Commodity Online Monsoon covering the entire country five days ahead of schedule , good rainfall activity over Rajasthan, and news that majority of food prices with in the whole sale price index had come down despite soaring inflation were the major highlights of the past week. Meanwhile, a report from the Union Ministry of Agriculture has pointed out that acreage under rice production has increased while Among the crops that have increased acreage this year include maize (33.71 lakh ha) as against 31.02 lakh ha last year, soybeans from 43.92 lakh ha to 53.99 lakh ha.
Meanwhile, acreage of cotton, sugar cane and jowar have come down. Cotton area has decreased to 39.17 lakh hectares as against 63.38 lakh hectares last year, while sugarcane acreage has decreased to 43.19 lakh hectares from 52.82 lakh hectares last year. Jowar’s acreage has also decreased from 17.19 lakh ha to 12.12 lakh ha. Arcreage changes for major crops, monsoon progress and global oil prices will determine the price movements in the week ahead.
Gold Last week was very volatile for precious metals, as prices of gold in the international market plummeted sharply on the first two days of the week. Spot Gold prices touched low of $912.40/oz before bouncing back sharply. Gold rallied nearly 2 percent on Thursday, boosted by firmer oil prices, a weaker dollar and technical buying including automatic orders triggered as gold ruptured resistance levels.
Gold jumped as high as $947.40 an ounce on Thursday; it’s strongest since April 17, when it touched $952.60 an ounce. India's gold imports in June fell 67.6% year-on-year, due to high gold prices. Given the background of rising inflationary along with recessionary fears, and with geopolitical tension surrounding Iran still running high, we would look for the Gold to find continued scaled down support, and ultimately break higher once resistance around $953-$955 is cleared.
For mid-term, near-record crude prices are seen as a major supportive factor for the precious metal. Oil prices at these levels should anchor precious metal investment demand as investors seek portfolio protection against rising global inflation expectations.
Silver prices are expected to follow gold prices for near term. On the International front, Spot Gold is meeting with stiff resistance at $970/oz levels, where as support is seen at $930 and then at $910/oz levels. MCX August Gold support stands at Rs.12800/112620 & resistance at Rs.13350/13525 per 10 gram.
Crude Oil Crude oil futures managed to recover towards the end of last week, as prices jumped more than $5 to close above $141a barrel, as rising tensions in Nigeria and Iran intensified. Fall in US dollar also helped oil prices to gain further. Iran tested more missiles in the Gulf on Thursday, state media reported, and the United States reminded Tehran that it was ready to defend its allies.
The main militant group in Nigeria's oil-producing Niger Delta said on Thursday it was abandoning a unilateral cease-fire, in protest at a British offer to help tackle lawlessness in the region.
Fresh Iranian missile tests overnight and a declaration by MEND rebels of an end to the current cease-fire are motivating buyers to remain long in crude oil. Prices are expected to trade in the range of $135 to $155 per barrel. For this week, MCX July contract is expected to face resistance at Rs. 6550 and support is seen at Rs. 5710 per barrel on the lower side.
Base Metal The base metals pack witnessed phenomenal performance in the week gone by. Metals with weak fundamentals gained on the back of a major bout of technical buying and short-covering. We have noticed in the past few days that the six base metals have seen divided performance as three metals i.e., copper, aluminum and tin have strong fundamentals while zinc, lead and nickel have poor fundamentals.
However, last week’s gain in the complete base metals complex including zinc, lead and nickel indicated strong technical support. Fundamental factors like supply constraints and expected cut in production also added spice to the rally. However, the base metals closed off session highs on Friday on the back of profit-booking before the weekend. Copper’s upside is capped due to concerns over slowing demand in China. However, expected strikes in Peru is providing cushion to the downside in copper. The coming week could see heavy volatility as this technically led rally could be followed by heavy profit-booking as metals like zinc, lead and nickel do not have any strong fundamental backing.
