If spot gold falls and trade below $1848 in USA session then it will nosedive. Trend in USA session is the key. Traders and short term investors are caught between covid induced lockdown (in eurozone, UK and USA) and covid vaccine. Short term volatility will be there. Traders will start taking positions for “Thanksgiving” in seven days from now. Gold, copper and silver December future will expire in eleven days. Position squaring and rebuilding has started. Overall gold is still a buy on sharp dips strategy. Silver is bullish. However a sharp “V” shaped prices move can happen anytime in silver and copper.
Gold price trend with Biden as president of USA (part 1 of part2)
Current volatility in gold and silver is due to two factors (1) USA under Joseph Biden as president. (2) Word economy and Life once a covid vaccine is available for the masses. Generally there is an international policy continuity in USA on the political front. Change in president has never changed the overall political policies. To me Turkey-USA relations (after speculation of USA supplying F35 aircraft to Greece as counter to S400 Russian anti-aircraft system and Turkey’s direct involvement in Armenia-Azerbaijan conflict). In the next four years one will need to closely look at Turkey and its relations with Eurozone leaders and USA. Turkey is self sufficient in a lot of things. Turkey has a big influence among Islamic nations. Turkey is one of the largest consumers of gold. Per capita gold demand in Turkey is highest in the world. Any significant worsening of relations between Turkey and NATO alliance will ensure that gold prices easily break past $3500 in the next four years. In the next four years $1450 is the worst case downside risk for gold with every possibility of $3500. Risk to return ratio recommends to invest in gold at current price for the long term.
Financial policies and trade policies will change under Biden. Federal Reserve policies under Biden will be different than Trump between 2021 and 2024. Trade relations between USA and its NATO members will need a close watch. The formation of Regional Comprehensive Economic Partnership (RCEP) has a number of NATO members. USA’s trade dictatorial policies with be less effective with RCEP members. Purchasing power of the greenback will see a significant fall under Biden. Trump started the great decline of the greenback. Biden’s rule will ensure that the last leg of US dollars decline comes to an end. Digital currencies (supported by central banks) will take over paper currencies. Digitization of global currencies will result in hour to hour manipulation by central banks of financial markets. Common retail investors will be mere pawns at the hands of central banks, central banks affiliated business houses and central bank affiliated hedge funds. Gold, bitcoin and selected crypto currencies will be the only hedge against hour to hour central bank manipulation.
Russia-Eurozone relation particularly on Nord-stream 2 will need a close watch under Biden’s presidency. USA is trying its best to scuttle the Nord-stream2 gas pipelines. Global energy future lies in natural gas and not on crude oil. USA is trying its best to ensure that it dictates global natural gas prices (in the long term).
Germany-USA relations can change under Biden. There will be a leadership change in Germany. Angela Merkel will not be there as Germany’s head. USA-Germany relations has been the best (post world war 2)under Merkel. Questions will remain over continuity.
COMEX GOLD DECEMBER 2020 – current price $1858.40
- Gold will crash if it trades below $1848 to $1818.00 and $1797.90
- Overall trend is down as long as gold trades below $1871.
- Gold has to trade over $1871 to be in intraday bullish zone.
COMEX SILVER DECEMBER 2020 – current price $2405.80
- Silver needs to trade over $2350-$2360 zone till Friday to have hopes of a rise to $2520 and $2588.
- There will be a free fall if silver trades below $2350 to $2260 and $2200.