Gold 30918 /Silver 46470/ Crude Oil 2926/ Copper 337.55 /Soyabean 3623/
Top Gainers
Nickel – gains – 1.21% up by 8.40 pts LTP – 704.80
Lead– gains – 0.85% up by 1.05 pts LTP – 124.05
Top Losers
Crude Oil – Losses – 1.18% down by 35 pts LTP – 2926
Natural Gas – Losses – 1.07% down by 2 pts LTP – 185.30
Commodity Round UP
Bullions
Gold remains relatively flat, ahead of two-day FOMC July meeting
Gold inched down in cautious trade on Monday, amid a steady dollar, as market players looked ahead to the start of the Federal Reserve's two-day meeting in Washington D.C. for further clues on the path of the U.S. central bank's long-term interest rate outlook. Gold remained near three-week lows on Monday after closing last week's trade with its second consecutive losing week. More broadly, the precious metal is still up by nearly 25% year-to-date after hitting 28-month highs earlier in July.
Over the weekend, Gold rolled over from the August to December contract as the front month for future delivery.
Commodity traders largely stood pat on Monday, as metal investors prepared for the start of the Federal Open Market Committee's (FOMC) two-day July monetary policy meeting on Tuesday morning. While the FOMC is unlikely to make any adjustments to its benchmark Federal Funds Rate, the U.S. central could provide key hints on the timing of its next interest rate hike. After the Fed's historic rate hike last December, the Committee has responded by leaving the Fed Funds Rate steady at each of its first four meetings in 2016. When the Fed approved a 25 basis point rate hike at the end of last year, the FOMC abandoned a seven-year Zero Interest Rate Policy by ratifying their first interest rate hike in nearly a decade.
Since the FOMC last met in mid-June, a series of major economic and geopolitical developments could compel the Committee to alter its long-term rate forecast. In early-July, minutes from the meeting showed that the participants "generally thought it was prudent," to assess the implications of the Brexit vote on global financial markets before deciding on the timing of further monetary policy tightening. After global markets quickly stabilized following an initial panic, Fed governor Daniel Tarullo said at a forum in Washington that he felt the world's financial system prepared itself "reasonably well," to handle the fallout from the Brexit decision. Federal Reserve chair Janet Yellen has yet to issue a public comment on the impact of the U.K. referendum on the worldwide economy.
The FOMC will also convene for the first time since the release of a relatively optimistic June U.S. employment report, in which the labor market added 287,000 nonfarm payrolls last month. The robust job gains could erase some negative sentiments from a disappointing report in May when the economy added only 38,000 nonfarm jobs – its lowest monthly total in six years.
Any rate hikes by the FOMC this year are viewed as bearish for gold, which struggles to compete versus high-yield bearing assets in periods of raising rate environments.
Elsewhere, gold remained supportive as a safe-haven asset after leading G20 officials continued to express widespread concerns on the strength of the global economy at a conference in Chengdu, China over the weekend. Gold is still up by more than 5% since the U.K. voted to leave the European Union on June 24, even as global stock markets linger near nine-month highs.
"We reiterate our determination to use all policy tools – monetary, fiscal and structural – to achieve our goal of strong, sustainable, balanced and inclusive growth," the leaders said in a joint statement.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, was relatively flat on Monday hovering at 97.35 in U.S. afternoon trading. The index remains near four-month highs. Over the last few weeks, the dollar has risen sharply against the Japanese Yen and British Pound amid signs of potential easing from both the Bank of Japan and Bank of England in coming months.
Dollar-denominated commodities such as Gold become more expensive for foreign purchasers when the dollar appreciates.
Energy
Oil drops to fresh 11-week low; WTI below $44 on U.S. drilling outlook
Oil prices extended overnight losses in North American trade on Monday, falling to a fresh 11-week low amid ongoing concerns over a global supply glut.
Crude oil sank to a session low of $43.24 a barrel, a level not seen since May 10. It last traded at $43.40 down 79 cents, or 1.79%.
On Friday, New York-traded oil fell 56 cents, or 1.25%, amid signs of an ongoing recovery in U.S. drilling activity.
Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. last week increased by 14 to 371, the fourth straight weekly rise and the seventh increase in eight 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.
The U.S. benchmark lost $1.93, or 3.83%, last week, after weekly supply data showed a surprising increase in gasoline inventories.
Despite being in the midst of the peak summer-driving season in the U.S., gasoline stocks are well above the upper limit of the average range, according to the EIA.
The report also showed that total U.S. crude oil inventories fell by 2.3 million barrels last week. But at 519.5 million barrels, stockpiles are at historically high levels for this time of year, the EIA said.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for October delivery slumped 75 cents, or 1.63%, to hit $45.34 a barrel, after falling to a daily low of $45.24, the weakest since May 11.
London-traded Brent futures declined $2.23, or 4.03%, last week, as prospects of increased exports from Libya and Iraq added to concerns that a glut of oil products will cut demand for crude by refiners.
According to market experts, elevated stocks of fuel products amid slowing global demand growth is expected to keep prices under pressure in the near-term.
In the week ahead, oil traders will be focusing on U.S. stockpile data on Tuesday and Wednesday for fresh supply-and-demand signals.
Market players will also continue to monitor supply disruptions across the world for further indications on the rebalancing of the market.
U.S. natural gas futures drop after rising to 2-week high
U.S. natural gas futures declined on Monday, falling for the first time in three sessions as investors locked in gains after prices climbed to a two-week high.
Natural gas shed 3.7 cents, or 1.35%, to trade at $2.706 per million British thermal units.
Prices climbed to a daily peak of $2.785 earlier, the most since July 11, as investors bet a heat wave making its way across the continental U.S. will prompt households to ramp up their air conditioning.
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 storage in the U.S. rose by 34 billion cubic feet last week, according to the U.S. Energy Information Administration, below forecasts for an increase of 39 billion. That compared 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.
Total U.S. natural gas storage stood at 3.277 trillion cubic feet, 14.4% higher than levels at this time a year ago and 17.1% 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.
Natural gas prices are down nearly 10% since reaching a 13-month high on July 1 amid speculation that July heat won’t prevent stockpiles from reaching a record before the winter.
Base Metals
Base metals edge up in thin volumes, await central bank meetings
Base metals were mostly in positive territory in thin volumes on the LME on Monday morning while traders await this week’s central bank meetings for fresh direction.
“It is not the most exciting market at the moment but nickel and zinc are getting more interesting as producers are selling a bit into the rally,” a category one member said.
A stronger dollar has continued to pressure metal prices while weakening energy prices have also weighed, broker Triland noted.
The dollar index rose peaked at 97.57 in today’s session and was last at 97.26. Investors have been attracted to the greenback after recent labour and housing data demonstrated that, despite the UK’s Brexit decision, the US economy was still on pace for its eighth year of expansion.
That momentum continued on Friday, with the US flash manufacturing PMI for July a forecast-beating 52.9.
Meanwhile, benchmark crude oil prices fell to two-and-a-half-month lows on Friday on concerns over rising gasoline stockpiles, with Brent crude slipping as low as $45.15 per barrel – it was last at a soft $45.59.
“The US FOMC meeting on Wednesday and [advance second-quarter US GDP growth] on Friday will be critical for the stronger US dollar story that has been evolving over the past two weeks,” the bank noted.
There are also expectations that the Bank of Japan (BoJ) will deliver additional stimulus measures this week although the Fed is seen holding steady – “the pace of activity remains too slow to persuade chair [Janet] Yellen and the doves that they should resume rate increases soon”, Citi noted.
In the metals, copper recently traded at $4,931 per tonne, up $11 on Friday’s close. Fewer than 3,000 lots have changed hands on Select so far.
In today’s warehouse data, copper stocks fell a net 1,375 tonnes to 221,350 tonnes and cancelled warrants climbed 1,375 tonnes to 85,850 tonnes.
Aluminium edged $3 lower to $1,608 after stocks fell 5,850 tonnes to 2,319,150 tonnes and cancelled warrants dropped 7,925 tonnes to 934,525 tonnes.
Nickel was $85 higher at $10,495, continuing to find support from developments in the Philippines – a sixth nickel miner has been ordered by the government to stop production at two of its operations due to environmental violations.
“There is fund money being put to work on nickel,” the category one member said. “Funds like a bullish narrative and spec for a metal that is so ‘cheap’.”
Nickel stocks fell 1,752 tonnes to 373,608 tonnes and cancelled warrants dropped 1,854 tonnes to 112,668 tonnes.
Lead climbed $12 to $1,852 – stocks edged 75 tonnes higher to 187,350 tonnes – and zinc at $2,265 was up $20, with stocks down 125 tonnes to 436,800 tonnes.
Agri commodity
Farmers planting pulses in big way; area up by 39%
Pulses area has increased by 39 per cent to 90.17 lakh hectare so far in the ongoing the 2016-17 kharif season on the back of good monsoon rains and higher support price and bonus offered to farmers. The area under pulses has increased sharply by 87 per cent in Karnataka to 14.09 lakh hectare as of today, from 7.53 lakh hectare when compared to the year-ago period, as per the data released by the Agriculture Ministry. Pulses area stood at 64.69 lakh hectare in the year-ago period. Farmers have taken pulses planting in a big way this time buoyed by sharp hike in the support price by up to Rs 425 per quintal as well as high retail price. As per the ministry's data, all kharif crops including pulses and paddy have been covered in 65 per cent of the total farm area of 1,062 lakh hectare. (Source: BS)
Analysts warn of cotton market 'correction' as Chinese imports slump
The recent rally in cotton futures could prove short-lived, analyst suggested, with little fresh bullish news and a big question mark hanging over US export prospects. US government export projections are being called into question, as the pace of Chinese import demand slows. And stalling momentum in the New York cotton markets could encourage a wave of investor selling. Chinese cotton imports in June were down 55% year on year, at 72,750 tonnes. Imports over the first half of 2016 were down 54%, at 431,250 tonnes. "A sharp fall in domestic prices and lower import quotas for tax-free imports are responsible for the slump in imports," said Commerzbank. The Chinese government is planning to auction off 2.0m tonnes of cotton from its massive state-owned inventories, accumulated during a defunct price support programme. Some 1.4m tonnes of cotton have been auctioned off so far. (Source: AM)
Anticipating shortage in 2016-17, Indian trader books raw sugar
Anticipating a shortage of sugar and increase in domestic prices in 2016- 17, an MNC trade house has contracted for import of 25,000 tonne raw sugar for processing in Maharashtra. However, the domestic sugar industry has categorically denied need of any sugar imports in 2016-17. Sugar prices have remained stable for more than a month and are expected to remain range bound for next few months. However, according to the preliminary estimate of Indian Sugar Mills Association (ISMA), sugar production in 2016-17 is expected to decline by over 7%. ISMA has estimated a closing balance of 43 lakh tonnes as on October 1, 2017, which will be sufficient to meet country's sugar requirement of two months, where as the government norm is to have a balance to meet requirement of three months. But, the industry says, the norm of three months made sense when sugar was a regulated commodity. (Source: ET)
India imports over 7 lakh tonnes of pulses in Apr-May
India has imported over 7 lakh tonnes of pulses during April-May of this fiscal to meet domestic demand, Parliament was informed on Tuesday. In a written reply to Lok Sabha, Food Minister Ram Vilas Paswan said the country has imported 7,05,477 tonnes of pulses in the first two months of 2016-17 fiscal. India had imported 57.97 lakh tonnes of pulses during the entire 2015-16 fiscal, the data showed. In reply to another query, Paswan said: "The production of pulses varies in the range of 17-19.5 million tonnes while demand for 2016-17 is estimated at 24.61 million tonnes." The deficit in domestic supply is met through imports primarily under private trade, he added. (Source: BS)
Technical Levels.
Gold
Support at 30600---30450 and Resistance at 31000---31150
Still trend looks weak and could test 30600---30450. Further downside panic will see only close below 30450 mark else it could test its resistance level of 31000---31150 again
Further upside rally will see only close above 31150 mark
Trade with levels only
Silver
Support at 45800---45500 and Resistance at 46800
Looks weak and could test 45800---45500 mark. Further downside panic will see only close below 45500 mark else it could test its resistance level of 47000 again
Further upside rally will see only close above 47000 mark
Trade with levels only
Crude oil
Support at 2820 and Resistance at 3050
Close below 2910 will take to 2850---2820. Further downside panic will see only close below 2830 mark else it could its resistance level of 2980---3050 again.
Trade with levels only
Copper
Support at 330 and Resistance at 337---340
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
Soyabean
Above 3690 will take to 3750---3820 mark. Further upside rally will see only close above 3820. Fresh selling can initiate only close below 3600 mark .
Trade with levels only. More will update during market hours.
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