Gold 31108 /Silver 46990/ Crude Oil 3082/ Copper 338.10 /Soyabean 3749/
Top Gainers
Copper – gains – 1.09% up by 3.65 pts LTP – 338.10
Zinc– gains – 1.01% up by 1.50 pts LTP – 150.55
Gold – gains – 0.30% up by 93.00 pts LTP – 31108
Top Losers
Nickel – Losses – 1.06% down by 7.50 pts LTP – 702.20
Aluminium – Losses – 0.95% down by 0.95 pts LTP – 109.80
Crude oil – Losses – 0.77% down by 24 pts LTP – 3082.00
Commodity Round Up
Bullions
Gold ticks up in cautious trade, ahead of key central bank decisions
Gold ticked up on Tuesday, in spite of a firmly stronger dollar, as investors awaited two critical central bank meetings later this month for further indications on the strength of the yellow metal as a hedge against inflation.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,325.50 and $1,335.25 an ounce before settling at $1,332.65, up 3.35 or 0.25% on the session. Gold has rebounded somewhat over the last two sessions after retreating from 28-month highs earlier this month in a Brexit-inspired rally. Last week, Gold slid by more than 2.2% suffering its first negative week since early-June.
Nevertheless, Gold is on track for one of its strongest years on record after soaring roughly 25% year to date. Gold has ticked up since last Friday's close, as some jittery investors have sought safety in the precious metal in the wake of a failed coup attempt in Turkey.
Gold likely gained support at $1,311.60, the low from June 29 and was met with resistance at $1,368.60, the high from July 7.
On Tuesday, stocks on Wall Street hovered in record territory as the Dow Jones Industrial Average remained on pace for its eighth consecutive winning session. Over the last week, both the Dow and the S&P 500 Composite index have achieved all-time intraday and closing highs on multiple sessions, amid clear signals of weakness among euro area banking stocks and a plunging Japanese Yen. The rally among U.S. equities has dampened investor's optimism toward Gold in broad risk-on trade. In Tuesday's session, the S&P and NASDAQ Composite index were dragged down by subdued quarterly results from Netflix Inc (NASDAQ:NFLX), while the Dow received a boost after Johnson & Johnson (NYSE:JNJ) beat analysts' second quarter earnings forecasts.
Investors were largely hesitant to make any major moves ahead of the European Central Bank's monetary policy meeting on Thursday. The ECB's Governing Council is widely expected to stand pat in its first interest rate decision since last month's historic Brexit decision. While the Governing Council will receive updated economic data from the release of Germany's ZEW Economic Sentiments survey and consumer confidence indicators throughout the euro zone, the ECB has still received a relative dearth of information on how the economy has responded to last month's shock in the U.K.
Next week, the Federal Reserve will also issue its latest interest rate decision upon the completion of its two-day July meeting on July 27. Since the Federal Open Market Committee (FOMC) held short-term interest rates steady in June, a number of policymakers have been split on the timing of the U.S. central bank's next rate hike.
Any rate hikes by the FOMC this year are viewed as bearish for Gold, which struggles to compete against 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, jumped more than 0.55% to an intra-day high of 97.18, as the Dollar surged more than 1% against the British Pound and more than 0.50% versus the euro. The index has still declined by approximately 3% since early-December.
Dollar denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Energy
Oil flips between gains and losses ahead of API supply report.
Oil prices struggled for direction in North American trade on Tuesday, flipping between small gains and losses as market players 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 2.3 million barrels.
Crude oil for September delivery on the New York Mercantile Exchange fell by as much as 0.8% to a session low of $45.56 a barrel. It last stood at $45.84 by 12:55GMT, or 8:55AM ET, down 10 cents, or 0.22%.
A day earlier, New York-traded oil futures lost 71 cents, or1.52%, 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 six last week to 357, the third straight weekly rise and the sixth increase in seven 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.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for September delivery inched down 6 cents, or 0.13%, to $46.90 a barrel, after falling 65 cents, or 1.37%, on Monday, as market players dismissed worries of supply disruptions from the failed coup attempt in Turkey.
U.S. natural gas futures jump amid spreading heatwave
U.S. natural gas futures bounced back from the prior session's losses on Tuesday, as investors bet a heat wave making its way across the continental U.S. will prompt households to ramp up their air conditioning.
Updated weather forecasting models showed that temperatures are expected to be warmer than previously projected in the central U.S. from July 20 to July 24, and sweltering conditions are also forecast for the West from July 25 to July 29.
Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.
Natural gas for delivery in August on the New York Mercantile Exchange rose 3.7 cents, or 1.36%, to trade at $2.759 per million British thermal units by 14:35GMT, or 10:35AM ET.
A day earlier, natural gas lost 3.4 cents, or 1.23%, amid speculation that July heat won’t prevent stockpiles from reaching a record before the winter.
Total U.S. natural gas storage stood at 3.243 trillion cubic feet as of last week, according to the U.S. Energy Information Administration, 15.6% higher than levels at this time a year ago and 18.1% 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.
This week's storage report slated for release on Thursday is expected to show a build in a range between 32 billion to 44 billion cubic feet for the week ending July 15.
That compares with an increase of 64 billion cubic feet in the prior week, 59 billion a year earlier and a five-year average of 61 billion cubic feet.
Base Metals
Base metals consolidate, zinc outperforms
Base metals were mixed on Tuesday morning on the LME, taking a breather after rallies in recent weeks while volumes remain low.
The metals are drifting in line with global equities and mining shares this morning, a trader said, although zinc is the exception to the consolidatory tone.
It peaked this morning at $2,247.50 per tonne – its highest since May 2015 – and recently traded at $2,243, still up $25 on Monday’s close. More than 5,000 lots have changed hands on Select so far.
Inventory moves were subdued – stocks and cancelled warrants both fell a net 225 tonnes to 438,050 tonnes and 20,625 tonnes respectively.
LME zinc prices are in a danger zone because Glencore could announce a restart of production at a price of $2,200.
“But until a Glencore announcement, the zinc market is likely to test higher because the higher the price, the stronger the sentiment and the higher momentum-based buying,” he said.
In today’s data, German ZEW economic sentiment and EU ZEW economic sentiment both disappointed at -6.8 and -14.7 respectively. US data later includes building permits and housing starts; the rest of the week is quiet but the run of flash PMI indicators on Friday could lend direction to the industrial metals, market participants noted.
As well, on Thursday, the European Central Bank holds its first monetary policy meeting since the June 24 UK Brexit referendum. The ECB is expected to adopt a ‘wait and see’ approach – as has the Bank of England – keeping its deposit rate at -0.4 percent and leaving other key rates unchanged.
In the other metals, copper recently traded at $4,936, down $3. Volumes are low – only around 5,000 lots have changed hands so far.
Stocks fell 3,125 tonnes to 226,300 tonnes and cancelled warrants were down 2,125 tonnes to 78,850 tonnes.
“The base metals have generally been consolidating in recent days but the pullbacks appear to be pauses rather than signalling an end to the firmer trends,”
Aluminium at $1,651 was down $8. Both stocks and cancelled warrants were down 7,175 tonnes to 2,304,875 tonnes and 959,275 tonnes respectively.
Nickel recently traded at $10,550, up $5. Stocks climbed 768 tonnes to 377,748 tonnes while cancelled warrants fell 882 tonnes to 116,772 tonnes.
Yesterday, the metal was the best performer, closing above $10,500 supported by mining review in the Philippines.
Analysts are, however, divided on whether the current and potential supply-side disruptions from the Philippines can turn the nickel market around decisively.
Lead at $1,864 was $10 higher; stocks were unchanged. Tin was last at $17,770, down $155, eve after stocks fell 100 tonnes to 5,870 tonnes.
Agri Commodity
Kharif oilseeds sowing up, but imports set to touch new high
Even as the ongoing kharif sowing trends indicate farmers’ growing preference to plant oilseeds, industry experts foresee India’s vegetable oil imports touching a new record in the current oil year ending October on rising consumption and a bearish trend in global prices. Higher prices of oilseeds such as groundnut, soyabean, sesamum and sunflower last year have prompted farmers in the key growing States such as Madhya Pradesh, Maharashtra, Gujarat, Karnataka, Andhra Pradesh and parts of northern India to turn to oilseeds from other crops such as cotton. The kharif sowing of oilseeds has risen by about three lakh hectares to 13.01 million hectares from last year’s 12.73 million. (Source: HBL)
Crop planting gathers pace as monsoon advances
Key agricultural areas in northern and central India have received heavy showers this time, preparing the ground for more crop planting and a good kharif harvest after two years of drought. Crop planting has gathered pace in the region after the monsoon rapidly advanced to northern India and covered the entire country last week. The India Meteorological Department (IMD) expects good rainfall to continue this season although there would be a temporary weakening of the monsoon current in central India this week. Increased rainfall has helped farmers increase sowing of crops by 38% last week, with the biggest increase coming in are under pulses. Pulses acreage jumped 55 per cent in a week, and is now 39 per cent higher than last year despite the late arrival of the monsoon this year. (Source: ET)
Rising cotton prices lead to government selling stock to spinning mills
Cotton Corporation of India is set to sell its present cotton stock bought under Minimum Support Price (MSP), to spinning mills belonging to the MSME category, registered with the Office of Textile Commissioner. This decision was taken after the government reviewed the situation where rising price of cotton lead to higher input costs for spinning mills. By midJuly, 75.41 lakh hectare of sowing had taken place whereas average sowing in the same period of last few yeas comes to 78 lakh hectare, official from Department of agriculture told PIB. Although the cotton stock is enough and is expected to reach 43 lakh bales by the end of september, the Textiles Commissioner said she was asked to keep monitoring the situation closely, PIB reported. (Source: FE)
Govt to sell cotton stocks to stem shooting prices
Government today decided that the Cotton Corporation of India (CCI) will sell its existing stock purchased under minimum support price to MSME spinning mills on account of recent spurt in cotton prices. The Textiles Ministry in a statement here said the recent jump in cotton prices has resulted in higher input costs for the spinning sector in India. Cotton prices had reached a high of Rs 35,000 per candy (356 kgs) in May this year. The CCI, which buys cotton from farmers when rates go below the support prices, had said that it had procured 8,40,000 bales up to May this year. According to Textiles Commissioner Kavita Gupta, the opening balance is expected to be 43 lakh bales as on September 30, 2016. On sowing, it said the representative from the Department of Agriculture has informed that 75.41 lakh hectare of sowing has taken place as on July 15 (October-September crop year)as against normal sowing of 78 lakh hectare in the corresponding period of the previous year. (Source: inidatoday)
Technical Levels
Gold
Support at 30700 and Resistance at 31200
Close above 31200 will take to 31450---31600 mark. More and more upside rally will see only close below 31600 else it could test its support level of 30700 again
Further downside panic will see only close below 30700 mark
Trade with levels only
Silver
Close below 46700 will take to 46300--46000 and then to 45800 mark in days to come. More and more downside panic will see only close below 45800 else it could test its resistance level of 47400---47700 again.
Further upside rally will see only close above 47700 mark
Trade with levels only
Crude Oil
Trading in a very wide range of 2990---3160. Either side break or close with volume will decide further. Till then traders can trade in a range with strict stop loss and wait for confirmation
Copper
Support at 333 and Resistance at 340
Close above 340 will take to 343---345+ mark else it could test its support level of 333 again.
Close below 333 will take to 327---323 mark.
Traders can trade in a range with strict stop loss as trend looks choppy and has no clear direction.
Trade with levels only
Soyabean
Above 3800 will take to 3880---3940 mark. Further upside rally will see only close above 3940 mark. Three consecutive closes + weekly close above 3940 will see sharp upside rally till 4200---4350+ mark in days to come
Fresh selling can initiate only close below 3600 mark
Economic Data
Britain Average Earnings Index 3m/y – 02:00 PM
Britain Claimant Count Change– 02:00 P.M
Britain Unemployment Rate y/y – 02:00 P.M
Crude Oil Inventories – 06:00 P.M
More will update soon!!
