China reopening from yesterday and the start of fourty day celebration of the Chinese Year of Rabbit has caused a big rise in precious metals and industrial metals. Traders are expecting the Chinese to empty their pockets on everything. The big Chinese splurge expectation is the only reason for the Monday morning sharp rise. Momentum is very bullish for all metals and energies. There will be a technical breakout if the rise continues today after London AM Fix.
Chinese central bank buying gold for two consecutive months in November and December has caught everyone by surprise. The pace of rise of gold can be very fast with every $25 rise from here on. Bullish trend is there for gold.
Silver and copper are bullish. There will be another big wave of rise if price rise continues this week and next week. Crude oil is bullish. Natural gas is oversold.
Trades are not yet finished focusing away from interest rates. They are happy that the Federal Reserve will raise interest rates by 0.25% in 1st February FOMC meeting followed by a pause thereafter.
US December nonfarm payrolls around 223,000 suggests less impact on US economy by the interest rate hikes in 2022. ISM (manufacturing and non-manufacturing) both contracted in December suggested mild slowdown in US economy. This has created a “Goldilocks scenario” for the Federal Reserve. Goldilocks nation implies a steady growth coupled with stable to falling inflation trend. Gold and silver generally are bullish whenever the Federal Reserve faces a Goldilocks dilemma.
I expect a sharp fall in inflation in December in USA. CPI and PPI should fall. A falling CPI and PPI (if any) will be bearish for the US dollar and start another wave of rise for gold, silver, and Asian stocks. A very sharp rise in CPI and PPI is needed to cause a short term bearish trend in gold and silver.
China opening freely. China taking steps to restore the lost faith in housing market is the biggest surprise last week. Copper will be the biggest beneficiary if Chinese housing market near pre covid. Social media is still filled with sub $7000 LME for copper this year. I have a reverse view and expect copper price to break past $12000 in the final quarter of the year. But copper and industrial metal bulls, have to bear and grin high volatility till Easters.
COMEX SILVER MARCH 2023 (current market price: $2416.00)
- 600 day simple moving average: $2372.50
- 400 day simple moving average: $2266.50
- 100% retracement: $2540.00
- Silver has to trade over $2310 this week to rise to $2485.50 and $2572.70.
- Crash or sell off will be there only if silver trades below $2310.00 any day in USA session.
- Initial support is at $2362. There will also be sellers in silver if it trades below $2362.
COMEX COPPER MARCH 2023 (current market price $396.60)
- 600 day simple moving average: $397.50
- 200 day simple moving average: $384.17
- 50 day simple moving average: $372.40
- Copper needs to trade over $380.10 this week to rise to $413.20 and $431.10.
- Copper will crash if it trades below $380.10 any day in USA session.
- A daily close over $403.00 for five consecutive trading sessions will result in a copper breaking past $460.
Investment demand will rise sharply in precious metals and industrial metals if and only if there is indication that there will be a sustained break of key resistances. Keep a close watch on China and economic developments in China and policy changes in China.
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