The reason that I missed the current fall in gold, silver, and base metals is the unwinding of long USD/JPY positions. Commodity trading have a higher risk quotient as compared to stocks and bonds. Japanese traders and Japanese hedge funds are reducing their investment in risky short-term investment. Precious metals have fallen from the monthly highs party due to gains in USD/JPY or profit booking by the Japanese.
Unwinding of Japanese Yen currency trades, if it continues will only have a negative impact on precious metals and base metals and/or prevent it from a big rise. Usd/jpy is trading around 152.50. The two-hundred-day simple moving average is around 151.50. Precious metals short-term bulls hope that usd/does not fall below 150.50 in the next two weeks. (Assuming some undershooting from two hundred days simple moving averages.). There can be more short-term speculative sell-off in USD/JPY falls below 150.50 and also trades below 150.50. Please keep a close watch at USD/JPY for the next two weeks.
India slashed import duties on gold and silver to 6% from 15%. I was not expecting a custom duty. Inflows to bond markets will be rising steadily after India’s inclusion in global bond indexes. Indian government custom duty cut on gold, silver and platinum serves (i) Foreign exchange outflows increase. (ii) Gold smuggling will be reduced significantly. Anti-nationals will get less money from gold smuggling. (iii) Official gold imports will rise significantly. Now we will have an accurate picture of India’s gold consumption.
Physical demand and jewelry demand in India will be very high. Most people will not wait for the Hindu festive season (which starts around 1st October) to buy. Indian demand for precious metals is price-sensitive.
US Inflation, US jobs, and Federal Reserve meeting are all there in the next eight days. One needs to look for signs of a medium-term bottom in gold, silver, copper and base metals in the next eight days.
A lot of short-term buy-stop losses have been triggered by the current fall in gold price and silver price and copper price. As a prudent trader or a prudent investor our goal is to protect capital despite taking risky trades. Each individual has to decide on the amount wise risk which he/she has to take.
Most people make losses on whats there on social media. For example, when copper was over $10500 in May this year, social media was filled with view of over $40,000 over the coming year. Those who invested in copper in May 2024 are nurturing huge losses. Similar thing is happening with silver.
I have also given bullish views in this “Asian Metals Market Update”. They have also flopped some times. I am not trying to justify my incorrect analysis. News flows like Trump's failed assassination attempt, India cutting customs duty on precious metal imports or the Historical Bank of Japan intervention in FOREX markets are non-recurring events. These cannot be predicted. This is why we use trailing top losses in short-term trades and medium-term investments.
Gold and silver are still bullish for the long term. My long term is a period between three years and five years. I intend to use all the crash in silver prices in India till the end of August to increase investment in physical silver. I believe there is more value in physical silver investing (in case of price trades with a falling trend in August month.). However, at the current price I am on the sidelines and buy physical silver only if there is a technical breakout in spot silver.
SPOT Silver – (Current market price $27.95)
- 50 day simple MA: $30.24
- 100 day simple MA: $28.52
- 200 day simple MA: $25.91
- TODAY VIEW: Spot silver has to trade over $27.70 to rise to $29.21, $29.67 and more.
- Crash or sell off will be there if spot silver trades below $27.70 both in London and USA to $26.97 and more.
- The above is just view for Today or intraday.
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
- ALL VIEWS ARE INTRADAY UNLESS OTHERWISE SPECIFIED
- Follow us on Twitter @chintankarnani
- PLEASE NOTE: HOLDS MEANS HOLDS ON DAILY CLOSING BASIS
- PLEASE USE APPROPRIATE STOP LOSSES ON INTRA DAY TRADES TO LIMIT LOSSES.
- THE TIME GIVEN IN THE REPORT IS THE TIME OF COMPLETION OF REPORT
- ALL PRICES/QUOTES IN THIS REPORT ARE IN US DOLLAR UNLESS OTHERWISE SPECIFED.
- ALL NEWS IS TAKEN FROM REUTERS NEWSWIRES.
- TECHNICAL ANALYSIS IS DONE FROM TRADINGVIEW SOFTWARE
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