Interest rate hikes chances are looking less for today’s European central bank meeting. Bank of England meeting next week will pause on interest rate hikes. Federal Reserve is expected to raise interest rates by a token 0.25% next week. I am seeing an increase in bets of early interest rate pause.
Bailing out banks and bank depositors is an indirect way of injecting liquidity and indirect interest rate cut. Global liquidity will rise sharply over the coming weeks and coming months. World will enter a period of increasing money supply for the rest of the year and next year. Fear of rescue of another “too big too fail” large businesses will ensure a bullish trend in gold and silver and safe havens.
Position squaring and rebuilding for FOMC meet next week still continues. Quarter end position squaring and rebuilding has started. Volatility will rise till next week. Sharp two way stop loss eating price moves is the new norm.
Credit Suisse will borrow up to $54 billion from the Swiss central bank to shore up its liquidity. There are lot of banks which have received funding from central banks but the news will never come out. Collapse has been averted of the global banking system. Bank bailout memories will vanish from traders’ minds once stock markets move into a bullish zone. Central banks will ignore everything (including inflation factors) for a revival of the bullish trend in global stock markets. To me the short term bear trend in global stocks will hopefully be over before the Federal Reserve meeting. Only an interest rate hike of 0.50% in the forthcoming meeting (of Federal Reserve) this year will cause another massive collapse in global stocks.
Spot gold needs to trade over $1905 till tomorrow to be in a bullish zone. Spot silver has to trade over $21.30 till next week to in a bullish zone. Trend after London AM Fix is the key.
Spot Gold
- Daily support: $1887.10 and $1905.10
- Daily resistance: $1937.20 and $1955.40
- Gold needs to trade over $1905.10 to rise to $1955.40 and $1989.60.
- Mild sell off will be there if gold trades below $1905.10 today.
- Crash/sell off will be there in case spot gold does not break $1947.00 by tomorrow.
Spot Silver:
- Daily Support: $21.20 and $21.60
- Daily Resistance: $22.37 and $23.01
- Spot silver has to trade over $21.60 to rise to $23.01
- Crash/sell off will be there only if silver trades $21.60 after London opens to $21.22 and $20.87 and $20.60.
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