market dynamics. A surprise increase in U.S. stockpiles raised concerns about sluggish demand from the largest oil consumer, counteracting fears of potential disruptions in Middle East supplies due to escalating tensions in Gaza. These geopolitical tensions provided some support to oil prices, balancing out the bearish impact of increased inventories. Support for oil prices also stemmed from expectations of robust demand during the upcoming summer driving season in the U.S. However, economic concerns surfaced with a decline in U.S. consumer confidence and a strengthening U.S. dollar following hawkish comments from Federal Reserve officials, adding pressure on oil prices. The U.S. Energy Information Administration (EIA) reported a build in crude oil inventories by 3.6 million barrels to 460.7 million barrels for the week ending June 21, contrary to expectations of a drawdown. Gasoline inventories also saw a significant rise, climbing by 2.7 million barrels to 233.9 million barrels, indicating softer demand or higher production compared to consumption. In contrast, distillate stockpiles fell slightly by 0.4 million barrels to 121.3 million barrels. Technically, the crude oil market experienced fresh selling pressure with an increase in open interest by 0.45%, settling at 4901 contracts, while prices edged lower by 1 rupee. Key support levels are identified at 6744, with potential downside testing towards 6685. On the upside, resistance is expected at 6854, with a bullish breakout potentially pushing prices towards 6905.
 

Trading Ideas:
* Crudeoil trading range for the day is 6685-6905.
* Crude oil settled flat as a surprise build in U.S. stockpiles fuelled fears about slow demand from top oil consumer
* Money managers cut their net long U.S. crude futures and options positions in the week to June 18
* Crude stocks at the Cushing, Oklahoma, delivery hub fell by 226,000 barrels in the week, the EIA said.


Naturalgas
Natural gas prices closed lower by -1.9% at 226.8, driven by indications that producers are gradually increasing output to meet rising summer demand, despite forecasts of a prolonged heat wave across the United States. This decline occurred amid concerns over high storage levels, which continue to exceed historical norms. In the Lower 48 U.S. states, natural gas output averaged 98.5 billion cubic feet per day (bcfd) in June, showing a slight increase from May's 25-month low of 98.1 bcfd but still below the record high of 105.5 bcfd seen in December 2023. However, daily output recently dipped to a two-week low of 97.6 bcfd, indicating some variability in production levels despite overall seasonal demand pressures. Meteorological forecasts suggest persistently hotter-than-normal weather across the country through mid-July, driving substantial demand from power generators to meet air conditioning needs. Despite this demand, flows to major U.S. LNG export terminals have slightly eased compared to previous months, suggesting a nuanced balance between domestic consumption and export demands. The U.S. Energy Information Administration reported an addition of 52 billion cubic feet of gas into storage during the week ending June 21, 2024, slightly below market expectations but marking the 12th consecutive week of seasonal increases. Total gas in storage now stands at 3,097 Bcf, significantly above both last year's levels by 314 Bcf and the five-year average by 528 Bcf, highlighting ample supply conditions. Technically, the natural gas market saw fresh selling pressure with a 13.02% increase in open interest, settling at 22,708 contracts, while prices declined by -4.4 rupees. Support levels for natural gas are identified at 223.4, with potential downside testing at 220.1, while resistance is expected around 231.5, with potential upward movement toward 236.3 if prices breach this level.
 

Trading Ideas:
* Naturalgas trading range for the day is 220.1-236.3.
* Natural gas fell on signs producers were slowly boosting output to meet rising summer demand.
* US utilities added 52 billion cubic feet of gas into storage
* Speculators increased net long futures and options positions on the New York Mercantile and Intercontinental Exchanges.



Copper
Copper prices settled down by 0.78% at 834.25 yesterday, reflecting concerns over global demand uncertainty and rising inventories. The market sentiment was influenced by disappointing PMI reports indicating a bleak outlook for manufacturing in major economies, compounded by signs of slowing industrial demand in China, the world's largest consumer of copper. Chinese copper inventories remained near their highest levels since 2020 in June, despite expectations of a seasonal drawdown, as domestic production continued robustly, particularly from increased smelted output from scrap. Inventories in Shanghai Futures Exchange-monitored warehouses showed a slight decline last week but still stood significantly higher at 322,910 tons compared to earlier in the year. Meanwhile, LME-approved warehouse stocks surged over 60% since mid-May to 167,825 tons, largely influenced by deliveries from Asian warehouses, primarily sourced from China. This surge contributed to cash copper prices trading at a steep discount of around $135 per ton against the three-month contract, highlighting market concerns about oversupply. The global refined copper market reported a surplus of 13,000 metric tons in April, a decrease from March's surplus of 123,000 metric tons, according to the ICSG. China's unwrought copper imports in May unexpectedly rose by 15.8% year-on-year, surpassing market expectations despite subdued physical consumption amid record-high copper prices. Imports totaled 514,000 metric tons, marking a 17.4% increase from the previous month, suggesting resilient demand despite price pressures. Technically, the copper market saw fresh selling pressure with an increase in open interest by 2.91%, settling at 9513 contracts while prices declined by 6.55 rupees. Key support levels for copper are identified at 830.4, with potential downside testing towards 826.4. Resistance is anticipated at 840.1, with a potential bullish move towards 845.8 if prices breach this level.
 

Trading Ideas:
* Copper trading range for the day is 826.4-845.8.
* Copper prices dropped amid an uncertain global demand outlook and rising inventories.
* Chinese copper inventories also held near their highest since 2020 in June
* The latest PMI reports have so far pointed to a poor outlook for manufacturing in major economies


Zinc
Zinc prices closed marginally lower by -0.13% at 264.9, influenced by weaker-than-expected industrial output in China for May, signaling subdued industrial demand amid contractionary manufacturing PMI figures. Despite these challenges, the downside was limited as market sentiment brightened on expectations of improved demand in China following recent price declines and supportive monetary policies from the People's Bank of China. China's zinc concentrate imports plummeted by 24% in the first four months of the year, reflecting a tightening raw materials market. This decline has been exacerbated by dwindling spot treatment charges for imported zinc concentrates, which are insufficient to cover processing costs for many Chinese smelters. Consequently, Chinese smelters are increasingly turning to domestic sources for zinc supply. Globally, zinc production has faced setbacks, declining by 2% in 2022 and another 1% in 2023. The trend continued into 2024 with a 3% year-on-year drop in the first quarter, according to the International Lead and Zinc Study Group (ILZSG). Additionally, restarts of idled smelter capacity in Europe have further constrained concentrate availability on the spot market. On the London Metal Exchange (LME), zinc stocks have seen a notable increase, rising from 30,475 tons to 255,900 tons since the beginning of 2023, driven partly by inventory churn and financial activities. Despite this, the global zinc market surplus narrowed to 22,100 metric tons in April from 70,100 tons in March, indicating tighter supply-demand dynamics compared to previous months. Technically, the zinc market experienced fresh selling pressure with a 5.7% increase in open interest, settling at 2,558 contracts, while prices declined by -0.35 rupees. Key support levels for Zinc are identified at 263.2, with potential testing at 261.6, while resistance is expected around 266.5, with a possible breakout towards 268.2.
 

Trading Ideas:
* Zinc trading range for the day is 261.6-268.2.
* Zinc dropped as industrial output in China slowed more than expected in May, adding to the signs of poor industrial demand.
* The global zinc market surplus fell to 22,100 metric tons in April from 70,100 tons in March.
* In China, zinc concentrate imports decreased by 24% in the first four months of this year compared to the previous year.


Aluminium
Aluminium prices settled down by 0.81% at 227.95 yesterday, primarily due to indications of ample supply that exacerbated pressure from subdued demand dynamics. The market sentiment was influenced by several factors, including China's reaffirmed commitment to a supportive monetary policy aimed at bolstering economic stability. Despite efforts to stabilize the economy, inventories in Shanghai Futures Exchange-monitored warehouses rose by 2.0% compared to the previous week, reflecting ongoing supply-side challenges. In economic indicators, the US Manufacturing PMI reached a three-month high of 51.7 in June 2024, surpassing expectations and indicating modest expansion in the sector. Meanwhile, China maintained its key lending rates unchanged, as monetary easing measures faced limitations amidst narrowing interest rate margins and a depreciating currency. Global primary aluminium production showed a robust increase of 3.4% year-on-year to 6.1 million tons in May, according to the International Aluminium Institute. China, the world's largest producer, reported a 7.2% rise in aluminium production to 3.65 million tonnes year-on-year in May, contributing significantly to the global output surge. Importantly, China's aluminium imports surged by 61.1% year-on-year in May, attributed largely to increased shipments from Russia amid Western sanctions. Russia significantly ramped up its aluminium exports to China, capitalizing on restrictions imposed by the US and Britain on Russian metal deliveries post-sanctions. Technically, the aluminium market witnessed fresh selling pressure, with open interest rising by 1.88% to settle at 4453 contracts while prices declined by 1.85 rupees. Key support levels for aluminium are identified at 226.9, with a potential test of 225.7 if this support level is breached. Resistance is expected at 230, with a possible upward movement towards 231.9 if prices break above this level.
 

Trading Ideas:
* Aluminium trading range for the day is 225.7-231.9.
* Aluminium dropped amid signs of ample supply magnified the pressure from muted demand.
* Global primary aluminium output rose 3.4% year on year to 6.1 million tons in May
* China aluminium production up 7.2 % to 3.65 mln tonnes in May


Cottoncandy
Cottoncandy prices retreated by -0.71% to settle at 58,540, driven by profit booking following earlier support from delayed shipments from the US and Brazil, which boosted demand for Indian cotton from neighboring mills. Despite this decline, a strong trend in cottonseed prices has helped support natural fiber prices. Meanwhile, kharif 2024 season sowing has commenced in southern states like Karnataka, Telangana, and Andhra Pradesh, aided by the onset of monsoon rains. In Telangana, a shift from chilli farming to cotton is anticipated due to weak prices in the spice crop, potentially increasing cotton acreage. Conversely, North India faces a potential decrease in cotton planting by about a quarter due to increased pest infestations and rising labor costs. This contrasts with the 2024/25 US cotton projections, which show higher beginning and ending stocks despite unchanged production, domestic use, and exports. The forecasted average upland farm price has decreased to 70 cents per pound, influenced by declines in new-crop cotton futures. Globally, the 2024/25 cotton balance sheet reflects increased beginning stocks, production, and consumption, while world trade remains stable. Ending stocks are projected higher, driven by adjustments in production and consumption across various regions. Notably, Rajkot, a significant spot market, saw cotton prices end at 27,571.75 Rupees, up 0.12% despite broader market declines. Technically, the cotton market experienced fresh selling pressure with a 1.36% increase in open interest to 373 contracts, alongside a price decline of -420 rupees. Support levels for Cottoncandy are identified at 58,220, with potential further testing at 57,890. Resistance is anticipated at 58,980, and a breakthrough could see prices testing 59,410.
 

Trading Ideas:
* Cottoncandy trading range for the day is 57890-59410.
* Cotton dropped on profit booking after seen supported amid delay in arrival of shipments from US, Brazil.
* 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
Yesterday, turmeric prices settled down by 0.58% at 17,410 amid increased supplies at the end of the harvesting season. However, the downside was limited as farmers held back stocks in anticipation of further price rises. The prevailing heat wave across India poses a significant threat to crop yields, exacerbating the supply crunch and supporting prices. The India Meteorological Department forecasts continued hot weather, with many regions expecting more heat wave days than usual in May. Southern India received significantly lower rainfall in April, further impacting agricultural output. The Ministry of Agriculture and Farmers’ Welfare's first advance estimate pegs turmeric production for 2023-24 at 10.74 lakh tonnes, down from 11.30 lakh tonnes the previous year. Demand destruction has been noted as prices surged, leading many to adopt a hand-to-mouth approach. Turmeric-growing regions like Sangli, Basmat, and Hingoli are experiencing good demand for quality produce, driven by expectations of increased sowing areas this year. In April 2024, turmeric exports totaled 14,109.09 tonnes, a 19.07% drop from March 2024 and a 27.98% decrease from April 2023. Imports, however, saw a significant rise with 3,588.11 tonnes imported in April 2024, marking a 192.36% increase from March 2024 and a 570.31% rise from April 2023. In the major spot market of Nizamabad, turmeric prices ended at 17,835.6 rupees, down 0.47%. Technically, the turmeric market is under long liquidation, evidenced by a 3.57% drop in open interest to settle at 20,380 contracts while prices declined by 102 rupees. Support for turmeric is currently seen at 17,176, with potential testing of 16,942 levels if this support is breached. Resistance is likely at 17,710, with a move above potentially leading prices to test 18,010.
 

Trading Ideas:
* Turmeric trading range for the day is 16942-18010.
* Turmeric prices dropped amid increase in supplies at the end of harvesting season.
* 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 17835.6 Rupees dropped by -0.47 percent.


Jeera
Yesterday, jeera settled down by 0.4% at 28,990 due to expectations of higher production, which could put downward pressure 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 supported the market. Jeera production is expected to be 30% higher this season, reaching 8.5-9 lakh tonnes, due to a substantial rise in the cultivation area. In Gujarat, the sowing area increased by 104%, and in Rajasthan by 16%. Globally, jeera production has increased significantly, with China leading the surge. China's cumin output rose to over 55-60 thousand tons from the previous 28-30 thousand tons. High prices in the previous season encouraged increased production in Syria, Turkey, and Afghanistan, with new seeds expected in June and July. Turkey anticipates producing 12-15 thousand tons, while Afghanistan's output could double, weather permitting. As these new supplies enter the market, cumin prices are likely to decline. Reduced export trade in cumin also contributes to the price drop, indicating a shift in global market dynamics Trade analysts estimate a significant increase in cumin exports, reaching about 14-15 thousand tonnes in February 2024. In April 2024, around 38,026.96 tonnes of jeera were exported, an 18.37% rise from March 2024 and a 133.55% increase from April 2023. Technically, the market is under long liquidation, with open interest dropping by 0.86% to settle at 2,751 contracts while prices fell by 115 rupees. Jeera is currently supported at 28,740, with potential testing of 28,490 levels if it falls below this support. Resistance is likely at 29,320, with a potential move above this level seeing prices testing 29,650.
 

Trading Ideas:
* Jeera trading range for the day is 28490-29650.
* 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 29197 Rupees dropped by -0.06 percent.

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