Asian Metals Market Update for 12th August 2024

August 12, 2024

Last-minute position squaring and rebuilding before the release of July CPI and PPI numbers can result in sharp two-way price moves in gold, silver, and copper. Crude oil and energies will be unaffected by US inflation numbers.

Extreme global interconnection with mobile devices is the lesson that I learned in the past two weeks. I was surprised that people and traders were expecting another interest rate hike by the Bank of Japan in September. The net result was the sell-off frenzy. Reaction to US July nonfarm payrolls has been a bit extreme. But this is again the extreme global interconnection for investments. People do not keep any money in the bank. They invest for the short term in any short-term momentum trades. This has only increased the global interconnection. Continuous and very frequent boom-bust type of price moves will be there. There is a hyperrecession bug. By the middle of October, this narrative will change to a mild slowdown and even very slow growth. We need to live with the extreme global interconnection of investment and businesses. Profit protection for business and capital protection for investment need to be done at any cost.

Be extra watchful in all asset classes and not just precious metals and base metals. Do not get overwhelmed by hype, furor, and momentum to make short-term investment decisions for all asset classes. “Prudence based on each one’s risk-taking capacity” is needed for the next four weeks.

COMEX SILVER SEPTEMBER 2024 - View for the week 12th August to 16th August:

Key weekly support: $2685.00
Key weekly resistance: $2832.50
Silver September needs to trade over $2685.00 this week to rise to $2874.50, $2989.30 and more.
Crash or sell off will be there if silver September does not break $2813.50 by Wednesday close or 14th August close.

USD/JPY - View for the week 12th August to 16th August:

100-day simple moving average: 155.30
200-day simple moving average: 151.45
50-week simple moving average: 150.85
100-week simple moving average: 144.40 (this is the key support till end of September)
Key weekly support: 143.50
Key weekly resistance: 152.60 and 156.80
Usd/jpy needs to trade over $145.10 on a daily closing basis this week to rise to 152.80, 155.30, and more.
A daily close below 145.10 for a minimum of three consecutive trading sessions is needed for another wave of sell-off in yen to 140.40 and more.

Yen currency carry trade cannot be unwound in a week or two. News media and social media is bluffing you. Over twenty years of hyperactivity in the yen carry trade cannot be unwound in two weeks or less. Corporations, worldwide still have huge yen loan liabilities. A 25bps rise in interest rates and furthermore, still makes yen an attractive carry trade in forex markets. Asia (Other than China and Singapore) fully hedged yen loans are much cheaper than loans in local currency.

The problem rose and was exacerbated after retail traders started taking yen loans for trading purpose and investing purpose allover the world. Yen loans have moved the termite way among retail traders worldwide. Obviously, fully hedged costs will be way higher for small denomination yen loans as compared to large yen loans by corporates. Fears trading and fear investing always bring astonishing result. Last week was one such week.

Intervention will be there by the Bank of Japan for the rest of the year. Federal Reserve and other key central banks will keep a close on yen moves. They could also intervene in indirectly.

Disclaimer

The investment ideas provided is purely independent view point and are solely for collective learning and for academic interests. There is no commercial benefit accruing or have deemed to accrue to me out of providing such investment ideas.
The investment ideas shared here cannot be construed as investment advice or so. If any reader is acting on these advices, they are requested to apply their prudence and consult their financial advisor before acting on any of the recommendations made here. I am not responsible to anybody in the event of profits and losses (if any) upon acting on such advice.
I hope that our reader is aware about this well aware of the risk involved in trading in commodity derivative trading.

Disclosure: I trade in India's MCX commodity exchange. I have open positions in India's MCX commodity future. I do not trade in CME future or OTC spot gold and spot silver.

NOTES TO THE ABOVE REPORT