SP Futures Chart
MORNING CAPSULE: SHADES OF 2011-12 IN GOLD, MOMO CROWD BUYING AGGRESSIVELY ON INDIA SPECULATION
July 8, 2014
Our algorithms have been detecting aggressive buying of gold by the momo crowd in a pattern that is similar to the last quarter of 20011 to first half of 2012. Interestingly most of this buying is not happening in India, China or Russia but in North America. The impetus seems to be that India will eliminate import duties on gold in the upcoming budget. There is no way to know for sure what the government in India will do. However contrary to the belief among American momo crowd, our analysis of the informed sources in India close to the government shows that elimination of duty is not certain. There may be only reduction in duties.
At this time it is difficult to ascertain what scenario is already discounted in the price of gold — elimination of duty or reduction of duty. Let us also not forget that often the reaction in the market is to ‘sell the news.’
There is a strong correlation between quality of Monsoon rains and gold demand in India. When rains are good, farmers in India feel richer and buy gold with excess cash. In June, rains in India were below expectations. The main Monsoon season is July and August.
Our gold ratings may change.
Oil is staying below $104.
Interest rates are falling.
Stocks are slightly weaker in the pre-market.
Gold futures are at $1324, silver futures are at $21.17, and oil futures are $103.55.
S&P 500 resistance levels are 1975, 2000, and 2017; support levels are 1950, 1925, and 1900.
DJIA futures are down 31 points