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Asian Metals Market Update: Physical buyers are waiting for an opportunity to buy more

Gold and silver will see a technical breakdown if they fall today. Use sharp dips till “London PM FIX” to go long for tomorrow. Information on additional stimulus will be known by tomorrow (after USA closes). Any indication that additional stimulus will be postponed after the US presidential elections should result gold, silver, copper, nickel and other industrial metals falling first and then make a rise.

Physical buyers are waiting for an opportunity to buy more and more of gold and silver. They will refrain from new buying if gold and silver prices see a technical breakdown. Sharp crashes or sharp corrections in gold and silver (if any) will be a just a touch and go case. I do not expect a sustained falling trend in gold and silver. There are hundreds of bullish reasons why you should and everyone should use the current consolidation or correction phase in gold and silver to have a Merry Christmas and Happy 2021.

Mine supply constraints and high Chinese demand for industrial metals will ensure that industrial metals rise throughout the year. In the near term and for the next two weeks, industrial metals will be susceptible to global stocks markets crashes. I expect global stocks to plunge anytime in the next two week.

Last week some of the largest physical dealers of gold in India (like Malabar gold etc) were selling physical gold in India at a discount of three percent over prevailing rates. They also put a single rate for gold all over India. (In India gold prices differ in every state due to taxation (GST) rules). My initial reaction was that gold prices should correct or fall in the near term and then rise. (i) They are very large physical sellers of gold. They must have either hedged the physical gold at higher prices or passed the benefit to retail buyers. (ii) They expect gold prices to fall in India and they can purchase the sold quantity at lower price. Average weekly volatility of gold prices in India is over Rs.1000. This is good enough to hedge or buy gold at lower prices for some of the largest gold importers and largest gold jewelers in India.

One cannot sell physical gold at a discount unless there is a sound hedging strategy and/or they expect gold prices to fall in the near term. Gold cannot be compared mobile phone where models change every year and stocks have to sold at lower prices for clearance. Gold is only one. Gold does not need a stock clearance.

COMEX GOLD DECEMBER 2020 – current price $1896.60

  • Gold needs to trade over $1879.70 till Wednesday to rise to $1930.70 and $1943.90.
  • Gold will crash only if it trades below $1879.70.
  • Gold will also sell off if it trades below $1893.00

COMEX COPPER DECEMBER 2020 – current price $312.10

  • Copper has to trade over $309.60 to rise to $319.80 and $326.80,
  • Copper is overbrought. Copper can crash if it trades below $309.60 to 299.00.

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