I will prefer to trade in gold, silver, and copper only if there are extreme price moves. One can go long or buy futures/spot if there is a technical breakout in gold, silver, and copper rise after London opens. It is a fragile market and nervous sentiment.
Japan, China cut holdings of U.S. Treasuries to multi-year lows
Japan's holdings fell to $1.212 trillion, the lowest since January 2020, when the country's stash of Treasuries was $1.211 trillion. In April, Japan's holdings were at $1.218 trillion.
China's hoard of U.S. government debt dropped as well to $980.8 billion in May, still the lowest since May 2010 when its holdings were at $843.7 billion, data showed. In April, China had $1.003 trillion in Treasuries.
(news source reuters.com)
Our View: De-dollarization is catching up aggressively with central banks (a) They are aggressively reducing US dollars and US dollar investment in their forex reserves. (b) Every central bank is increasing its gold reserves every quarter. (c) India and other central banks are promoting non US dollar trades. (d) State forfeiture or state control of assets owned of large corporations owned by Russian citizens has resulted in more and more global corporations increasing their investment in their own nation. They know that they could be next in the coming years. Once again, less use of US dollar by large corporations. Physical gold is the only option to hedge against forced seizure of assets by USA, UK and NATO allies.
If we look at another political aspect, Saudi Arabia is trying to be friends with China and Russia. It is helping Russia to export its commodities and also meet the needs of Russia. I look at Dubai or Saudi Arabia as the future business hub of the world. The business-friendly policies will ensure that Singapore, Hongkong, and even Paris get good competition. Gold trading hub in MENA region (middle east and north Africa region) is Dubai and Sharjah. Trade (in Saudi Arabia) will be mostly in non-US dollar over the coming years. Petro-dollars will not be supporting USA. Gold is the only way for nations to survive.
Softer price in gold can there between thirty days to six months. Thereafter another new all-time high.
The real concern among traders and long-term investors for all asset classes are
- An interest rate hike (0.75% or 1.00%) on 27th July (by the Federal Reserve) is followed by an increased chance of more interest rate hikes in the subsequent meetings.
All asset classes will sell off once again if Federal Reserve is very direct on increasing interest rates on September and November meetings.
If the Federal Reserve is hawkish and makes further interest rate hikes dependent on inflation and economy, then there will be a big relief rally in base metals and precious metals.
Disorderly rise or fall continues in all asset classes till traders go kaput and the sentiment is one way. Buyers or long positions holders have incurred losses since May. The extent of losses is such that they will never ever dream of going long even in the wildest of their dreams. I prefer to take a calculated risk and trade against the herd.
Spot Gold: (current market price $1708.10)
- Key intraday support: $1688.60 and $1699.00
- Key intraday resistance: $1717.60, $1728.60
- Gold has to trade over $1699 to rise to $1723.00 and $1747.80.
- Gold will crash only if it trades below $1699.00 to $1688.60 and $1673.50.
- Overall all price fall up to $1660 (if any) will be a part of the long-term bullish trend.
- Gold is on a dirt track in the short term.
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