-- Published: Thursday, 13 February 2014 | Print | Disqus
- Thursday, 13th February: US January retail sale numbers will be the key. A bad number or a way below expectation number will be bullish for bullion. However cold weather effects will need to be taken into account before taking a short term call on bullion.
- Technically gold, silver, copper and crude oil are all bullish. The next two days are very crucial for gold and silver
Federal reserve and Taper
Federal Reserve Bank of St. Louis President James Bullard said Fed officials will probably be careful about altering the pace of their reductions to bond buying because of a potentially significant impact on markets. In my view the Federal reserve wants to withdraw from cheap money policy at the same time ensuring that US stock markets do not fall by much. This implies that in the short term apart the pace of tapering will be slow. A $10 billion a month taper is peanuts for global months and will not have any big impact on global stock markets however taper will prevent gold and bullion prices from a big short term sharp rise. We expect the Federal reserve to taper from March to June and thereafter take a pause in the US summer. Once the taper is over the Federal reserve will wait at least for another twelve months and then change to a higher interest rate cycle.
Japan, gold and emerging market currencies
I have my doubts whether abenomics is working on the Japanese economy. Japan's core machinery order suffered their steepest fall on record in December. It seems that a weaker currency is not able to propel the Japanese economy. Then there is further talk of a wage price hike in almost all Japanese companies. The second quarter of the year beginning April 2014 is very crucial for Japan. In case Japan does not show the expected growth then zero interest will continue till early 2016. The implication of all this is that yields on Japanese government bonds (JGB) will fall. Lower JGB yields implies a rise in gold prices or restarting of another bull run in gold and gains for emerging market currencies. I firmly believe that higher JGB yields in May 2013 started the collapse of emerging market currencies like the Indian rupee and other nations.
Today gold needs to break and trade over $1297 for another set of rise. In case gold does not break and trade over $1297 then it will fall back to $1272 and below. Silver needs to break and trade over $2058 by Monday, else it will fall to $1969 and below.
Better to remain on the sidelines
TECHNICAL VIEW
COMEX SILVER MARCH 2014 – current price $2027.50
Bullish over $1990.00 with $2057 and $2130 as price target
Bearish below $1964 with $1912.00-$1890.0 as price target
Neutral Zone between: $1964-$1990.00
Break point: $2069.40 and $2018
- Silver needs to trade over $2008 today to target $2058-$2130
- Silver will crash if and only if copper and gold both fall.
- There will be buyers on dips as long as silver trades over $1990 today
MCX SILVER MARCH 2014 -- prices in Indian rupees below
Key support till Monday is at 44200 and as long as silver trades over 44200, there are still hopes of a rise to 45457 and 45800. Silver March futures are expiring in the next two weeks. Bearish trend will be there in silver only if (a) silver does not break 46500 in the next two weeks (b) Silver has a daily close below 44200 for two consecutive days. We prefer to remain long silver as long as physical silver trades over 42700 in the short term.
Today silver has to trade over 44900 to be in a bullish zone. Be prepared for big one way moves in silver anytime. The recent 44000-45400 consolidation phase will be over and a new direction will be formed.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared by Manan Somani
Disclosure: Insignia consultants or it employees do not have any trading positions on the trading strategies mentioned above. Our clients do have positions on the trading strategies mentioned in the above report.
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NOTES TO THE ABOVE REPORT
UK session starts around 2:30 pm Indian Standard Time (+5:30 GMT) -- after the release of LME daily inventories
US session starts at 7pm pm Indian Standard Time (+5:30 GMT)
PLEASE NOTE: HOLDS MEANS HOLDS ON DAILY CLOSING BASIS
PLEASE USE APPROPRIATE STOP LOSSES ON INTRA DAY TRADES TO LIMIT LOSSES.
APPROPRIATE STOP LOSSES PER LOT IN US DOLLARS ON THE TRADING CALLS GIVEN IN THIS REPORT
COMEX GOLD – $15-$17
COMEX SILVER: $25-$30
COMEX COPPER: $3
NYMEX CRUDE OIL: $0.60
SPOT SILVER: $0.25
SPOT GOLD: $15-$17
THE TIME GIVEN IN THE REPORT IS THE TIME OF COMPLETION OF REPORT
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-- Published: Thursday, 13 February 2014 | E-Mail | Print | Source: GoldSeek.com
