The sharp recovery in silver yesterday indicates that there is good investment demand around $22.00. For the next three weeks spot silver has to trade over $21.50 to try and rise to $24.00 and more. Or If I rephrase it, spot silver will see another wave of sell-off only if it trades below $21.50. But I am not going long in silver at the current price. I will prefer to wait and see for trend after London open and then decide.
A lot of short-term investment stop losses will be triggered if copper and zinc fall today. Physical buyers as usual will be absent from the market. Short sellers will continue to sell unless there is a sign of an intraday bottom. With Shanghai closed, LME short-selling punters will be active. (as seen yesterday night.)
Gold prices are still in a range. This range should be broken in the next two weeks.
Federal Reserve officials are saying that in 1986 they had cut interest rates only to raise back in 1987 as inflation zoomed. This 1986-1987 experience is making them cautious or “higher for longer” in cutting interest rates anytime soon. The biggest difference between 1986-1987 and now is the technological maturity, artificial intelligence adoption in financial markets and more leveraged financial products like ETF for everything and India and China importance to global supply chain and global demand.
In my view, there is a direct correlation between (i) risk appetite for investment in risky asset classes like commodities, cryptocurrencies, etc and (ii) Money supply changes. Interest rate cut and subsequent fall in bond yields will increase money supply. This in turn will be bearish for the US dollar index. A weaker greenback is pro-inflation for USA but anti-inflation for the rest of the world. Caution is needed by the Federal Reserve and most central banks so that there is long-term policy continuity. But traders are so fickle-minded on the first interest rate cut, they are playing Russian Roulette.
Bank of Japan’s interest rate moves will impact precious metals and base metal prices in a much bigger way than the first interest rate cut by the Federal Reserve. In case, bank of Japan delivers the first interest rate hike and moves away from zero interest rate policy (zirp), then we will see a very quick pace of rise in price of gold, silver, precious metals, copper, and all base metals. Commodity traders need to keep a close watch on (i) JGB’s or Japanese Government Bond Yields and its trend. (ii) Yen moves and trend versus the US dollar and other major currencies. In my view trillions of US dollars of Japanese Yen options are traded every day with end quarter end options the key. (iii) Real intentions of bank of Japan on its interest rates.
TODAY
Traders will start taking positions for US inflation numbers of next week (CPI and PPI). A low number will not cause an interest rate cut in March meeting. The thing is May or June meeting of Federal Reserve for the first interest rate cut.
Day traders and jobbers need to remain on the sidelines today.
Spot Gold (current market price $2033.60)
- Daily support: $2020.00
- Daily resistance: 2042.90 and $2059.60
- Spot gold has to trade over $2020.00 to be in an intraday bullish zone and rise to $2042.90 and $2059.60.
- Mild sell off will be there if spot gold trades below $2030.00.
PLATIMUM CME APRIL FUTURE (current market price $897.80)
- Daily support: $887.30
- Daily resistance: $908.70
- The technical correction was over in Platinum yesterday. It can rise to $915.00 and $930.00 as long as it trades over yesterday’s low of $877.50.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views o the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. All analyses used herein are subjective opinions of the author and should not be consider7ed as specific investment advice. Investors/Traders must consider all relevant risk factors including their own personal financial situation before trading. Prepared by Chintan Karnani Website www.insigniaconsultants.in.
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NOTES TO THE ABOVE REPORT
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