Gold 31719/Silver 47487/ Crude Oil 3059/ Copper 317.80 /Soyabean 3788/
Top gainers
Zinc – gains 1.77% LTP -143.77
Silver – gains 1.48% LTP – 47587.00
Nickel – gains 1.37% LTP – 663.70
Top losers
Gold – losses – 0.42% LTP – 31747
Copper – losses 0.36% LTP – 317.90
Lead – losses – 0.33% LTP – 121.85
Commodity Round Up
Bullions
Gold pares losses amid high volatility following robust
U.S. jobs report Gold pared considerable losses amid high volatility in credit and currency markets, as the prospects for a 2016 interest rate hike from the Federal Reserve increased on Friday following reports of robust domestic job gains last month. On the Comex division Gold traded between $1,336.50 and $1,371.35 an ounce, before settling at $1,358.10, down 4.00 or 0.29% on the session. Gold closed lower for the second consecutive session, retreating from 28-month highs of $1,374.90 from earlier this week. Despite the mild losses, the precious metal is still up nearly 7% since voters in the U.K. approved a referendum paving the way for Britain's departure from the European Union late last month. Since opening the year around $1,075 an ounce, Gold has surged more than 28% amid indications of a potential global recession. Gold likely gained support at $1,323.50, the low from June 8 and was met with resistance at $1,391.40 the high from March 17, 2014.
On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics said nonfarm payrolls rose by 287,000 in June, defying expectations for an increase of 180,000 and posting the highest monthly gains in eight months. The struggling labor market demonstrated broad signs of improvement last month following downwardly revised gains of 11,000 in May, providing indications that the weak hiring period in late-Spring could have been an anomaly. Nevertheless, the three-month moving average fell sharply to 147,300, in line with the Fed's expectations, down from 195,700 over the first quarter.
Within the report, the gains were concentrated in leisure and hospitality, health care and social assistance and financial assistance. The leisure and hospitality category added 58,000 positions for the month after remaining relatively flat in May. The telecommunications industry also experienced a snapback, adding 28,000 positions as thousands of Verizon workers returned to work following a labor dispute the previous month. At the same time, the struggling manufacturing sector reported a rare gain, adding 14,000 jobs on the month. Notably, approximately 90% of the job increases in June went to workers aged 55 or above.
Meanwhile, the unemployment rate rose moderately by 0.2 to 4.9%, remaining below the Fed's objective of 5%, while the labor force participation rate inched up by 0.1 to 62.7%. The U-6 Unemployment Rate, which measures workers who are marginally attached to the labor force and are no longer looking for full-time work, fell 0.1 on the month to a seasonally-adjusted 9.6%. By comparison, the Fed's preferred gauge for unemployment, stood at 10.5% a year ago and peaked at 18.0% during the height of the Great Recession.
On Wednesday, the minutes from the Federal Open Market Committee's (FOMC) June meeting depicted a divided Fed on the long-term outlook for future interest rate hikes. At last month's FOMC monetary policy meeting, participants cited a slowing labor market and the threat of a British exit from the EU as main factors for holding interest rates steady. Following the release of Friday's job report, analysts from Goldman Sachs Group Inc (NYSE:GS) said there is roughly a 66% chance that the FOMC will raise its benchmark Federal Funds Rate at some point this year.
Investors who are bullish on Gold are in favor of a gradual tightening of monetary policy by the Fed. Gold, which is not attached to interest rates, struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, stood at 96.37 in U.S. afternoon trading, up 0.04% on the session. Earlier, the index hit an intraday high of 96.71, in response to the employment situation.
Dollar denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver climbs on global cues, gold continues downward slide
Silver jumped to the highest since September 2014 and gold surged as investors speculated central banks will need to continue supporting the global economy in the wake of Britain’s vote to quit the European Union.
Silver rose as much as 3.6% to $19.3960 an ounce and traded at $19.2245 by 2:18pm in Singapore. Prices have soared 8.3% this week, the most in nearly three years. Gold added 0.8% to $1 332.17 an ounce and was set for a fifth weekly gain. The metal priced in the UK currency rallied above 1 000 pounds an ounce.
Governor Mark Carney said on Thursday the Bank Of England could cut interest rates within months as it tries to shield an unstable UK economy. Prospects for further US interest-rate increases have been wound back since the Brexit vote, while investors continue to pile into exchange-traded funds backed by gold, boosting the assets to the highest since 2013. According to Marc Faber, publisher of the Gloom, Boom & Doom Report, the Federal Reserve may even embark on a fourth round of quantitative easing.
“There are risks that policymakers will now have to consider further easing to help limit the fallout from Brexit,” Zhan Dapeng, an analyst at Ever bright Futures Company, said in a note. “Gold could climb further as more investors allocate money into it.”
Assets in gold-backed ETFs keep expanding. The holdings have increased 34% this year to 1 952.5 metric tons as of Thursday, data compiled by Bloomberg show.
Riding high on strong global cues and continued buying by industrial units and coin makers, silver prices cracked the Rs 45,000-mark today by surging Rs 960 per kg to trade at a two-year high of Rs 45,560.
This was the fifth straight day of rise for the commodity. Bullion traders attributed the rise in silver prices to a firming trend overseas, where it surged to its highest level since August 2014, as Britain's vote to leave the EU fuelled speculations that central banks around the world will boost economic stimulus.
Moreover, increased offtake by domestic industrial units and coin makers too buoyed sentiment, they added. Globally, silver climbed 5.2% to $19.58 an ounce and gold advanced 1.4% to $1,339 an ounce in New York in yesterday's trade. In the national capital, silver ready extended gains for a fifth straight day by surging Rs 960 to trade at Rs 45,560 per kg, its highest level since July 14, 2014 when it stood at Rs 45,600 per kg. Silver weekly-based delivery to continue its upward journey and edged up by Rs 30 to Rs 45,200 per kg.
Energy
Crude extends slight gains, as oil rigs rise for fifth time in six weeks
Crude futures rose moderately on Friday afternoon, extending slight gains from earlier in the session after a closely-watched report showed that U.S. oil rigs crept up last week, providing some signals that dormant shale producers nationwide may be on the verge of ramping up output. On the New York Mercantile Exchange, WTI crude for August delivery traded between $44.78 and $45.96 a barrel before closing at $45.30, up 0.16 or 0.35% on the session.
The front month contract for U.S. crude bounced off near two-month lows, one day after sliding below $45 a barrel for the first time since early-May. On the Intercontinental Exchange (ICE), Brent crude for September delivery wavered between $46.15 and $47.23 a barrel, before settling at $46.67, up 0.27 or 0.58%. On Friday afternoon, oil services firm Baker Hughes reported that U.S. oil rigs rose by 10 to 351 last week for the week ending on July 1.
It marked the fifth weekly increase in the domestic rig count over the last six weeks. The combined Oil and Gas count, meanwhile, increased by nine to 440 as gas rigs last week inched down by 1 to 89. Over the first week of June, the overall count moved higher for the first time in 2016 ending a 41-week drought. While Baker Hughes said the average oil rig count increased by about 2% in June on a monthly basis, it still fell by approximately 50% from its level 12 months earlier. Although U.S. shale producers have been forced to slash drilling due to persistently low oil prices, many have responded by shutting down their least efficient rigs.
Oil prices recovered somewhat in Friday's session after a government report a day earlier showed a lower than expected crude inventory draw last week. Though the the U.S. Energy Information Administration (EIA) reported a decline of 2.23 million barrels on the week, analysts expected a sharper decease following estimates of a 6.7 million barrel draw down from the American Petroleum Institute on Wednesday evening.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, stood at 96.37 in U.S. afternoon trading, up 0.04% on the session. Earlier, the index hit an intraday high of 96.71, in response to a robust U.S. jobs report for the month of June. Dollar denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
U.S. crude futures are up more than 60% from their level on February 11 when they slumped to 13-year lows at $26.05 a barrel. Crude futures have still fallen precipitously over the last two years when they peaked at $115 a barrel in June, 2014.
Natural gas: Temperature eased and traders booked profit
Natural Gas ended the week at 2.817 falling this week by 5.69% as temperatures eased and traders booked profits. Natural gas is actually up 10% for the month. There were only four trading days during the week ended July 5 due to the U.S. Fourth of July Independence Day holiday weekend. To avoid filling storage caverns to their maximum capacity after a warm winter left stockpiles at record highs, analysts forecast prices would remain relatively low this year to pressure producers to cut output and encourage power generators to burn more gas instead of coal.
Friday’s climb came largely from data the U.S. Energy Information Administration released Thursday, an analyst and trader said. It showed inventories as of July 1 totaled 3.2 trillion cubic feet, 20% above levels from a year ago and 23% above the five-year average for the same week. While those inventories still could challenge a record high going into the winter, the surplus compared to years past has come down from more than 50% in just three months.
Hot high pressure continues dominating the central and southern US with widespread 90s to 100s, including all of Texas. Hot conditions also continue to over the East with highs again warming into the 90s today, including across major cities such as Philadelphia, D.C., and NYC. A weather system over the north-central US will gradually track across the Great Lakes, Mid-Atlantic, and Northeast late today and Saturday for slight and brief cooling.
Next week, hot high pressure is expected to build back across the Great Lakes and Northeast with temperatures again warming above normal, while remaining hot over the southern 2/3rds of the country. Over the West, systems off the Pacific will keep conditions cooler than normal over the NW and N. Rockies, but still hot across the SW. Overall, nat gas demand will be MODERATE to HIGH over the next 7 days.
Commodity Round UP
World food prices post biggest rise for four years in June: FAO
World food prices posted their biggest monthly rise for four years in June, buoyed by a surge in sugar and increases for most other edible commodities, the United Nations food agency said on Thursday. Food prices have been gaining ground since hitting a near seven-year low in January after four straight annual declines, and the United Nations Food and Agriculture Agency (FAO) now expects them to be stable for the next decade. The 4.2 percent gain from May was the fifth increase in a row for the index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar. Food prices on international markets are now just 1 percent below the same month last year, the FAO said. (Source: Reuters)
Kharif sowing picks up pace on ample rains
After a sluggish start, sowing of kharif crops such as paddy has picked up pace this week on account of good rains in several parts of the country, Agriculture Minister Radha Mohan Singh said today. Till last week, total acreage under kharif (summer) crops was down 23 per cent to 215.87 lakh hectares because of inadequate rainfall in June. Sowing of kharif (summer) crops begins with the onset of southwest monsoon from June and harvesting is done from October onwards. Paddy is the main kharif crop. “Several parts of the country received good rainfall. The monsoon situation has improved and sowing of kharif crops has picked up pace in many places,” Singh told reporters. The kharif sowing is expected to improve further as good rainfall is predicted for the months of July, August and September, he added. (Source: PTI)
Sugar refineries breathe easy over export duty concerns
In a relief to export-focused sugar refineries, the government has clarified that export of imported raw sugar, after refining, will not attract any duty. This paves the way for movement of various shipments that were stuck at ports, due to ambiguity on this. The government last month slapped an export duty of 20 per cent on locally produced sugar, to ensure adequate domestic availability and curb price increase. The June 16 notification inadvertently impacted export of raw sugar after value addition, imported by domestic refineries for this purpose. As a result, about 200,000 tonnes of refined sugar were stuck for days, worth around Rs 700 crore and meant for markets in West Asia and Africa. (Source: BS)
Oilmeal export down 61% in June quarter
Oilmeal export fell 61 per cent in the period between April and June, first three months of this financial year. Data from the apex industry body, the Solvent Extractors’ Association of India, showed export at 186,293 tonnes in the first quarter, from 473,676 tonnes in the same period of last year. Last month, the fall was 48 per cent, at 88,514 tonnes, as compared to 169,699 tonnes in the same month last year. South Korea continued to remain top oilmeal importer from India, at 123,977 tonnes in the quarter, as against 305,849 tonnes in the same period last year. With 40,036 tonnes, Vietnam was next, as compared to 88,172 tonnes earlier. The major reason for India losing ground in the global market is a higher price quote. Compared to $495 a tonne (FOB), soybean meal in the benchmark Rotterdam market was quoted at $465 (CIF). Rapeseed meal at $245 a tonne in global markets is quoted by Indian exporters at $290 a tonne. (Source: BS)
China: Oilseeds and Products Update
In anticipation of higher demand for industry feed and protein meal as a result of a recovery in swine production and steady growth in the poultry sector, China’s soybean imports are forecast to hit a record of 86 million metric tons (MMT) in MY16/17, up from the estimated 83 MMT in MY15/16. Post’s forecast for MY16/17 soybean imports is slightly lower than the official USDA data forecast of 87 MMT. As changes in government policy are lowering expectations for corn profits, MY16/17 soybean acreage is up moderately with a forecast production of 12.5 MMT, up from the 11.6 MMT in the previous year. However, growth in soybean production is unlikely to increase the total domestic oilseed supply given the low forecast for rapeseed and cottonseed production. (Source: USDA)
Technical Levels
Gold
Gold has a support at 31700 and resistance at 32000.
Close above 32000 will take it to 32500 levels and then to 32800 marks in days to come. Else it could test its support level of 31700. Further downside panic can be seen if close below 31700 mark.
Silver
Silver has support at 46800 and resistance at 47800.
Close above 47800 will take it to 48500---49000 and then to 49800 mark in days to come else could test its support level of 46800 again. Further downside panic can be seen if closes below 46800 mark.
Crude oil
Crude oil has support at 3025 and resistance at 3140
Two consecutive close + weekly close below 3025 will take it to 2880---2830 mark else could test resistance level of 3140 again. Further upside rally will see only closes above 3140 mark.
Natural Gas
Natural gas has support at 183 and resistance at 201.
Three consecutive+ weekly close above 201 will take to 206---210+ mark in days to come else could test its support level of 183. Fresh selling can be initiated below 183.
Copper
Copper has support at 313 and resistance at 321.00.
Close below 313 will take it to 308— 306 mark in days to come else could test its resistance level of 321 again. More and more upside rally will see only weekly close above 321.
Soyabean
Soyabean has support at 3650 and resistance at 3800,
Close above 3800 will see further upside rally till 3880---3940 mark in days to come else it could test its support level of 3650 again. Fresh selling can initiate only close below 3650 mark.
Technical Pick
Buy Guargum (Oct) above 6550--6600, Stop Loss 6000 Target 8000++
Three consecutive closes + weekly close above 6480 will take to 7600---8000+ mark in days to come.
Support and stop loss below 6000 on closing basis
