Argentina central banks raised interest rates by three percent yesterday. Bank of England and Swiss central bank also raised interest rates yesterday. Federal reserve raised interest rates on Wednesday. Almost every central bank is raising interest rates on emergency basis to curb inflation. Global money supply is falling with passing of each day. There is even nervousness among political leaders over mass unrest and re-election prospects. Gold will rise or remain firm or fall far less than other asset classes.
Every other factor is bullish for gold other than strong US dollar and rising bond yields. Every central bank is steadily increasing its gold reserves. China and Japan have reduced investment in US treasuries. China's holdings of U.S Treasuries tumbled in April to their lowest since May 2010. Japan's holdings of U.S. Treasuries fell further in April to their lowest since January 2020. The real purchasing power of the US dollar is on the decline. US dollar Index on paper is rising. The biggest fallout of the Ukraine crisis is that even NATO member states are increasing gold reserves. They are not idiots.
Gold is the real safe haven as it has remained firm on the back of the selloff in stock markets. In India, it is very easy to convince people to buy physical gold for investment. But it is very difficult to convince people to liquidate some of the stock investment and switch to gold investment (in any form). Most, hardcore stock traders and stock investors want a return of over twenty percent in India. Gold rarely rises twenty percent any year (except for 2007 or 2020 among others). Most stocks in India are near a twelve month low. Gold price (in India) is way over the price twelve months before. This is something stock traders never understand.
In May-June 2014, Indian stock markets crashed. I had to wait for three years to be in a profit in some of the fundamentally strong stocks with a high dividend payout. Gold price rise has been steady. All I am trying to convey is that one should increase gold in their portfolio. Even young Indian investors who are less than thirty years old should include physical gold and gold etf as a part of retirement planning.
Monday is a holiday in the USA. Traders will start taking positions for Tuesday. Global stock markets have to rise on profit-taking. If US stock futures fall today and they close much lower, then all hell will break loose on Monday in Asia. Intraday volatility will rise sharply.
Spot Silver: (current price $21.79)
- Key supports: $21.38
- Key resistances: 22.09 and $22.35
- Silver has to trade over $21.90 to rise to $22.35 and $22.84.
- There will be a sell off only if silver trades below $21.40.
MCX Crude oil 19th July 2022: (previous day close/CMP Rs.8938.00)
- Key support: Rs.8701 and Rs.8802.
- Key intraday resistance Rs.9098
- Crude oil has to trade over 8802 to be in an intraday bullish zone and rise to 9098 and 9270 and 9364
- Crude oil will crash if it trades below 8801 to 8753 and 8701, 8587 and 8444.
- Key support till next week is at 8701. There can be a flash crash if crude oil trades below 8701.
(prices are Indian rupees above)