Momentum and trend is hyper bullish for all US dollar denominated assets after the Federal Reserve chairman indirectly said of delayed taper (not from November as priced by traders) and no interest rate hike next year.
Jackson Hole comments by Federal Reserve chairman will be hyper inflationary and a selloff in the US dollar. Gold rises in both these scenarios (hyper-inflation and weaker US dollar). Global stock markets will continue to rise till the Federal Reserve meeting on 22nd September.
Federal Reserve and every central bank will be looking at September trend for economic growth and delta variant of coronavirus. If coronavirus cases does not rise then monetary stimulus withdrawal or interest rate hikes will be there. Coronavirus cases in September will dictate central bank’s monetary policy adjustment. They will tolerate hyper- inflation and bubbles in stock markets till mask free life does not return. Investment in physical gold is the only way to hedge against such a scenario.
What can bring down gold price? (a) US August jobs numbers and other August US economic parameters suggest continuation of current economic growth. US dollar gains and gold sells off in the short term. (b) Coronavirus cases show a sustained decline worldwide in September. Investors will reduce gold investment which was for safe haven purpose. (c) Gold gets a daily close below $1741. All price fall till $1741 in September month will be a part and parcel of the bullish trend.
On lighter note, I have received a lot of queries from friends and clients and a lot of people on the weekend intending to buy physical gold. Jackson hole comments by Federal Reserve chairman has spread like a wildfire worldwide. Physical demand of gold in India will rise very sharply this week. Premiums over MCX gold October future is also expected to rise this week. I find delhi/newdelhi as one city which buys least gold compared to other cities in India. This time it seems masses of delhi want to invest in physical gold.
COMEX SILVER DECEMBER 2021 – current price $2406.50
The moving averages
50 day: $2507.90
100 day: $2607.60
200 day: $2587.80
300 day: $2527.50
- Silver is bullish as long as it trades over four hundred day moving average of $2305.70 (not shown in above chart).
- Silver needs to trade over three hundred day moving average of $2527.50 in September to target $3049.
- If silver trades over $2527.50 after the release of US August nonfarm payrolls then chances of $3049 before FOMC meet on 22nd September will be very high.
- Silver will crash and test August lows if three hundred day moving average of $2527.50 is not broken in the next seven trading sessions. The reason is simple fatigue and switch over to gold will come in if the nearest resistance of $2527.50 is not breached.
To me silver is invest at current price for Christmas. Day traders, jobbers and weekly traders have to remain on the sidelines.