-- Published: Wednesday, 29 July 2015 | Print | Disqus
Just ignore the FOMC meet. Unconfirmed reports suggest that a December interest rate hike will be there. A September interest rate hike may not be there. Whether there will be a short covering rally as a result of the same remains to be seen. Do not be hyper bearish on gold for the next two weeks, unless key technical supports are breached. There can be sharp pullback rallies.
The general view is that the commodity boom is over. Commodities rose due to higher Asian growth resulting in record investment demand. The higher trajectory of commodity prices resulted in (a) Higher inventory levels by end manufacturers and (b) commodity inventories being used as a means of short term financing. When commodity prices started falling all the excess inventories were consumed first which resulted in reduced demand. Reduced demand resulted in falling investment demand which resulted in the creation of net short positions.
The commodities boom will restart when Chinese and Asian demand shows signs of forming a long term bottom. In my view another eighteen months is needed for Asian commodities demand to form a long term bottom. But remember that bottom fishing never works.
Everyone is concerned over the impact of a US interest rate hike and a UK interest rate hike on Asian economies. The common belief is that but for the fall in energy prices, most of the Asian economies would have been buried. The fact is that Asian monetary planners have understood the American way of monetary policy tools and are taking some really bold measures to prevent a history repeat. Asian currencies will not sink unless Yellen does a Volcker. 2016 being an US president election year, I do think the Federal Reserve will hike interest rates rapidly.
If there are no big problems from southern European nations, then Euro could make a big comeback in 2016.
Ask yourself: (a) Will the USA be able to maintain the current growth rates even with a 0.50% interest rate hike and (b) Will US companies continue to maintain the current rate of employment in 2016. If you are able to get the right answers for the two, then make your currency trading strategy for 2016 as well as commodity trading strategy for 2016. To me any indications that the US economy will have a sluggish growth in 2016 will result in US dollar bombardment and renewed interest in commodities as an investment.
The UK’s understatement of Libyan war expenses just confirm the unofficial money printing mafia which not just the UK but the USA and Eurozone are running. Later than sooner this unofficial money printing mafia will be laid to rest. Nothing lives forever. Once this starts to happen, gold prices will move into the stratosphere.
Till next week at lower prices I am against selling unless gold falls below $1070. I am against selling unless silver falls below $1397. I am against selling unless copper falls below $227. I am against selling unless crude oil falls below $41.00.
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: Wednesday, 29 July 2015 | E-Mail | Print | Source: GoldSeek.com