I am amazed by trader’s worry over interest rate hikes by the Federal Reserve. A minimum 0.50% interest rate hike will be in September FOMC meet. There is the August CPI numbers before the FOMC. If the CPI comes around lowest side of expectation then interest rate hikes expectation will be reversed.
The big question is whether there will be a 0.50% interest rate hike in November, December and the January Federal Reserve meeting. To me, this is the only worry. A 0.50% in September followed by 0.25% for the next three federal reserve meetings will be bullish for all asset classes including precious metals.
I am expecting Biden to have full control of the US senate in the November elections. Hitlertarian power for Biden. Hunter will be hunting the world. Biden controlling US Senate (if any) will ensure that US dollar Index pares this year’s rise and move to a falling trajectory. US politicians could copy Indian politicians w.r.t freebies (only on paper) announcements. It is just the US dollar index rise for bullion.
Gold price have to show that they are delinked from moves in forex markets if they are to be truly called a safe haven. Even the tiniest nation is trying to increase its gold reserves. Gold is falling only in US dollar value. Gold prices are firm in every nation in their local currency.
The worst is getting factored in before the Jackson hole speech. Comments from Powell will reflect the stance for stocks, bond yields and forex. We are now just puppets at the hands of Federal Reserve. If Powell wants stocks to rise then this comments will reflect bullishness and vice-versa.
Food price inflation is here to stay. Europe, China, and Eastern India (the rice hub for India), are all facing severe drought. Crop yields will be pathetic. Nations will keep on hoarding food stuff or will stop exports.. There may be a drop in food price. But the drop will not be sustainable. A warm winter in northern hemisphere will only reduce crop production. Dense Fog and sustained temperatures below 10C will be needed in North India and central India’s wheat-producing regions. (between December to Mid February months).
COMEX GOLD DECEMBER 2022 (current market price $1751.20)
- Key intraday support: $1734.70
- Key intraday resistance: $1777.30
- Gold needs to trade over $1734.70 zone to rise to $1792.00
- There will be sell off only if gold trades below $1744 between 2:30 pm Indian Time and 10:30 pm Indian time to $1719.50 and $1704.20.
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