Protectionism is something we have ignored in the past few months. World focus in bond yields. Nations are trying to be self-independent in all possible ways. India’s policy of “Aaatmanirbhar bharat” (self sufficient India) is also a form of trade protectionism.
I support “Aaatmanirbhar bharat” as it will give impetus to small and tiny labor intensive sectors which lost due to underpriced and cheap Chinese imports. Huawei ban is also protectionism. Trade war is nothing but protectionism war.
Every nation is trying to create more jobs and protect its jobs sector through trade protectionism during this covid pandemic. A competitive industrial base cannot be set up overnight. A lot of nations have introducing import quotas till the time an industrial base is set up.
China will continue to be the factory of the world for another two years. Chinese exports should see a big long-term crash after. Gold will continue to rise for the next two years till nations reduce dependence on cheap imports (whether it’s from China or any other nations).
Another big fall out of so call “self-sufficiency” is that raw material cost of most items will zoom and rise multiple times in the next two years. Copper, silver, rhodium and palladium are some example of prices rising very fast this year. This is just the starting point for them and not the end.
Cotton and other soft commodities could be next. Industrial raw material (of any kind) could be the next gold over the next two years. Look for news signs of direct protectionism and indirect protectionism. This is going to rise. Gold prices can reach infinity.
Focus will be on surprises in today's FOMC minutes. Gold and silver are not impacted by US economic data releases. A sustained rise or a short term trend reversal to bullish in US bond yields will be bearish for gold.
Comex silver futures are expiring on 31st August. Silver will soon enter delivery period zone. There will be shortage of physical silver.
Day traders and jobbers need to remain on the sidelines.
COMEX GOLD DECEMBER 2020 – current price $1992.90
- Gold needs to trade over $1970-$1980 zone (till Friday) to rise to $2033.20 and $2078.10
- Crash or sell off will be there only if gold trades below $1970.30 till Friday
COMEX COPPER SEPTEMBER 2020 – current price $299.80
- Key resistance is at $304.30. Copper needs to break and trade over $304.30 to rise to $311.20 and $318.10.
- Sellers will be there below $294.20.
- The next four trading sessions are very crucial for copper bulls. Big rise due to a long term technical break out or a massive crash. There will be nothing in between.