There will be an inverse correlation between US dollar Index and bullion price this week. Physical demand will be very high in Asia this week if price continues to fall. I am advising our jeweler clients in India to start building physical silver stocks (for the October festive month). Physical gold has to be accumulated on any fall of more than three percent for October festive month. (Hedge local currency versus the US dollar in you are buying for October festive month.)
Just trade in the technical this week. Copper and silver futures are expiring on 31st August. There will be position squaring and rebuilding before the end of the month. I expect December future (expiring on 30th November) to be a very big one in gold, silver, and copper.
I have a simple strategy of using all the price fall till 24th September to invest for March 2023. News of all kinds will come and go. Price can fall over ten percent (before 24th September), but will not change my strategy. The only risk to my view is energy price (crude oil or natural gas or both) reaching stratosphere.
But before 24th September, I will prefer to do day trading most of the days. I will also take advantage of extreme one way price move days to get maximum profit.
The current fall in gold and silver is due to three key reasons (a) Technical breakdown on a fall below fifty day moving average. (b) Sharp rise in US dollar index. (c) Continued outflows from gold ETF.
The peak crude oil demand of 2022 will be there in three week’s time. Chinese demand and Indian demand of crude oil will be very high in October. Chinese have their spring festival in the first week of October. Dushera and Diwali festivals are both in October. Crude oil demand, gold demand and silver demand and jewelry demand will be very high in the month of October. Crude oil should fall from the second week of September.
Overall crude oil demand will be at a historically high till the Valentine day (of 2023) vacations. Global leisure travel and business travel will be high. A negative supply side news or a hurricane of category5 in the Gulf of Mexico will cause a twenty percent spurt in price. Crude oil price will swing like a pendulum. However a nuclear deal with Iran and subsequent free flow of crude oil from Iran (if any) will ensure that crude oil will not break past $130 (Nymex/WTI) alteast this year.
The world is looking for comments and view by the Federal Reserve chairman in the Jackson hole conference on Friday.
COMEX SILVER SEPTEMBER 2022 (current market price $1901.00)
- 200 WEEK MA: $2075.20
- 100 MONTH MA: $1858.50
- 200 MONTH MA: $1966.00
- Trend and momentum is down for silver. There is no doubt over it.
- BUT there is still a chance of a pullback rally to $2075.20 as long as it trades over $1840-$1858.50.
- A daily close below $1840 for three consecutive days will pave the way for $1774.40 and $1712.00.
COMEX COPPER SEPTEMBER 2022 (closing price on 19th August $366.45)
- 50 day SMA: $356.50
- 200 WEEK MA: $341.90
- Copper can rise to $380.20 and $396.00 this week as long as it trades over $346-$352 zone.
- All the price fall in copper upto $346 will be a part of the bullish zone.
- Technical are neutral to bullish.
- I am personally bullish due to the demand outlook for the fourth quarter.
LME NICKEL SPOT 2022 (closing price on 19th August $22071.50)
- 100 week MA: $20939
- 50 day MA: $22619
- 200 day MA: $25302
- Nickel needs to trade over $20939 this week to be in a bullish zone and rise to $23155 and 25090.
- Right now the trend of nickel is down as long as it trades below $22619.