-- Published: Tuesday, 10 June 2014 | Print | Disqus
Expectations of higher interest rates over the coming years and intervention by the USA and its friends to curb gold prices are the key reasons for bearishness in gold and silver. There are a lot more factors than interest rates which can drive up gold prices. Yesterday I had mentioned demand from India, China and Russia as one the key movers for bullion. In my view India and China will see long term growth rates bottoming out by the first quarter of 2015 and thereafter once again there will be a five years of higher GDP growth. The USA and Europe are also expected to see higher economic growth. Higher global economic growth in most nations will result in higher physical demand for gold and silver and will nullify the effect of higher global interest rates. The only risk to this view is higher food prices. Global warming will result in nations finding it difficult to control the spiral of higher food prices. So the concept of higher interest rate can affect gold and silver prices can be applicable for a period of two years to three years and thereafter gold will move on its own.
Every nation is now trying to find ways and means to get over the “dadagiri” of USA. This will not happen immediately and will take over a decade for getting visible results. Nations will covertly increase their gold reserves. The rise of right wing fundamentalism in European parliament could be a precursor to some of the western European nations increasing their gold reserves in the next five years. I may be wrong, but I see a very strong possibility of the same.
We need to trade and invest. Gone are the days when one invests and forgets for a few years. Every long term investment (whether equity, commodity or bonds), needs to be reviewed after a period of three months. Technology is changing fast. Investment is also changing fast.
Technical talks about death cross in gold are actual and will be applicable for the next twelve months. I believe in fundamentals for any investment. If the fundamentals of any investment are strong, then later than sooner it will attract huge investment flows. Once US and European interest rates start to rise, then traders will be betting on the pace of rise. To me the pace of rise of interest rates will be much slower than what markets are now expecting and will be a catalyst to another gold bull run.
I am seeing another big global asset bubble from the last quarter of 2016 and/or early 2017. Most probably it will be a global stock market bubble and a housing bubble in the UK and the Eurozone. This asset bubble will be impossible to deflate. The concept of “too big to fail” will fail central banks this time. Their money printing machine will not work. When this starts to happen gold prices will zoom.
Gold can rise to $1262 and $1279 as long as it trades over $1244. Silver can rise to $1927 and $1954 as long as it trades over $1888. Crude oil will see sell stop losses getting triggered over $106.50 and a break of $106.50 will see another wave of rise.
MCX GOLD AUGUST 2014 – prices in Indian Rupees below
Gold needs to trade over 26015 today to target 26108-26244. Initial support is at 25905 and there will be sellers only if gold trades below 25905 either in the UK session or the US session.
NYMEX CRUDE OIL (1ST CONTRACT) - current price $104.78
Bullish over $103.30 with $105.70 and $107.20 as price target
Bearish below $102.20 with $101.60 and $101.90 as price target
- A consolidated break of $105.20 will result in $107.10-$109.20
- There will be buyers only if crude oil trades over $105.20
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 Chintan Karnani
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
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UK session starts around 1:30 pm Indian Standard Time (+5:30 GMT) -- after the release of LME daily inventories
US session starts at 6pm 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: Tuesday, 10 June 2014 | E-Mail | Print | Source: GoldSeek.com