Asian Metals Market Update: Bitcoin-Crypto Crash Benefits Gold and Silver

July 05, 2024

Asian Metals Market Update for 5^th July 2024

Crash or sell off in bitcoin and crypto currencies is one the reason for this week rise in gold and silver. Crypto currencies will always be a short-term competitor to precious metals. In the long term, precious metals investment will always be much more than crypto currencies.

Trend, technical and momentum are all very bullish for precious metals and base metals. September interest rate hike by the Federal Reserve is now more or less factored in by the markets. The next big bet by the traders will be the number of interest rate cuts by the Federal Reserve, European central bank and Bank of England over the next twelve months.

My worry is and will always be a increased short term frequency of boom-bust price moves in all asset classes before the first interest rate cut by the Federal Reserve. In the last five years, there has been extremity in stance of interest rates and monetary policy by the Federal Reserve and most central banks. Losses are mounting for some short-term traders. They are not able to make good profit due to off and onn boom-bust. Option trading volumes are increasing worldwide mainly due to frequent boom-bust price move. In India, in my view, small traders are buying put options or buying call options for any asset class like a lottery. They know the maximum risk while buying any option. But some traders are making more losses as they try to recover the past losses in option buying strategy. My personal view is to reduce option buying/selling and instead increase long term portfolio allocation to physical gold. To me, long term is a period of five years and more.

For long term investment in any asset classes, I will prefer to look for news which alters the long term fundamental bullish outlook. If not, then I will prefer to sleep on that investment. However, for short term investment I will prefer to use trailing stop loss. Keep a close watch on technical charts and speculative interest in that asset classes. I know a lot of people who worry on long term Mark to Market (MTM) value if they do not rise at the end the week. If something is fundamentally bullish it will rise later than sooner. We just need to be patient. Gold and silver and copper investors need to be patient if price consolidate for a very long period of time.

US June nonfarm payrolls need to show a strong side of US economy. If not then there will be another wave of rise in gold, silver, copper and base metals and energies. A headline number over 275,000 along with a fall in unemployment rate by 0.20% is needed for a sell off in gold and silver. Base metals and energy price generally are unaffected by NFP numbers.

COMEX GOLD AUGUST 2024 -- current price $2372.00

14 DAY VIEW: Gold August to trade over $2334.50 (for the next fourteen days) to rise to $2447.60 and $2521.90 and $2651.50.
Crash or sell off will be there if Gold August does not break $2420.20 by 19th July to $2318.10 and $2291.50 and more.
A daily close over $2404.30 for five consecutive trading sessions can result in prices nearing $2600 before FOMC on 31st July.

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