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Asian Metals Market Update: Fear of continuous rate hikes making metals sell-off

The fear of very high continuous interest rate hikes by central banks and untamable inflation is the reason for the sell-off in precious metals and base metals. There is a slowdown all over the world. India is also seeing a slowdown. Confusion is there among long-term investors and short term traders alike on the best-balanced portfolio. It is just a wait and watch for the interest rate hike drama to end by 22nd September.

The only hope for gold and silver bulls is that of a lower CPI numbers causing a sell off in global bond yields and an indication that a medium term bottom has been formed in bullion price.

The summer trading (In USA, UK, and Europe) comes to an end or the summer summary

No one will dare buy or invest in gold and silver after the pathetic performance between June and August this year.

  • Gold fell despite continuous central bank buying.
  • Gold fell despite inflation becoming a runaway bride.
  • Gold is not an inflation hedge has been said this year by the price moves.
  • Gold has been caught in whirlpool of big swings in all asset classes.
  • Gold fell as central banks created a slowdown by a historical high interest rates. The west has never seen such high interest rates. Asian people have seen high interest rate in the 80’s and early 90s.
  • Silver will never see big investment by the common man after the bear rampage in July and August.

Traders made huge losses in long positions in gold and silver. Physical buyers of gold and silver were at a loss as well due to historically volatile premiums.

Why Do I still recommend to invest in gold for the long term.

  1. Gold price in local currency is firm has not dropped much due to currency weakness.
  2. Gold’s performance is not bad at all in Usd/inr or Usd/pkr or Usd/idr or Usd/thb.
  3. The current bearish phase (in gold) is a passing phase which can last for another six months to nine months at the most.
  4. The current phase in US dollar index is the last phase of rise before the it vanishes. The extreme case scenario is another twelve months of gains for the greenback followed by a historical slump.
  5. I call treasuries as junk bonds. Junk bonds are always a short term play. Gold is still the best hedge for long term.

Gold’s message to traders at the end of the summer

  • Be flexible. Do not be an extreme bull or extreme bear.
  • Keep on booking partial profit on all the trades.
  • Use strict higher trailing stop losses.
  • Do not hesitate to go short if technical suggest.
  • Never ignore the herd or the momentum.

COMEX GOLD DECEMBER 2022  (current market price $1716.80)

  • Key intraday support: $1703.50
  • Key intraday resistance: $1730.50
  • Gold can fall to $1703.50, $1692.00 and $1657.20 as long as it trades below $1725.90
  • Overall trend is down as long as gold trades below $1730.

MCX ZINC SEPTEMBER 2022 (current market price Rs.306.50)

  • 50 day SMA: Rs.296.10
  • 200 day SMA: Rs.308.70
  • 100 day SMA: Rs.315.10
  • Key intraday support: Rs.304.80
  • Key intraday resistance: Rs.308.70 and Rs.313.30.
  • MCX Zinc september can fall to Rs.304.80 and Rs.304.50 and Rs.296.10 as long as it trades below Rs.308.70.
  • MCX Zinc september needs to trade over Rs.308.70 on daily closing basis to be in a short term bullish zone.

(prices in Indian Rupees above)

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