Short term traders are focused on the economic impact of delta variant of coronavirus. Crude oil sold off due to lesser demand expectation this week courtesy the virus. Crude oil traders are jittery. They are closing their long positions on any hint of a slowdown in demand. The only reason why I am bullish on crude oil is that aggressive short positions are not yet visible in crude oil futures. Natural gas is the dark horse as it continues to rise this summer. Natural gas is the star performer this summer.
Apart from US July ADP jobs numbers there are other US economic data releases which can affect the trend of all metals and forex. There is fear that US July employment numbers (ADP+NFP) will be below expectation due to increase in new variants of coronavirus in the second half of July. Trend is neutral for gold, silver, crude oil and US dollar index. Get ready for a five percent one way price move in gold and silver anytime till Monday. UK Pound will be very volatile before the bank of England meeting tomorrow.
Incoming US economic data releases between June NFP (non-farm payrolls) and Friday’s July NFP is very robust. It suggests a continued strength in US economy. Industrial metal demand in USA from the second quarter has been robust. Companies are trying to maintain higher inventory levels. Copper and other industrial metals demand for the rest of the year in USA is expected to be robust. US labour number will continue to rise over the coming months. New variants of coronavirus are an economic threat to the world economy and not just limited to USA. “Taper” and “inflation” words will go the dustbin if new variants of coronavirus creates a significant economic impact. The phrase to remember is “Significant Economic impact”. It is just and wait and watch for now.
A query from of mine. He says he want to generate a ten percent per month returnby trading in gold and silver.
On the weekend a school friend in the city of Hyderabad (India) asked me if can generate a ten percent per month return by trading and investing in bullion. My dear friend is already getting over seven percent per month return by trading and investing in Indian stock markets. My Reply to my friend: (a) My initial answer was straight forward no. It is very rare that gold and silver price rise ten percent or more in any month. (b) He can generate ten percent income by trading in MCX gold futures and MCX silver future. But risk are equally high. A Rs.100 profit in MCX gold 1kg future generates a profit of Rs.10,000. Intraday margin money required is not more Rs.1lac to trade in MCX gold future. Average MCX gold future intraday volatility is over Rs.300. One good trade a month is good enough generate a ten percent per month return. But risks are equally high as gold price is dictated by global news and view and not by local news. MCX silver futures are equally volatile as gold and does generate good return as compared to gold. Once again risk in silver is higher than gold. When I told him of risk associated with bullion future trading he was against it. (b) The next thing he ask me is can he generate a ten percent per month income by buying and selling physical gold and physical silver. Hyderabad is a city in India where gold demand is throughout the year. There is no cyclical period of low gold demand in the city of Hyderabad. Buying and silver of physical gold(in Hyderabad) is comparatively easy as compared to New Delhi and north India. If gold and silver price are very volatile one can generate a very high investment return by trading in physical gold and physical silver. Whether one can generate a return of ten percent per month, I am not sure. It all depends on the number of times a person is able to buy physical bullion and sell bullion. Risk is very less for trading in physical gold and physical silver but returns will be less than half of what one generates by in futures trading. (There is nothing hypothetical in this. I always prefer to tell everyone the risk factors of any investment and investment strategy. )
Comex Silver December (intraday view) Current Price $2559.10
- Support: $2514.00
- Resistance: $2586.00 and $2621.50
- View: Silver has to trade over $2525-$2530 zone to rise to $2621.50 and $2660.40.
- Silver will crash only if it trades below $2525 after the release of US July ADP numbers and till days close.
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