— Posted Monday, 2 March 2015 | | Disqus
This is a Holi week for Indians. US February nonfarm payrolls on Friday will give us an indication whether there will be a June interest rate hike. Chinese markets have also opened after their New Year. Gold and silver have a very crucial two weeks period. (a) If gold falters then chances of a fall to $ 1072.60 in the coming weeks will be possible. On the contrary if gold rises in the next two weeks, then $ 1321.30/$ 1397.20 will be there. (b) If silver falls in the next two weeks, then $ 1412 and $ 1285 could be tested. On the contrary if silver rises, then $ 1890 and $ 2184 will be there. There will be big one way moves in the next two weeks.
Chinese interest rate cut should also be supportive for bullion and base metals.
India does not reduce gold import duty
India did not cut custom duty on gold. Instead it will be (in the next few months) introducing measures to monetize gold. Indian gold imports will fall, despite everything. Monetizing gold is another way tackling the black money issue in India as gold forms a good part of black money in India. Jewelers will get the gold supply. There will not be any shortage of supplies in India. However the measure should be voluntary and not forceful. By forceful, I mean hindu temples which have gold should not be forced to opt for this scheme. If Hindu temples are forced to opt for monetization of gold scheme, then government is indirectly seizing the peoples gold.
A bit on the Indian budget
The budget will lift the Indian neo middle class and will hugely burden the middle class. The great Indian middle class is in danger now of moving into lower income levels and higher credit card debt. Rise in service tax and increase in services to be service taxed will only increase tax payouts to the government. The budget is doing everything to please the global investor at the cost of Indian middle class. Corporate tax rate cut will not necessarily imply higher employment generation. The great Indian middle class who voted by Mr.Modi, are now sulking at their decision.
Indians are not getting the benefit of global crash in energy prices. In the name of taming fiscal deficit, the Modi government is doing everything to please global financial community. Indian politicians are just blindly copying the American system where there is a huge income gap between the superrich and average income people. I am against the American style capitalist system where the middle class is made to pay (in the form of taxes) for all the ills and administrative misdeeds of politicians.
Investor perception is that the Modi government is laying foundations for a sustained long term growth. But certainly they can reduce prices of surviving essentials in the immediate term (which has not been the case).
On a different note, the Indian Supreme court is performing the role of the executive more and more. Whether it is coal block allocation or telephone spectrum allocation, they are Supreme. I wonder whether the Indian Supreme court has time to deal with cases for the common man. (The Indian legal system has a severe shortage of judges. Every government has failed to increase the number of judges. It seems there is no will among all political parties to increase the number of judges).
There will be short covering in case gold and silver are able to rise throughout the day. Indian demand for gold and silver could see a temporary spurt as people who delayed purchases will now be purchasing. Indian demand could remain on the higher side for the next three weeks.
COMEX TECHNICAL VIEW
COMEX GOLD APRIL 2015 current price $ 1223.50
Bullish over $ 1211.00 with $ 1230.10 and $ 1246.30 price target
Bearish below $ 1203.10 with $ 1198.70 and $ 1189.10 as price target
Neutral Zone between $ 1203.10 and $ 1211.00
Jobbers aggressive buy over: Buy if and only if gold trades over $ 1227 in UK session strict stop loss of $ 1219.10 and a price target of $ 1240.10 and $ 1254.80
Jobbers aggressive sell below: Below $ 1207 at any time of the day stop loss $ 1212 for $ 1201.10 and $ 1196.10
- Key resistance is at $ 1227. Only a break of $ 1227 will result in another wave of rise to $ 1240 and $ 1254
- At higher prices one needs to trade very carefully between $ 1246 and $ 1255 zone.
- We prefer a buy on sharp dip ($ 25-$ 30) with a stop loss below $ 1186 till Thursday.
COMEX SILVER MAY 2015 current price $ 1675.50
Bullish over $ 1623 with $ 1719 and $ 1774 as price target
Bearish below $ 1601 with $ 1576 and $ 1519 as price target
Neutral Zone between: $ 1601-$ 1623
Jobbers aggressive buy over: Buy if silver trades over $ 1682 at anytime of the day stop loss $ 1669 for $ 1703 and $ 1719 (high risk call)
Jobbers aggressive sell below: No call
- Silver has the best chance to rise to $ 1719 and $ 1774 very quickly.
- The region to trade very carefully between $ 1719 and $ 1737 zone.
- Till Friday as long as silver trades over $ 1520-$ 1550 zone, we prefer to use sharp fall (if any) to go long.
COMEX COPPER MAY 2014 current price $ 269.20
Bullish over $ 268.10 with $ 279.90 -$ 288.10 as price target
Bearish below $ 263.20 with $ 259.10-$ 253.80 as price target
Neutral Zone between: $ 263.20 and $ 268.10
- Copper needs to trade over $ 263 till Friday to rise to $ 288.60 and $ 298.10
- There will be sellers only if copper trades below $ 268 either in UK session or US session.
NYMEX CRUDE OIL (1ST CONTRACT) – current price $ 49.37
Bullish over $ 48.90 with $ 51.70-$ 52.80 as price target
Bearish below $ 48.20 with $ 47.70 and $ 45.80 as price target
Jobbers buy over: $ 50.30 stop loss $ 49.70 for $ 51.40-$ 52.70
Jobbers sell below: $ 48.90 stop loss $ 49.40 for $ 48.20 and $ 47.30
- Crude oil needs to trade over $ 47.70 till Friday to prevent another wave of selling.
- Crude oil is neutral between $ 42-$ 56 zone from a medium term perspective.
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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