I am against taking seriously yesterday’s trend in gold and silver. I will call it profit taking by American traders after they returned from a vacation. Other than Federal Reserve most central banks are expected to start taking measures to reduce money supply this year. Australian central bank, European central bank and most Asian central banks are expected to start reducing money supply before the end of the year. Global coronavirus situation is still fragile. A new variant called “Mu” has started rising in USA. Media reports say that the “Mu” variant is deadlier than the “delta” variant. Taper talks, money supply reducing talks etc will not happen soon if new variants of coronavirus comes in one after the other. Gold and safe havens will rise or find buyers on dips. In the short term wild price swings will be there in all asset classes (including industrial metals and energies). My personal advise will be to use a combination of long term fundamentals and short term technical to trade and invest.
The coronavirus has resulted in a big tax burden for the masses worldwide (not just in India). Insurance costs have zoomed. Speculative demand created commodity inflation is an indirect tax on masses. Industrial metal price has a speculative portion of over fourty percent. Physical gold and physical silver are the only hedge against every decreasing purchasing power of paper currency. I am advising to increase allocation to twenty five percent in physical gold and physical silver (from fifteen percent) for investment made with tenure over five years.
US inflation numbers PPI and CPI, central bank meeting (Federal Reserve and ECB) and elections in Germany and Canada are the key factors (other than taper and coronavirus) which will affect global financial markets in September.
COMEX GOLD DECEMBER 2021 – current price $1799.60
- Fifty day moving average: $1796.80.
- One hundred day moving average: $1814.80
- Gold has to trade over $1796.80 to rise to $1814.80 and $1825.80.
- Gold will crash to $1777.50 and $1763.20 if it trades below $1796.80.
- Gold needs a daily close below $1796.80 continuously till Monday to be in a short term bearish zone.
Spot Silver: Intraday trading range is $23.54-$24.44. Silver will crash only if it trades below after ADP and till days close to $23.12 and $22.70.
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