Yesterday gold’s sell was due to inability to trade over $1905 key resistance. There will be overshooting from key resistances. Not just gold any investment should trade at least six hours over/below key support/resistances for a new trend. Spot gold did not trade over $1905 for six hours and more yesterday, hence the selloff.
On one hand there is a new strain of more deadly coronavirus and on the other hand coronavirus vaccinations have a long term economic impact. UK has now been alienated from global travel as most nations have stopped to and from flights. There will be a very sharp two way price move as a result of it.
Every major political leader is taking the covid19 vaccine as a way to attract more and more people to take the shot. The real impact of the vaccine will be felt only from March onwards. In fact covid cases worldwide can see a sharp rise towards the last week of January as people celebrate Christmas and New Year.
Key things to focus on the next three weeks (till 12th January 2021).
- US dollar Index.
- Sustained break of key technical resistances for gold, silver and copper.
- Global stock market trend.
- Impact of new strain of deadly coronavirus.
- Medium term changes to demand outlook (if any).
- US jobs numbers in December.
- Trend of US jobs and global jobs in the first four months of 2021 (after dissecting 2020 jobs numbers).
Additional stimulus, further additional stimulus, extra additional stimulus or whichever phrase one calls involves increase in global money supply. There will be frequent boom-bust for every asset class due to the continued rise in global money supply. A certain percentage of stimulus money (whenever they are announced) goes for short term speculative investment. This is one of the reasons why copper prices crashed on the last day of September this year and thereafter has seen an unstoppable rise. This is one of the reasons why gold and silver prices rose, then crashed and once again rose this year. Boom-Bust-Boom cycle for gold and silver in the last five months this year. The list of boom-bust-boom-bust cycles this year is applicable to every asset class this year.
Physical dealers have to hedge their stocks in futures. Short term traders and short term investors need to be extra cautious. Sometimes a wait and trade or a wait and invest have to be followed. Long term investors should keep a close watch on overall fundamentals. Never worry an iota if your long term investment has strong fundamentals.
UK pound has pared most of yesterday’s losses against the US dollar. US dollar is weaker in Asia. Just trade in the technical today. There are lots of US economic data releases today (i) US third quarter GDP numbers. (ii) CB consumer confidence (iii) Existing home sales among others. These numbers can have a trend changing impact on the US dollar Index and short term direction of global stock markets.
COMEX SILVER MARCH 2021 – current price $2663.50
- Silver needs to trade over $2635 to rise to $2763 and $2829.
- There will be sellers if silver trades below $2635 to $2555 and $2487.
- Overall trend is bullish as long as silver trades over $2480-$2510 zone.
COPPER MARCH 2021 – current price $358.10
- Copper needs to trade over $354.30 to rise to $364.90 and $372.70.
- There will be sellers only if copper trades below $354.30 to $346.70 and $343.30.
- Copper price will be dictated by trend of global stock markets.