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Investment Guru India 2018-07-10 12:32:46

Gold

Gold on MCX settled up 0.19% at 30617 prices inched up in yesterday’s session tracking firmness from Comex Gold prices which gained 0.2 percent higher at $1,256.85 an ounce as the dollar hovered close to a 3-1/2-week low after U.S. jobs data showed an increase in the unemployment rate and slower wage growth. Gold notched a slight gain for last week, after a mostly upbeat U.S. jobs report was seen keeping the Federal Reserve on a path toward gradually higher interest rates, moving at no faster a pace than long trend expectations for markets.

Yet, gold futures at the start of last week had hit their lowest levels of 2018, knocked lower by a strengthening dollar. The U.S. economy created more jobs than expected in June, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases this year. Meanwhile Gold demand also has been hurt by the fear that a trade spat may hurt Beijing’s economy, which already has shown signs of decelerating in recent months.

Gold was sold at a premium in India this week after a drop in domestic prices boosted demand, while buyers elsewhere in Asia were sidelined, waiting to see how the escalating trade tensions between the United States and China would evolve. Holdings of SPDR Gold Trust fell 0.15 percent to 802.24 tonnes on Friday. Now day ahead Key factors to watch today include China's consumer price index (CPI) and producer price index (PPI) in June, as well as the ZWE economic sentiment index for eurozone and Germany in July. Technically now Gold is getting support at 30552 and below same could see a test of 30487 level, And resistance is now likely to be seen at 30730, a move above could see prices testing 30843.

Trading Ideas:

*  Gold trading range for the day is 30487-30843.

*  Gold rose as investors covered their short positions and the dollar slipped to its weakest since mid-June, while lingering U.S.-Sino trade tensions supported the bullion as well.

*  The U.S. economy created more jobs than expected in June, but steady wage gains pointed to moderate inflation pressures.

*  Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell 0.18 percent to 800.77 tonnes on Monday.

Silver

Silver on MCX settled up 0.3% at 39885 on a softer dollar and threat of a full-blown trade war after US tariffs on $34 billion worth of Chinese goods took effect on Friday. Prime Minister Theresa May's foreign minister and Brexit negotiator quit on Monday in protest at her plans to keep close trade ties with the European Union after Britain leaves the bloc, stirring rebellion in her party's ranks. Britain's ramshackle exit from the EU could damage economic growth in the euro zone, European Central Bank policymaker Ewald Nowotny said.

The Bank of Japan maintained its upbeat economic assessment for all nine regions of the country but some areas saw companies fret about rising costs from labour shortages, a sign that a tightening job market could constrain business activity. Germany and China signed a raft of commercial accords worth some 20 billion euros ($23.5 billion) on Monday, with their leaders reiterating commitments to a multilateral global trade order despite a looming trade war with the United States. Last Friday’s jobs report showed wage inflation increasing less than forecast, easing the pressure on the Federal Reserve to take a more aggressive path on policy tightening.

Higher interest rates tend to weigh on demand for bullion, which doesn’t bear interest, in favor of yield-bearing investments. In a session with no major economic reports, investors looked ahead to inflation data later in the week with the producer price index to be released on Wednesday, followed by the consumer price index a day later. Technically now Silver is getting support at 39770 and below same could see a test of 39655 level, And resistance is now likely to be seen at 40085, a move above could see prices testing 40285.

Trading Ideas:

*  Silver trading range for the day is 39655-40285.

*  Silver gained on a softer dollar and threat of a full-blown trade war after US tariffs on $34 billion worth of Chinese goods took effect on Friday.

*  President Donald Trump said the United States may ultimately impose tariffs on more than a half-trillion dollars' worth of Chinese goods.

*  Data showed the US unemployment rate increased and wages grew less than forecast in June even as the economy created more jobs than expected.

Crudeoil

Crudeoil on MCX settled down -0.51% at 5049 as Canada's Syncrude operations are set to resume activity sooner than expected, while signs of rising U.S. output added to concerns. Suncor Energy said its Syncrude oil sands project in Canada would resume some production in July, sooner than expected, and hit full capacity in September, following an outage last month that disrupted total output. Cushing inventories fell to 27.78 million barrels for the week ended June 29, according to the Energy Information Administration. The tentative start to the week for WTI crude oil prices emerged as investors continued to weigh the impact on global crude stockpiles of ongoing supply outages in Libya against increased output from OPEC producers.

Libya's national oil output has dropped to 527,000 barrels per day (bpd) from a high of 1.28 million bpd in February, the head of the National Oil Corporation said on Monday. In a bid to prevent a global crude supply shortage – amid rising oil demand and ahead of U.S. sanctions on Iran – Saudi Arabia reportedly raised output by 458,000 barrels a day (bpd) in June from the prior month. But market participants continue to expect that oil demand will outstrip supply as major oil producing countries have little spare capacity.

Investors continued to digest data released Friday from Baker Hughes showing the number of U.S. oil drilling rigs in operation rose by 5 to 863 in the week to June 29. Rising U.S. rig counts – widely viewed as a sign of increased activity in the sector – has shifted the focus to domestic crude output growth. Technically now Crudeoil is getting support at 5010 and below same could see a test of 4970 level, And resistance is now likely to be seen at 5094, a move above could see prices testing 5138.

Trading Ideas:

*  Crudeoil trading range for the day is 4970-5138.

*  Crude oil remained under as Canada's Syncrude operations are set to resume activity sooner than expected, while signs of rising U.S. output added to concerns.

*  Iran's oil minister on Saturday accused U.S. President Donald Trump of insulting OPEC by ordering it to increase production and reduce prices.

*  "Trump's order to OPEC members to increase production is a great insult to those governments and nations, and destabilises the market."

Naturalgas

Naturalgas on MCX settled down -1.12% at 194.50 on fresh selling while prices are battling between concerns of lower than normal storage and the lingering hot weather along with complacency that current production levels will eventually overtake any shortages before the winter. While Hot high pressure will build back across the eastern US the next few days with highs of upper 80s to 90s returning to Chicago to NYC. The rest of the country remains very warm to hot with highs of upper 80s to 100s, hottest over the California, the Southwest, and Texas.

A weather system with showers and cooling will sweep across the Great Lakes and Northeast Thursday and Friday, easing national demand from high to moderate. However, hot high pressure will return across the North & East next weekend to again dominate most of the country. Overall, demand will be HIGH. Last week on Friday, the U.S. Energy Information Administration reported that U.S. supplies of natural gas rose by 78bcf for the week-ended June 29. This was slightly above the estimate of 75 Bcf. Total stocks now stand at 2.152tcf, down 717 Bcf from a year ago, and 493 Bcf below the five-year average, the EIA said.

Last year, total stocks stood at 2.869 Tcf. The five-year average is at 2.645 Tcf. The latest production figures show it running more than 7 Bcf/d higher year/year. Now technically market is under fresh selling as market has witnessed gain in open interest by 32.25% to settled at 4158 while prices down -2.2 rupees, now Naturalgas is getting support at 193.2 and below same could see a test of 192 level, And resistance is now likely to be seen at 196.5, a move above could see prices testing 198.6.

Trading Ideas:

*  Naturalgas trading range for the day is 192-198.6.

*  Natural gas dropped to as production hit another record high and forecasts for less hot weather and demand during over the next two weeks than previously expected.

*  In recent months, the biggest factor affecting the gas market has been speculation on whether production, which is at record levels.

*  Production in the Lower 48 U.S. states averaged a record high 80.4 billion cubic feet per day (bcfd) over the past 30 days.

Copper

Copper on MCX settled up 1.18% at 436.70 gained on short covering tracking LME copper which rebounded from a near one-year low hit in the session before, as a weak dollar forced short holders to cover positions amid simmering trade war tensions. Upside will be capped as slow global demand growth and increasing supply constraints should lead to tighter markets heading into 2019. LME Copper rallied 1.8 percent to $6,392 after prices slumped to $6,221.50 a tonne on Friday, which was the weakest since late July 2017.

Shanghai Futures Exchange copper also rebounded, rising 1.5 percent to 49,990 yuan ($7,552) a tonne. The U.S. economy created more jobs than expected in June, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases this year. The global economy is starting to show signs of strain from the “America First” push of U.S President Donald Trump who will hear renewed pleas to step back from a broader trade war when he visits Europe in the coming week. While Wall Street has taken the China-U.S. tariffs enacted on Friday in its stride so far, but investors are on alert for a ramp-up in the trade conflict.

Now ahead of Key factors to watch today include China's consumer price index (CPI) and producer price index (PPI) in June, as well as the ZWE economic sentiment index for eurozone and Germany in July. Technically market is under short covering as market has witnessed drop in open interest by -7.88% to settled at 22544 while prices up 5.1 rupees, now Copper is getting support at 434.2 and below same could see a test of 431.7 level, And resistance is now likely to be seen at 439.1, a move above could see prices testing 441.5.

Trading Ideas:

*  Copper trading range for the day is 431.7-441.5.

*  Copper rebounded as a weak dollar forced short holders to cover positions amid simmering trade war tension.

*  China’s foreign exchange reserves unexpectedly rose in June, bolstered by an increase in the value of its U.S. Treasury holdings in an otherwise volatile month for Chinese markets.

*  Labor negotiations at BHP Billiton Plc Escondida copper mine in Chile, entering into the final three weeks before a 30-month contract expires at the end of July.

Zinc

Zinc on MCX settled down -2.65% at 185.55 tracking weakness from LME zinc prices which slipped 1.1 per cent to $US2705 broadly impacted by trade worries and volatile market conditions. Last night the US dollar index fell below 94 on weaker-than-expected salary data, but closed slightly up from the previous trading day, given a declining euro on political turmoil in London overnight. Base metals mostly rose but with limited momentum with pressure from the China-US trade conflicts. LME copper led the gains and closed over 1.5% higher, aluminium, tin, and nickel grew nearly 1%, while zinc lost over 2%, and lead edged down.

While China's foreign exchange reserves rose $1.51 billion in June to $3.11 trillion, compared with the expected $3.1 trillion, central bank data showed on Monday. The small increase marked a rebound after two consecutive months of decline. Meanwhile the global economy is starting to show signs of strain from the “America First” push of U.S President Donald Trump who will hear renewed pleas to step back from a broader trade war when he visits Europe in the coming week. Wall Street has taken the China-U.S. tariffs enacted on Friday in its stride so far, but investors are on alert for a ramp-up in the trade conflict.

Now ahead of Key factors to watch today include China's consumer price index (CPI) and producer price index (PPI) in June, as well as the ZWE economic sentiment index for eurozone and Germany in July. Technically market is under fresh selling as market has witnessed gain in open interest by 44.01% to settled at 9070, now Zinc is getting support at 183.3 and below same could see a test of 181.1 level, And resistance is now likely to be seen at 189.7, a move above could see prices testing 193.9.

Trading Ideas:

*  Zinc trading range for the day is 181.1-193.9.

*  Zinc prices dropped as the market looked ahead to rising supplies, a narrowing deficit and global trade tensions that are expected to weigh on metals.

*  China’s broad economic growth was expected to ease to around 6.6 percent in the second half of this year, the State Information Center said.

*  Zinc producer Red River Resources updates on June quarter Thalanga operation Zinc Concentrate production was up 24% from Q3

Nickel

Nickel on MCX settled up 0.56% at 964.30 rallied on Monday on fresh buying alongside equities as worries about economic growth receded, but an escalating trade dispute between the United States and China is expected to cap prices. A lower U.S. currency helped to support industrial metals as this makes dollar-denominated commodities cheaper for holders of other currencies. This relationship is used by funds to generate buy and sell signals from numerical models. Nickel is still up by 62% compared to its June 2017 lows, mostly on the back of falling inventories in top consumer China.

On the Shanghai Futures Exchange nickel stocks have dropped for 24 straight weeks while LME warehouses are the emptiest since mid-2014. And recent weakness has not altered a bullish longer term outlook for nickel with industry research house Wood Mackenzie adding its voice to the plus-column in a note out on Monday. While stainless steel production – currently nearly 80% of total demand for nickel – is expected to stay solid over the coming years, booming demand from the electric vehicle battery market is set to fundamentally alter the structure of the industry.

Last night the US dollar index fell below 94 on weaker-than-expected salary data, but closed slightly up from the previous trading day, given a declining euro on political turmoil in London overnight. Now ahead of Key factors to watch today include China's consumer price index (CPI) and producer price index (PPI) in June, as well as the ZWE economic sentiment index for eurozone and Germany in July. Technically market is getting support at 957.3 and below same could see a test of 950.4 level, And resistance is now likely to be seen at 973.3, a move above could see prices testing 982.4.

Trading Ideas:

*  Nickel trading range for the day is 950.4-982.4.

*  Nickel gained on falling inventories and potential stimulus plans, with focus shifting back to market fundamentals and away from the festering Sino-U.S. trade war.

*  Trade tensions between the US and China, the European Union, and Mexico may cause an impact on the trade prospects for the rest of the year.

*  Investor concerns eased over excessive supplies as demand for steel products is typically weak during China’s summer.

Aluminium

Aluminium on MCX settled up 0.52% at 144.60 gained on short covering tracking firmness from LME aluminium prices which registered a second consecutive day of increase last night. It stood firm above the five-day moving average, jumping to a high of $2,134.5/mt with resistance at the 10-day moving average. Its inventory across LME warehouses rose 9,275 mt to 1.12 million mt. Earlier this year Aluminium prices gained as a far bigger hit to supply came on April 6, when the Trump Administration imposed sanctions on Russia's Oleg Deripaska and his Rusal aluminium empire.

Russia was the second largest supplier of commodity-grade aluminium to the U.S. in both 2016 and 2017. Imports of Russian metal were 600,000 tonnes and almost 700,000 tonnes respectively in the last two years. The impact on the premium was as significant as the March tariffs confirmation. Indeed, in terms of further-dated CME premium contracts, the impact was actually greater, the six-month futures contract jumping more than 13 percent in a day. The LME aluminium price went supernova at the same time, three-month metal soaring to a near 7-year high of $2,718 per tonne.

LME aluminium has since corrected back down to a current $2,105 as the market prices in a deal between the U.S. Treasury and Rusal to allow sanctions to be listed. But the premium hasn't corrected for the good reason that there is a lot of Russian-brand aluminium already in the United States thanks to those high imports over the last two years. Some end-users may be happy using it. Technically market is getting support at 142.9 and below same could see a test of 141.2 level, And resistance is now likely to be seen at 146.4, a move above could see prices testing 148.2.

Trading Ideas:

*  Aluminium trading range for the day is 141.2-148.2.

*  Aluminium gained amid investor expectations for a decline in output following a statement from China pledging to shut down some smelters.

*  China's inventory of primary aluminium across eight major markets, including SHFE warrants, fell 6,000 mt over the weekend to stand at 1.83 million mt.

*  Russian aluminium and copper exports rose in the first five months of 2018, while nickel exports declined, official customs data showed.

Mentha oil

Mentha oil on MCX settled up by 4% at 1438 due to bullish demand outlook from domestic market as well as exporters. Spot markets are also witnessing strong consumption demand amid restricted supplies. Bumper crop harvest has been discounted in the market and market is moving upwards on rising demand from end users. The Multi Commodity Exchange of India will double the total additional margin to 10% on both buy and sell side of all running as well as yet-to-be-launched contracts of mentha oil from Monday.

Despite the peak season of harvest in June, prices of mentha oil have risen over 20% since the beginning of June as farmers held back stocks. Farmers are holding back stocks as they are expecting prices to rise to 1,800 rupees a kg in the next two-three months. As per preliminary estimates, acreage under mentha crop will rise this year as the farmers are encouraged by higher price in recent past. As per trade sources, all the major markets are likely to witness higher inflow of the produce. There could be chances of crop damage to certain extend due to unfavourable weather condition.

Besides, farmers are likely to hold back the stocks as the present prices are not remunerative for them. However, in recent years, the growth in production and consumption of synthetic mentha has influenced the demand for natural mentha. Mentha oil spot at Sambhal closed at 1721.40 per 1kg. Spot prices was up by Rs.155.40/-.Technically market is under short covering as market has witnessed drop in open interest by -0.72% to settled at 1378 while prices up 55.3 rupees, now Menthaoil is getting support at 1411.6 and below same could see a test of 1385.2 level, And resistance is now likely to be seen at 1451.2, a move above could see prices testing 1464.4.

Trading Ideas:

*  Menthaoil trading range for the day is 1385.2-1464.4.

*  Mentha oil spot at Sambhal closed at 1721.40 per 1kg. Spot prices was up by Rs.155.40/-.

*  Mentha oil prices rallied due to bullish demand outlook from domestic market as well as exporters.

*  Spot markets are also witnessing strong consumption demand amid restricted supplies.

*  Bumper crop harvest has been discounted in the market and market is moving upwards on rising demand from end users.

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