If US stock futures plunge, then there will be a selloff in gold, silver, copper, and all industrial metals. If the price falls then short selling will cause a technical breakdown. Everything is dependent on US stock futures.
I suspect is large hedge funds want to rule the sellers of put options or buyers of call options. As per the information with us, there was huge buying of gold call options for May 2022 on or from June 2020. The whole purpose of a falling price this month in gold is to ensure that long-term buyers of gold call options are out of the money.
The United States could ease some restrictions on Venezuela's government, raising hopes that the market could see some additional supplies. There is no confirmation of the same. Crude oil supplies from Venezuela and Iran can sink prices. Even if these nations are allowed to sell in a limited quota, then also WTI/Nymex crude oil will sink to $80.00 anytime and stabilize around $80.00. This is the right time to buy naked put options for the September and October months with a strike price of $80.00 and $60.00. Technically also there is fear of sharp price fall as long as crude oil does not break and trade over $130-$136 zone before end August.
When and where have traders made losses in metals and energies this year. (our view)
- Gold and silver traders have mostly made profit this year except for losses in last week crash.
- Crude and natural gas trades caused initial losses but later traders adapted to higher prices and continue to make over profit.
- Nickel was the biggest loss-maker for most. When nickel was rising in February traders went short for a few trades only for the stop loss to be hit. Later they started going long in nickel and after a few profitable trades, they went bust as nickel nosedived.
- Traders made losses in copper trades in late February and early but hardcore copper traders made a decent profit.
The lesson learned this year from the price moves in metals and energies are
- It is better to trade with the momentum in crude oil and natural gas.
- Gold and silver have the best technical moves. There is less momentum involved in price determination of bullion. It is easier to trade when herd or masses impact is less.
- Copper is the least risky and safest to trade (intraday as well as short term). Copper has a historical tendency to move in a one-way price direction followed by a long period of consolidation. You determine the direction and make your trade.
- In the forex markets, no one expected the Japanese Yen to break past 130.00 against the US dollar. Options traders and short sellers all made good losses. Generally in March, yen gains against the greenback. This year the reverse happened. Always use trailing stop losses while trading in the Japanese yen.
- I was also surprised by strength of usd/idr, usd/thb and usd/php this year. East Asian currencies will remain unpredictable for the rest of the year.
- Last do not panic when you have a loss-making open position. Use trailing-stop losses depending on your risk profile. Everyone panicked last Friday when gold, silver, and copper crashed. Fear caused to close long positions and incur huge trading losses. I am sure that if you had put trailing stop losses below key support, then your MTM loss today would have been way less.
The reason why I am sharing my experience of this year, is that it will not be easy to trade till end July. A bad trade can make you go kaput.
Spot Silver: (current price $21.45)
- Silver will crash if it trades below $21.30 to 21.19 and $20.71.
- Silver needs to trade over $21.65 to be in an intraday bullish zone and target $22.05 and $22.55 and more.
NYMEX CRUDE OIL (July 2022) (current price $108.16)
- Key resistance is at $111.20 and $113.90
- Key support is at $106.00
- Crude oil will crash only if it trades below $106.00 to $102.60 and $99.70.
- But if crude oil does not fall below $106.00 and trades below $106.00, then it will rise back to $115.00.