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Asian Metals Market Update: Diesel shortages, Inflation not topping, Gold and Silver not out of the bear's shadow..

So far gold and silver have managed to trade over key medium-term support of $1830 and $21.00. They are not yet out of the bear’s shadow. The sentiment is still bullish for the US dollar Index. US inflation is not showing signs of forming a short-term top. There is a diesel shortage in some cities in the USA. Diesel prices in the USA are rising every day. The great summer driving season of the USA will begin at the end of the month.

Trend after May options expiry is the key. Gold, silver, and copper can trade with a falling bias for the next three week (in case the fall continues till Monday). Gold has not got the benefit of rising inflation worldwide.

Morgan Stanley has reduced global growth expectations for 2022. They say that it will be very difficult to achieve pre-2020 growth due to hyperinflation and rising interest rates. Stagflation is here. Gold is falling in a stagflation world. Historically gold has performed best in stagflation times. Gold price rise and fall will be compared to other investments. Gold will be a winner if it falls less than alternate investments. One thing is for sure, it will be very difficult to break past $2000 before end of September unless the Ukraine situation goes nuclear.

Traders are now started discounting half a percent interest rate hike by the Federal reserve in the June meeting and July meetings. I am still sticking to my view of an interest rate hike of 0.50% in the June meeting followed by a pause for the rest of the year. Global consumption will be in a sink hole if Federal Reserve raises interest rates by 0.50% consecutively in June and July meetings. The multiplier effect will be tanking of Asian currencies and debt defaults by some Asian central banks and Asian corporates. The list will be endless. In short, the global banking system will collapse if there are two consecutive interest rate hikes of 0.50% by Federal Reserve by end of July. I will prefer to use crashes in gold and silver to increase allocation to physical gold and physical gold. I have never recommended investment in gold ETF. Future trading is only for a period of seven days to sixty days at the most.

Spot Gold: (current price $1852.70)

  • Gold will crash only if it trades below $1843.50 to $1834.70 and $1818.50.
  • Gold needs to trade over $1864.10 to continue its rise.
  • Intraday trend is neutral.

COMEX COPPER JULY 2022 (current price $418.20)

  • Key support is at $414.20
  • Key resistance is at $427.60.
  • Copper has to trade over $417.60 to rise to $434.30.


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