US dollar gains is all about virus versus virus battle. In July and August continued rise in coronavirus (in USA) lead to a crash in US dollar and sharp rise in gold and silver prices. In the second half of September fears of a big second wave of coronavirus in Eurozone and UK has resulted in gains for US dollar Index, sell off in gold and silver and rise and slight rise in US bond yields.
Till Easter of 2021, the world will see a virus (in one nation/continent) versus virus (in another nation/continent) war. Nations currency values, nation’s interest rate stance, nation’s bond yields and nation’s inflation stance will be dependent on the virus versus virus battle. Next key factors (in calendar year 2021) which will affect global financial markets will be covid vaccine, short term side effects of vaccine and distribution issues with vaccine.
I still believe that sharp crash (in any) from here and till 2nd October should be used to invest in gold ETF, silver ETF and even physical silver and physical gold. I have started buying physical silver in India yesterday in every small amounts and do intended to average it out on any ten percent price fall and more.
If gold and silver fall or trade below $1860 and $23.40 or on after 10th October then they might be in a big and sustained bearish zone.
Federal Reserve officials
Federal Reserve official struck a hawkish tone by mentioning the prospect of raising interest rates. President Charles Evans said the U.S. economy risked a longer, slower recovery, if not an outright recession, without another fiscal support package. Testimony will continue today as well as tomorrow.
Two things which can result in rise in US bond yields and fall in gold prices (i) There will not be any stimulus package any more. Current helicopter money will continue. (ii) Surplus liquidity can be withdrawn or economic stimulus package can come to an end much sooner if the covid vaccine is launched by multiple companies. The pace of rise of gold and silver will slowdown. Month to month gold and silver can give a negative return. Year to date and quarterly returns in gold and silver will always be positive and higher.
I am least bothered of short term fall in gold and silver price. Day traders and jobbers should not hesitate to go short.
COMEX GOLD DECEMBER 2020 – current price $1894.00
- Trend is down. Massive crash or sell off will be there if gold trades below $1887.50 to $1867.50 and $1826.00.
- A daily close below $1909 today and tomorrow will result in gold prices falling to $1800 and below.
COMEX COPPER DECEMBER 2020 – current price $304.20
- If the US dollar gains sharply then copper price will fall to $298 and $291 first and then rise to $330.00.
- The next four trading sessions is very crucial for copper.