Gold 31562/Silver 42260 / Crude Oil 3140 / Copper 317.85 /Soyabean 3793/
Top Gainers
Natural Gas – gains 1.14% LTP – 186.60
Gold – gains 0.51% LTP – 31562.00
Copper – gains 0.17% - 317.85
Top Losers
Crude Oil – Losses 3.86% LTP – 3140.00
Aluminium – Losses 1.15% LTP – 107.90
Zinc – Losses 1.06% LTP – 135.65
MCX/ COMEX
Bullions
Gold remains near 2-year highs, amid flight to safety in wake of Brexit
Gold closed slightly higher on Monday, remaining near two-year highs, as investors continued to engage in a flight to safety amid the fallout of last week's stunning decision by voters in the U.K. to approve a departure from the European Union.
On the Comex division Gold traded between $1,321.50 and $1,339.30 an ounce, before closing at $1,325.25, up 2.85 or 0.22% on the session. It came one session after Gold soared nearly $100 an ounce to $1,362.45, as markets worldwide were jolted by a surprising outcome in the historic Brexit referendum in the wee hours of Friday morning. Since opening the year near $1,075 an ounce, the precious metal has soared nearly 25% over the calendar year. With three days left in the month of June, Gold is on pace for its strongest first half of a year in more than a decade.
In London, U.K. Prime Minister David Cameron took steps to calm voters nationwide and markets overall after the British Pound fell sharply by more than 3% to tumble to fresh 31-year lows against the U.S. Dollar. At the close of euro area markets, GBP/USD stood at 1.3204, down 3.45%. The Pound Sterling has fallen by approximately 10% since it became apparent that the Leave campaign would prevail last Friday.
In an address before Parliament on Monday afternoon, Cameron emphasized that while the result of the referendum was not the outcome he preferred, it is a decision that he will respect along with the rest of his cabinet. Cameron also said that the U.K. has created a new civil service designed specifically for withdrawal discussions from the EU. While Cameron said last Friday that he plans to leave office by October, his administration announced on Monday that a new prime minister will be put in place by September 2. Cameron emphasized that the domestic economy remains on solid footing due to low, stable inflation and a comparatively low unemployment rate.
In addition, he told Parliament that the financial system is "substantially more resilient" than it was six years, as capital requirements remain 10 times higher than from the Financial Crisis. The U.K. prime minister also reiterated that the Bank of England has set aside an additional £250 billion in liquidity to support the nation's banks and financial markets.
"It is clear that markets are volatile, some companies are considering their investments and we know this will be far from plain sailing. However, we should take confidence from the fact that Britain is ready to confront what the future holds for us from a position of strength," Cameron said in his speech.
"The markets may not have been expecting the Referendum results but the Treasury, the Bank of England and our other financial authorities have spent the last few months putting in place robust contingency plans. The bank stress tests have shown that UK institutions have enough capital and liquidity reserves to withstand a scenario more severe than the country currently faces."
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rallied by more than 1% to hit a fresh three-month high at 96.86, before falling back slightly in U.S. afternoon trading. Despite the stellar two-day rally, the index is still down more than 3% since early-December.
Dollar denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for August delivery fell 0.043 or 0.24% to $17.70 an ounce.
Energy
Oil prices crashed as Brexit shock continue to rattle the market
Oil prices turned lower on Monday as markets continued to be hit by the fallout of Britain’s shock vote to quit the European Union, which sent investors scrambling into safe haven assets. Global benchmark Brent was trading at $48.18 a barrel on Monday, down 89 cents from its last settlement.
U.S. crude for delivery in August was down 98 cents at $46.62 a barrel.
Both contracts posted their largest one-day percentage decline since February on Friday, falling around 5%.
Global markets plunged on Friday as the decision by the U.K. to exit the EU shocked investors and traders around the world expecting the opposite result.
Oil prices had risen earlier Monday as analysts said Brexit would have little impact on supply and demand in the global oil market.
The U.K. accounts for less than 2% of the world’s oil demand.
But the pound fell to fresh 31-year lows on Monday, sending the dollar soaring.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.96% at 96.55.
A stronger dollar makes oil more expensive for traders using other currencies, typically pressuring prices lower. Also Friday, Baker Hughes said that the number of rigs drilling for oil in the U.S. fell last week for the first time in four weeks.
The rising rig count in recent weeks had fuelled concerns that price of around $50 a barrel could encourage U.S. producers to increase output and flood the still-oversupplied oil market. Oil prices have rebounded more than 80% after dropping to 13-year lows in the first quarter of 2016 on the view that the global supply glut is shrinking.
Agri Commodity
Monsoon in India: IMD says deficiency plunges to 18%
More than 25% excess rainfall over normal on Wednesday has pulled down the overall deficiency in the quantum of monsoon rainfall to only 18% from 25% reported a week ago. With monsoon rains expected to advance further into parts of northern and western regions in the next couple of days, overall deficiency would fall further, an India Meteorological Department (IMD) official on Thursday said. The conditions are favourable for further advance of southwest monsoon into remaining parts of west Madhya Pradesh, west Uttar Pradesh, most parts of Haryana, Chandigarh, Delhi and Punjab and some parts of East Rajasthan during next three to four days,” IMD said its latest bulletin. The IMD has stated that the average quantum of rainfall during June 1–June 22 has been 85.5 mm against the normal range of 103.8 mm, thus making it 18% lower than the benchmark. (Source: FE)
More than enough sugar in the country to meet domestic requirement
There is more than enough sugar in the country to meet the domestic requirement. Even in coming sugar season 2016-17, there would be no shortage of domestically produced sugar in India. During the current Sugar Season 2015-16, India had started with a carryover stock of 9 mt of sugar. The production of sugar has been estimated at about 25.1 mt in the current sugar season while demand about 25.5 million MT. Exports being low, the stock position at the close of the current sugar season (Sept. 2016) will stand at 7mt which will be carried forward for the next sugar season 2016-17. Thus with the closing stock of about 7-7.5 mt, and the estimated production of about 23 - 24 mt, during 2016-17, the total availability of sugar during 2016-17 season will be over 31 million tonnes, against the domestic demand of about 26 million tonnes. (Source: PIB)
Soybean prices to remain strong
India is the world’s fifth largest producer of soybean. However, its production is driven by increased acreage and productivity continues to remain low at 0.67 tonnes/hectare compared to the global average of 2.6 tonnes/hectare. Because of drought, India produced 7.38 mt of soybean in 2015-16 and 8.71 mt in 2014-15 compared to 12.18 mt in 2012-13. The USDA forecasts 11.7 mt of soybean production in 2016-17 on abovenormal monsoon forecasts. However, a portion of soybean area (10 per cent) is likely to be lost to kharif pulses in 2016-17. Last year’s soya acreage stood at 11.06 million hectares. Export of soymeal suffered a major setback in FY 2015-16 due to uncompetitive soymeal prices. In FY 2015-16, India could export only 70,820 tonnes of soymeal, down 89 per cent from 2014-15 (659,593 tonnes). Soybean prices are likely to remain strong on concerns about weather conditions in the US impacting yield as well as lower production in Argentina and some parts of Brazil. Higher Chinese demand from its animal feed industry will also provide support. Reduced acreage in India is another booster for soybean. However, the extent of upside looks limited on an above-normal monsoon forecast that may improve acreage and yield, and bleaker soymeal export prospects. Rising soymeal prices may also see users switch to other alternatives. (Source: HBL)
Inadequate production spikes prices of pulses:
CEA Arvind Subramanian Chief Economic Advisor Arvind Subramanian today said under-cultivation of pulses and their inadequate production have led to spike in prices, but vegetable prices have more to do with market forces than production. Besides, there has been a shift in dietary habit in which pulses have become core of food habits among the Indian people, but there was inadequate production to meet the demand, Subramanian told an international conference here. (Source: ET)
Cotton flaring on supply crunch, import from Pak to cool prices
It’s a role reversal of the sort. Nearly five-six months ago, Pakistan was buying cotton from India. Now, India is up to importing cotton from Pakistan. The reason--output shortage---is the same on both the occasions. Cotton productions in two neighbouring countries had been hit by bad weather. But that’s not the end of the story. There has been a recent twist. The all-Pakistan textile mills association (Aptma) has recently urged its government in Pakistan not to allow cotton exports from Pakistan to India, as it would hurt the domestic textile industry there. Back home in India, cotton prices were soaring, thanks to a supply crunch. According to the Cotton Corporation of India (CCI), cotton prices have gone up to Rs 40,000 per candy as compared with Rs 34,000 percandy in April. Cotton prices have risen by Rs 2,000 per candy recently. This, in turn, forced India, the world's biggest cotton producer, to opt for importing 20,000 bales from Pakistan within this month. Interestingly, the landed cost of already imported cotton from Pakistan is lower than local prices. India has so far imported about 1.2 million bales in 2015/16 and needs another 400,000 bales before the new crop starts arriving from the end of September. Earlier this year, India had also exported nearly 6.5 million bales of cotton this season, with Pakistan accounting for nearly 2 million bales. (Source: DFC)
Technical Levels.
Gold
Gold has a support at 31450 and resistance at 31750.
Break and sustain below 31450 will take to 31200---31050 and then to 30800 mark else it could test its resistance level of 31750 again. Further upside rally will see only close above 31750 mark.
Trade with levels only. More levels will update to our subscribers.
Silver
Silver has support at 42000 and resistance at 43000,
Three consecutive + weekly close above 43000 will take it to 43800-44500 and then to 46000+ mark in days to come else could test its support level of 42000.
Further downside panic can be seen if closes below 42000 mark. Trade with levels only. More levels will update soon.
Crude oil
Crude oil has support at 3130 and resistance at 3200---3270.
Two consecutive close + weekly close below 3130 will take it to 3070---3025 and then to 2940 else could test resistance level of 3200---3270 again.
Further upside rally can be seen if closes above 3270 mark.
Copper
Copper has support at 313 and resistance at 321,
Close below 313 will take it to 309—306 mark in days to come else could test its resistance level of 321 again.
Above 321 will see further upside rally till 325--328 mark. More and more upside rally will see only weekly close below 328.
Trade with levels only
Soyabean (Oct)
Support at 3600 and Resistance at 3800
Fresh selling can initiate only close below 3600 mark. Three consecutive closes + weekly close below 3600 will take to 3450--3380 and then to 3250 mark in days to come else it could test its resistance level of 3800 again
Close above 3800 will see further upside rally till 3880---3940 mark. 3940 act as major hurdle in Soyabean
Trade with levels only
Technical Pick
Buy Natural Gas (July) above 187, Stop loss 184, Target 191++
Economic Data
U.S Final GDP q/q – 06:00 P.M
U.S Final GDP Price Index q/q – 06:00 P.M
CB Consumer Confidence – 07:30 P.M
