The thing that I missed is the impact of the Chinese slowdown on precious metals, base metals, and energies. China is battling the worst of the coronavirus crisis. Crude oil will see a sell-off there is even a slight indication of a slowing down of the Chinese economy. Industrial metal exports from China will increase substantially if China slows. A higher zinc and aluminum exports (if any) from China will cool the rising price trend. Copper will be less affected by a Chinese slowdown as compared to other metals. One needs to keep a close watch on the Chinese economy and Chinese growth prospects for the next six months.
Gold and silver can correct first if there is a substantial reduction in the global liquidity scene. But falls or crashes will be short-lived. I am not ruling out the possibility of a sharp correction in case central banks take measures to reduce liquidity quickly.
FOMC MINUTES – Aggressive tightening in the offing
Federal Reserve released minutes from its last meeting that reinforced views the central bank may tighten aggressively to curb inflation. According to minutes of the March 15-16 policy meeting, Fed officials "generally agreed" to cut up to $95 billion a month from the central bank's asset holdings as another tool in the fight against surging inflation. (Source: Reuters News)
Our View: Right now these are all words and not backed by any action. Action time is still over three weeks away. There will be a reduction in speculative open (long) positions in base metals, energies, and soft commodities. There can be a fall in the price of all commodities (not just base metals and energies). But whether the fall (if any) trickles into lower purchase price by the consumer, remains to be seen. I am against buying or going long in any soft commodities, base metals, and energies at the current price. One needs to wait for next week’s trend and then decide on the short-term investment strategy for commodities. “Sit On Partial Cash should be the mantra till the end of April.”
COMEX SILVER MAY 2022 – Current market price $2441.30
- Silver has to trade over $2411.00 to rise to $2500.00 and $2537.00.
- Silver will crash if it trades below $2411.00 to $2387.00 and $2363.00.
NYMEX CRUDE OIL (May 2022) -- Current market price $97.86
- Fifty day moving average: $99.62.
- Crude oil has key long-term support at $94.50.
- There will be another big wave of sell-off only if crude oil trades below $94.50.
- Today crude oil needs to trade over $101.80 to be in an intraday bullish zone.