The Commodities Chronicle: Trends and Insights Shaping Global Markets

Silver Shines Amid Structural Deficits and Economic Signals

Silver prices nudged higher to ₹92,448, reflecting resilience backed by stronger-than-expected U.S. labor market data. November 2024 saw a rebound in job creation, with 227,000 new roles added, overshadowing October's hurricane-affected figures. Average hourly earnings rose by 0.4%, slightly beating forecasts, fueling confidence in a 25-basis-point Federal Reserve rate cut this month.

Globally, silver faces its fourth consecutive year of deficit, with an anticipated shortfall of 182 million ounces. Demand is projected to hit 1.21 billion ounces in 2024, driven by record industrial applications and revived jewelry consumption. Supply growth, aided by increased mining in the U.S. and Latin America, mitigates some pressures, while recycling contributes a modest 5% boost.

India’s silver imports surged dramatically in 2024, reaching 4,554 tons in the first half compared to just 560 tons a year ago. This spike stems from growing demand in solar panel production, electronics, and speculative investments.

Technically, silver futures indicate bullish sentiment, with rising open interest and price support at ₹91,765. A breakout above ₹93,195 could propel prices towards ₹93,950.

Crude Oil Faces Headwinds Despite Production Cuts

Crude oil prices dipped 1.36% to ₹5,726, burdened by subdued Chinese demand and increased U.S. output. U.S. crude inventories recorded a significant 5.073 million barrel drop, the largest in five months, yet broader market pressures persisted. Gasoline and distillate stock increases of over 2 million barrels each tempered bullish sentiment.

OPEC+ announced a delay in production cut reversals to April 2025, citing seasonal demand concerns and a potential global economic slowdown. Despite these measures, analysts predict persistent surpluses, with Brent prices averaging $65 per barrel in 2025.

Technically, crude oil futures signal bearish tendencies, with support at ₹5,676. Breaching this level could test ₹5,626, while resistance at ₹5,790 could drive prices to ₹5,854.

Gold Glimmers Amid Mixed Economic Data

Gold prices edged higher to ₹76,619, bolstered by November's U.S. jobs report that exceeded employment growth expectations but showed a rising unemployment rate. This mixed economic outlook reinforces expectations for a Federal Reserve rate cut.

Physical demand for gold softened in key markets like India and China due to elevated prices, with Indian dealers offering discounts of $2 per ounce and Chinese dealers widening discounts to $11-$15 per ounce. Conversely, central banks have been active buyers, with India leading October's purchases, adding 27 tonnes to its reserves.

Gold futures reflect bullish momentum, with support at ₹76,340 and resistance at ₹76,870. Breaching higher levels could see prices testing ₹77,120.

Copper: Buoyed by Tightening Supply and Strong Demand

Copper prices inched up to ₹821.75, driven by reduced Chinese inventories and tightening copper concentrate supply. The recent treatment charge agreement between Antofagasta and Jiangxi Copper raised concerns about limited availability.

China's copper demand remains robust, supported by manufacturing expansion and rising imports. The country’s unwrought copper imports rose 1.1% in October, reflecting seasonal demand recovery. Meanwhile, Shanghai Futures Exchange inventories fell 10%, underscoring supply constraints.

Copper futures indicate short covering, with support at ₹818.6. Resistance at ₹826.1 could push prices to ₹830.5 if breached.

Natural Gas: Seasonal Demand Lifts Prices

Natural gas prices rose modestly to ₹262, supported by cooler weather forecasts and increased LNG export flows. However, a smaller-than-expected inventory withdrawal of 30 billion cubic feet capped gains.

U.S. gas output averaged 102.2 billion cubic feet per day in December, reflecting a robust supply scenario. Inventories remain high, standing 7.8% above the five-year average.

Natural gas futures point to a bullish trend, with support at ₹257 and resistance at ₹265.2. A breakout could drive prices toward ₹268.3.

Aluminium and Zinc: Mixed Signals from Supply Dynamics

Aluminium prices dropped 1.14% to ₹243.3, pressured by higher Chinese production and export growth. October saw a year-on-year production increase of 1.6%, while exports surged 31%.

Meanwhile, zinc prices fell 1% to ₹286.05 as domestic production in key Chinese regions rebounded from maintenance. Despite the recovery, cumulative 2024 production remains 6% lower year-on-year.

Both metals face resistance near current levels, with aluminium at ₹245.5 and zinc at ₹289.7. Breaching these thresholds could spur upward momentum.

Jeera and Turmeric: Weather and Supply Chain Impacts

Jeera prices climbed to ₹23,855 due to delayed sowing in Gujarat and Rajasthan. The acreage decline raises concerns of a production drop for the upcoming season, supporting bullish sentiment.

Turmeric prices fell slightly to ₹13,186, reflecting profit booking and increased arrivals. However, delayed harvesting may tighten supplies in the coming months.

In conclusion, The commodities market remains a complex interplay of global and regional factors, from structural deficits in silver to supply dynamics in crude oil, metals, and agricultural products. Investors and traders should stay vigilant, monitoring macroeconomic signals and technical indicators to navigate this evolving landscape.