Gold 31035/Silver 47401/ Crude Oil 3135/ Copper 330.15 /Soyabean 3792/
Top Gainers
Crude Oil – gains – 3.84% LTP – 3135.00
Nickel – gains – 3.79% LTP – 700.40
Lead – gains – 3.04% LTP - 125.60
Top Losers
Gold – Losses – 1.72% LTP – 31035.00
Silver – Losses - 0.86% LTP – 47401.00
CPO – Losses – 0.45% LTP – 491.00
Commodity Round UP
Bullions
Gold plunges in broad risk-on trade, as Dow hits all-time high
Gold fell sharply in broad risk-on trade, as the Dow Jones Industrial Average surged to an all-time intraday high on Tuesday morning, dampening the precious metal's demand as a safe-haven asset.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,331.00 and $1,358.70 an ounce, before settling at $1.335.50, down $21.05 or 1.55% on the session. With the considerable losses, Gold suffered its worst one-day session since June 21 when it tumbled by more than 1.5% in pre-Brexit trade amid indications that the Stay campaign had taken a commanding lead in a wide sampling of closely-watched polls.
Days later, Gold surged nearly 5% following the shocking decision by U.K. voters to approve a measure to leave the European Union, prompting investors to engage in a flight to safety to the Yellow metal. As market players have piled into Gold over the last several weeks, the commodity soared above $1,370 last Wednesday to hit a 28-month high.
Since opening the year around $1,075 an ounce, Gold has surged more than 27% over the first seven months of 2016.
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.
U.S. stocks opened at record-highs, as the Dow surged more than 100 points to an intra-session high of 18,353.76, eclipsing the previous all-time intraday high of 18,351.36 from last May. Since tumbling by more than 850 points over a two-day, post-Brexit sell-off, the Dow has rallied approximately 1,300 points during the massive global equities rally.
At the same time, the S&P 500 Composite index reached fresh intraday highs for the second consecutive session, while the NASDAQ Composite index erased all of its losses on the calendar year.
Meanwhile, Federal Reserve Bank of St. Louis president James Bullard reiterated his position that current economic conditions deem it appropriate for the U.S. central bank to raise short-term rates only once over the next two years. While delivering a speech in St. Louis, Bullard noted that a flattening yield curve from plummeting long-term U.S. Treasury yields does not necessarily imply signals of an imminent recession.
In the wake of last month's Brexit decision, government bond yields worldwide, including those on U.S. 10-Year and 30-Year Treasuries have plunged to all-time record lows.
"Wall Street is taking it as a signal that growth is slowing. I think it is a flight to safety following the Brexit shock," Bullard said. "That is driving yields down and I would not take it as a signal of U.S. growth prospects."
Despite Bullard's dovish position, analysts from Goldman Sachs Group Inc (NYSE:GS) said Tuesday they still anticipate that the Federal Open Market Committee (FOMC) will "return to hiking rates," before long. Following a relatively strong U.S. employment report for the month of June, the Fed Futures Rate for a single rate hike in 2016 increased to 32.7% on Tuesday, up from 12% before last Friday's release.
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, fell more than 0.40% to an intraday low of 96.08 before rallying to 96.32 in U.S. afternoon trading. Despite a recent upturn, 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 sparkles as commodities outperform other assets
Commodities have outperformed other asset classes in the first half. The S&P Goldman Sachs Commodity Index is up 17.42% since the start of the year. That contrasts with a gain of only 3.11% for the S&P 500 index. Among commodities, silver’s performance has particularly sparkled.
The precious metal is up 35% since the start of the year, with gold adding only 25%. Both gold and silver have been buoyed by Britain’s decision to leave the European Union.
Analysts believe we may be at the start of a new bull run.
Some see silver in a range of $25-$32 an ounce by year-end, up from $20.4 at present.
Energy
Oil soars 3% after bullish OPEC monthly report
Oil prices rallied sharply in North American trade on Tuesday, after the Organization of the Petroleum Exporting Countries forecast higher demand for its crude next year as the global surplus fades.
In its monthly market report published earlier, OPEC said that demand for crude from its own 14 members was expected to rise to average 33.0 million barrels per day in 2017, representing a gain of 1.1 million barrels per day over the current year.
Output from OPEC’s 14 nations increased by 264,100 barrels a day to 32.858 million a day in June, according to external sources cited by the report.
Global oil demand will increase by 1.2 million barrels a day next year to reach an average of 95.3 million a day, with almost all of the growth concentrated in emerging economies such as India and China.
The rise in demand growth would come as rival non-OPEC supply continued to fall. Oil production outside OPEC will fall by 100,000 barrels a day to 55.9 million a day, as growth in Brazil and Canada is eclipsed by declines in Mexico, the U.S. and Norway, according to OPEC.
"The contraction seen this year in non-OPEC supply is expected to continue in 2017 but at a slower pace," OPEC said. "Market conditions will help remove overall excess oil stocks in 2017."
On the ICE Futures Exchange in London, Brent oil for September delivery jumped $1.34, or 2.9%, to $47.59 a barrel by 12:40GMT, or 8:40AM ET, after rising by as much as 3.4% to a session peak of $47.87.
A day earlier, London-traded Brent futures sank to $45.90, the lowest since May 11, amid easing concerns over supply outages in Africa and the Middle East.
Elsewhere, crude oil for August delivery on the New York Mercantile Exchange rose $1.11, or 2.48%, to $45.87 a barrel. On Monday, New York-traded oil futures sank to $44.42, a level not seen since May 11, amid signs of an ongoing recovery in U.S. drilling activity.
According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. increased by 10 last week to 351, marking the fifth increase in six weeks.
The renewed gain in U.S. drilling activity fueled speculation that domestic production could be on the verge of rebounding in the weeks ahead, underlining worries over a supply glut.
Market players now looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 3.2 million barrels.
Natural gas futures struggle as forecasts point to mild July weather
U.S. natural gas futures were lower for the second straight session on Tuesday, extending losses from the previous day as updated weather forecasting models pointed to mild temperatures across most parts of the U.S. in the weeks ahead.
Natural gas for delivery in August on the New York Mercantile Exchange shed 1.3 cents, or 0.48%, to trade at $2.689 per million British thermal units by 14:33GMT, or 10:33AM ET.
A day earlier, natural gas futures declined 9.9 cents, or 3.53%, as warm temperatures in key U.S. gas-consumption regions gave way to cooler readings.
Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.
Natural gas storage in the U.S. rose by 39 billion cubic feet last week, according to the U.S. Energy Information Administration, below forecasts for an increase of 43 billion. That compared with builds of 37 billion cubic feet in the prior week, 87 billion a year earlier and a five-year average of 77 billion cubic feet.
Total U.S. natural gas storage stood at 3.179 trillion cubic feet, 16.9% higher than levels at this time a year ago and 18.8% above the five-year average for this time of year.
Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.
Despite recent losses, prices are still up nearly 45% since late May as expectations have grown that hot summer weather will lead to heavy demand.
Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.
In the week ahead, market players will be focusing on weekly U.S. storage data on Thursday for fresh supply-and-demand signals. Some analysts believe this week’s storage addition will be less than usual for this time of year due to a recent burst of warmer-than-normal summer weather across most parts of the U.S.
Base Metals
Metals sustain advances, risk appetite picks up as political doubts ease Base metals moved steadily higher during Tuesday LME premarket trading, capitalising on an upturn in risk appetite, a softer dollar and a cranking-down in geopolitical uncertainty.
Copper climbed back above the $4,800-per-tonne level to a one-week high and nickel is just below recent eight-month highs.
Markets getting back to a more normal way of operating and reacting after the last two weeks and people coming round to the idea of what the Brexit decision means for the world economy,
“The stock markets are rising, the pound has maybe found a floor for now and, with a new government in the UK, things can move forward from here,” he said.
Consistent gains in equity markets coupled with diminishing political uncertainty in the UK – Theresa May will take over as prime minister from David Cameron on Wednesday – has decreased post-Brexit vote tensions and turbulence.
Although the reduction in volatility has dampened activity and volumes, the metals are settling into more-normal directional trading.
In other markets, the dollar slipped back to around 1.1110 against the euro while European equities were steady, building on the strength seen in global stock markets on Monday.
The FTSE 100 was up 0.2 percent at around a 2016 high.
On the data side, Japan’s PPI fell 4.2 percent while in Europe the German CPI rose 0.1 percent and its PPI climbed 0.6 percent. US data out later includes the small business index and job openings and wholesale inventories figures.
The key macroeconomic figures late this week will be Chinese trade balance GDP data while on Thursday there is the possibility of monetary easing in the UK and a reduction in interest rates.
In the metals, copper rose to $4,828, up $78 from Monday’s close and ignoring a big increase in LME inventories, the latest in a run of Asian warehouse warrantings.
Stocks rose a net 12,150 tonnes to 234,750 tonnes, the highest since early-February. In Asia, 8,500 tonnes were warranted in Singapore and 3,200 tonnes in Busan.
Aluminium was confined to a narrower band, picking up to $1,658, up just $5 from yesterday. The market has been inhibited by Chinalco, the largest Chinese aluminium manufacturer, announcing plans to scale up its capacity to 1.5 million tonnes per year.
Inventories continue to fall, with a 6,050-tonne fall to 2,338,125 tonnes, the lowest since December 31, 2008.
Nickel continues to draw support from Philippines supply concerns – the country is making an audit of all operating mines in the country while suspending the approval of new mining projects. Business at $10,380 was up $335, with a test of last week’s $10,410 – its highest since November last year – on the cards.
In others, zinc traded at $2,162, up $42, with stocks falling 125 tonnes to 439,450 tonnes. Lead was $34 higher at $1,853, with no change seen in inventories, which held at 184,525 tonnes.
Agri commodity
Monsoon will cover entire country by Wednesday: Met
The monsoon has been stuck over a small arc linking Gujarat and West Rajasthan over the past few days as it waits to run through the last outpost to establish coverage over mainland India. The India Meteorological Department says it will take two more days for it to accomplish this significant milestone. Heavy rain has been reported over west Rajasthan and adjoining Gujarat as the footprint of a wet spell reached out from Madhya Pradesh. The rains are forecast to sustain over Central and adjoining North-West India for the next few days given the presence of helpful atmospheric systems (low-pressure areas and other circulations). These include the low-pressure area over North-East Madhya Pradesh and upper air cyclonic circulations over South-West Madhya Pradesh and Odisha-Jharkhand. Completing the ensemble is the land-based trough extending from North-West Rajasthan to East-Central Bay of Bengal through north Chhattisgarh and Odisha. (Source: HBL)
Monsoon does its magic, sowing picks up pace
Monsoon rainfall last week was 35% above what is touted to be normal, helping kharif sowing to exceed last year’s level in case of rice, pulses and sugarcane, although the overall sowing level was still 6% lower than a year ago, reports Sandip Das in New Delhi. Rains during the current season, which remained below normal until over a week ago, turned slightly above normal: As on July 7, the rains were 1% above the benchmark long-period average. This has also improved water levels in 91 large reservoirs, although the storage continue to be significantly lower than this time last year. Analysts say that the sowing of kharif crops like paddy, pulses and oilseeds have picked up pace because of widespread rainfall. According to ministry of agriculture data released on Friday, the sowing was lagging by 23% last week. (Source: FE)
Government sets up panel to consider MSP hike, bonus for pulse production
To address the issue of escalating prices of pulses, the Union government on Monday set up a high-level committee headed by Chief Economic Adviser Arvind Subramanian to consider a "reasonable increase" in minimum support price (MSP) for pulses and bonus for farmers. A ministerial committee headed by Finance Minister Arun Jatley also decided to increase the buffer stocks to 20 lakh tonnes from the existing 8 lakh tonnes. A Food Ministry spokesman said that on the suggestion of Food Minister Ram Vilas Paswan, a ministerial committee headed by Arun Jaitley decided that a committee headed by Subramanian will "consider reasonable increase in MSP for pulses and bonus for the farmers for producing pulses". (source: BS)
Centre forms panel on pulses crisis, expands buffer stock
To provide a long-term solution to India’s pulses crisis, the Centre on Monday constituted a high-powered panel under Chief Economic Advisor Arvind Subramanian to revisit the minimum support price (MSP) and bonus mechanism, while at the same expanded the buffer stock by 1.2 million tonnes on hopes of a good harvest this year. The committee would submit its report in the next two weeks. The decision to constitute the panel and increase the buffer stock was taken at a meeting of senior government ministers chaired by Finance Minister Arun Jaitley. Food Minister Ram Vilas Paswan and Urban Development Minister Venkaiah Naidu also participated in the meeting. (Source: BS)
Cotton acreage declines on poor sowing in Maharashtra, Telangana
Poor cotton sowing in Maharashtra and Telangana — two of the major cotton producing States in the country — is largely responsible for the sharp drop in cotton acreage this kharif season, but the government and some experts say that with better rains there is still time for some of the deficit to be bridged. While part of the decline in acreage could be attributed to farmers looking for more lucrative options such as rice, pulses, maize or sugarcane this year, the larger factor for the fall could be the delayed monsoon in the region and its slow progress. “The rains have not progressed in the manner they normally do, especially in regions in Vidarbha and Marathwada where a lot of acreage normally happens. But there is still a window till about July 15. In this year’s kharif season (June onwards), cotton sowing has witnessed a major deceleration with total acreage till July 7 at 67.88 lakh hectares compared to 87.83 lakh hectares (lh). Maharashtra and Telangana alone accounted for a deficit of 15.5 lh of the total deficit of 20 lh. While there is a fall in cotton sowing to 2.5 lh in Punjab, where the crop was destroyed by whiteflies last year, the deficit is relatively low at 2 lh. (Source: HBL)
Technical Levels.
Gold
Support at 30900. Break and sustain below 30900 will take to 30700---30600 mark. Further downside panic will see only close below 30600 mark else it could test its resistance level of 31200---31500 again
Further upside rally will see only close above 31500 mark
Trade with levels only
Silver
Support at 46800 and Resistance at 48000---48700.
Today we will expect range bound trading in Silver. Wait for confirmation.
Crude oil
Support at 3050 and resistance at 3150
Close above 3150 will take to 3230----3280+ mark in days to come else could test its support level of 3050.
Fresh selling can initiate only close below 3050
Copper
Copper has support at 327 and Resistance at 334. Close above 334 will take to 338---340+ mark else it could test its support level of 327 again. Further downside panic will see only close below 327 mark.
Soyabean
Support at 3730 and Resistance at 3850
Looks negative and could test its support level of 3730. Three consecutive closes + weekly close below 3730 will see downside panic till 3660--3600 mark in days to come.
Fresh buying can be initiated above 3850.
Trade with levels only
Technical Pick
Buy Zinc around 146.50—146.20. Stop Loss 144 Target 150++
Economic Data
China Trade Balance – Tentative
Canadian BOC Monetary Policy Report – 07:30 P.M
Canadian BOC Rate Statement – 07:30 P.M
Canadian Overnight Rate – 07:30 P.M
U.S Crude Oil Inventories – 08:00 P.M
