Asian Metals Market Update: Inflation is running very far above target

March interest rate hike will not occur by the Federal Reserve. Federal Reserve chairman said yesterday in his testimony that “the US economy should weather the current COVID-19 surge with only "short-lived" impacts and was ready for the start of tighter monetary policy.”

FEDERAL RESERVE CHAIRMAN’S TESTIMONY YESTERDAY

1. High inflation did not become "entrenched".
2. A turn to higher policy interest rates and a runoff of its asset holdings was necessary to keep the current economic expansion underway.
3. Inflation is running very far above target.
4. The economy no longer needs or wants the very accommodative policies we have had in place,".
5. "It is a long road" to anything close to restrictive policy, Powell said.
6. Fed actions "should not have negative effects on the employment market," he added.
7. If prices continue spiking, the Fed could be forced to push through a sharper rise in interest rates this year than the three quarter-percentage-point hikes.
8. He now thinks inflation will ease by the middle of this year, but that the Fed stood ready to tighten borrowing costs as needed to be sure it does.
9. Powell gave no fresh hint about the timing for the liftoff in interest rates.
10. No decision had been made about when to let the size of the central bank's asset holdings decline, but that it was likely to happen "sooner and faster".

OUR VIEW

Interest rate hike in March will be dependent on inflation numbers of January and February months. March interest rate hike will be there only if inflation continues to rise preceding the (march) FOMC meet. The Federal Reserve chairman is trying to calibrate an interest rate hike without causing a sell-off in global stock markets. All these comments are just for readying the stock traders for an interest rate hike. Interest rate hikes and stock price rises will be there simultaneously. Powell is only increasing the size of the global asset bubble which should burst next year. Bullion traders should trade in the technical. Use a buy-on crashes strategy. Industrial metals are bullish. 2022 will be a year of historical growth. Demand will be at a historical high. Supply-side pressures will be there off and on.

TODAY

US consumer price index today has to come in higher than street expectation to cause a selloff in stocks, base metals. There should be a direct correlation between US ten year bond yields and bullion prices.

COMEX GOLD FEBRUARY 2022 – current price $1817.80

• Gold has to trade over $1808.60 to be in an intraday bullish zone and rise to 1839.40 and $1860.30.
• Gold will crash if it trades below $1808.60 after London opens to $1802.60 and $1792.70.

COMEX SILVER MARCH 2022 – current price $2278.20

• Silver has to trade over $2259 today to rise to $2326 and $2372.50.
• There will be a sell off if silver trades below $2259 to $2235 and $2189.

NYMEX CRUDE OIL (February 2022)  - current price $81.27

• Crude oil has to trade over $79.20 to rise to $83.76 and $86.70.
• There will be a very quick rise to $86.70 and $89.40 if crude oil manages to trade over $83.76 after 9:00pm Indian Time and day close.

COPPER MARCH 2022 – current price $446.20

• Copper has to trade over $439.10 to rise to $458.80.
• Copper will rise quickly if it manages to trade over $450.80 after LME opens.

BITCOIN-US DOLLAR (BTC/USD) – current price $42612.00

• Btc/usd can rise to $45697 as long as it trades over $41120.
• Use a buy on crashes strategy with a stop loss below $40800.

ETHERUM-US DOLLAR (ETH/USD) – current price $3241.80

• Etherum has to trade over $3147 to rise to $3630.90 and $3600.
• There will be a sell off only if eth/usd trades below $3170 to $3080 and $2887.
• USE A BUY ON CRASHES STRATEGY WITH A STOP LOSS BELOW $2900.