If gold and silver prices fall this week then they will test September lows and may be even fall below September lows. This is a big week for gold and silver. I am bullish on gold and silver and will prefer to use sharp fall of this week to invest for early November. Those are already long in gold and silver should wait till Wednesday and then decide.
FOMC minutes and various Federal Reserve speakers can impact markets. Lots of US economic data releases are there. Economic data releases from the USA and world will impact only temporarily as there are a lot other news which have a greater say at the moment. Jobbers and day traders trade when you're near your trading screen. Just focus on making profitable trades.
Factors which will impact metals and currencies in the final quarter:
- Trump’s recovery from covid and its impact on US presidential elections. Investment world is now preparing for Biden as the next US president.
- Brexit issues are yet to be resolved. Euro and Pound both would have zoomed against the US dollar but for brexit squabbling.
- Investment demand in metals and energies. Third quarter of the year got massive investment demand in all metals and natural gas. Crude oil was an untouchable. It will not be easy for metals to match or break Q3 investment demand, unless there are no alternate investment avenues worldwide.
- New stimulus measures from China and USA is expected in October. Precious metals, industrial metals and energies will zoom as and when they are announced. World is looking forward to these announcement.
- US dollar Index and trend of bond yields will also need a close watch. More so if they see a sustained rise.
- I am bullish on physical demand for gold, silver and copper in October. India will see a good demand for gold and silver in the second half of the year. World is waiting for gold and silver prices to see another sell off so that they mop up the physical stocks.
- Last but not the least, covid risk etc is always there. A vaccine passing the third and final stage will always shake the global financial markets. Industrial metals will zoom if a vaccine is available. Gold and silver can fall more and then make for a new high.
I am not talking about good economic and bad economic as prices of metals and energies is all about momentum. Day trading in September has been difficult. Short term investment has been difficult in September. Long term investors of gold, silver, copper, crude oil and natural gas will be a bit scared if prices fall next week.
Economics is not affecting price moves and investment decisions worldwide. There is still short term uncertainties of all kinds. Herd prices moves is there in almost all asset classes.
How to trade and invest in copper and industrial metals?
Mr.Rao an Indian professional working in Vietnam just asked me this question. He is a subscriber to our reports. He just gave a suggestion as gold and silver are not easy to trade and invest, should be trade in copper futures as well. I personally love copper. In India’s MCX copper futures is the safest metal (after gold) to trade and invest.
I have been tracking copper since 2004 when it was trading around $1500 (LME copper 3 months). Please note the following points before you invest in copper.
- Copper and most industrial metals price moves in a trend or a one way direction.
- There will be long periods (even months) when copper prices consolidate. There after a sudden technical breakout or a technical breakdown happens.
- Losses happen when you have an opposite trade on the technical breakout day or a technical breakdown day.
- Retail traders have the habit of rolling over loss making positions for the next trading day. BUT they close profit making position at the end of the day. Such a trading strategy can erode all your capital if you trade in copper.
- In 2020 January to mid-February copper prices consolidated. Mid February to end March copper prices nosedived. Thereafter copper prices have been rising. A short position in comex copper futures in April would have eroded your capital. The “V” shaped price move in copper between 30th September 2020 and 2nd October 2020 does not happen day every day. Massive buy stop losses were triggered on these dates. Investing prudence is needed on such days.
- Copper price moves on fundamentals of world economy of atleast six months and more. Speculative money is there in copper in a world of negative interest rates. But speculative money does not change overnight (like gold and silver and bonds).
- Lastly never treat copper as a cyclical play.
COMEX GOLD DECEMBER 2020 – current price $1898.70
- Gold needs to trade over $1872 this week to rise to $1925.00 and $1943.80.
- Sell off will be there only if gold trades below $1890.
- Gold will crash only if it trades below $1872 this week.
COMEX SILVER DECEMBER 2020 – current price $2393.50
- Silver needs to trade over $2320 this week to rise to $2500 and $2633.
- Silver will crash only if it trades below $2320 this week.