Big three weeks ahead with US jobs, US inflation numbers and Federal Reserve meeting and other central bank meetings.
There was a “U Turn” in interest rate expectation from a pause in June to a hike in June and July successive meetings of the Federal Reserve. This caused a selloff in gold, silver and copper. Technical breakdown and triggering of buy stop losses added to woes of buyers. Incoming US economic data releases last week indicated that slowdown is not there.
Hedge funds are net short in copper, base metals and natural gas. Oversold conditions exist.
Interest rate hike are over net over. Interest rate pause will be there in the third quarter. US dollar Index rose. I have a different view than the market. Interest rate pause can be there in June meeting if payrolls/NFP and CPI both fall. Lower hiring and lower inflation will force the Fed to pause. We need to keep a close watch on overall jobs scenario in USA. CPI should fall in the month of May in USA and in almost every nation worldwide.
How to trade and invest in the next three weeks
- Keep in mind the key long term support for gold, silver, copper, US dollar Index and crude oil.
- If they hold then invest or go long for the short term and medium term with strict higher trailing stop loss.
- Go short in gold, silver, and copper after looking at key US economic data releases on or from 31st May and 14th June. There has to be a technical breakdown before deciding on the short selling strategy.
- Low risk takers trade for intraday but use major price crash to invest for the short term with trailing stop loss depending on the trading strategy.
- There can be a gap opening daily between 31st May and 16th June. Be prepared for higher than normal volatility on certain days.
- Momentum is still down for gold and silver. A lot of long term investment buy stop losses will be triggered if copper, zinc and base metals fall this week and till 16th June. One should look for signs of bottom formation in silver, copper and base metals.
- One can start investing in gold and silver in small amounts and start averaging on any fall of more than five percent. Time period for investing is till Christmas and New Year.
US DOLLAR INDEX TECHNICAL
- 50 day moving average: 102.38
- 100 day moving average: 102.65
- 200 day moving average: 105.3750.
- US dollar Index has to trade over 102.02 to rise to 105.50 and 106.95.
- Crash or sell off or technical breakdown will be there only if DXY does not break 105.3750 this week and after June FOMC meeting.
COMEX SILVER JULY 2023 (current market price $2316.50)
- Key price to watch: $2346.00
- 100 day MA: $2346.00
- 200 day MA: $2200.50
- 600 day MA: $2345.00.
- Weekly View for silver: Silver has to trade over $2262.00 this week to rise to $2448.00 and $2505.00.
- There will be a long-term technical breakdown if silver trades below $2262.00 for three consecutive trading days to $2200.40 and more.
- Immediate support is at $2316.00. Mild sell off will be there if silver trades below $2316.00.
- A daily close below $2330 today and continuously till Friday can restart another big medium term bearish zone for silver.
- I am against new investment in silver at the current price. I will prefer to wait for trend after US May nonfarm payrolls on Friday and later decide.