Intraday Market Thoughts

Buying the BinLaden Metals Dip?

by Ashraf Laidi
May 2, 2011 6:25

News of Osama Bin Laden's death led to a knee jerk reaction rally in the USD, a $13 decline in gold to $1550 and a $3.4 decline in silver to $44.50. Since it is important to realize that the recent run-up in commodities (and especially metals) has been the product of QE2 policy and the FOMC's consistently dovish remarks regarding i) muted inflation; ii) downgrading growth and iii) planning to reinvest their mortgage securities payments, the monetary policy element of metals is to remain in favour.

Todays historic news is highly symbolic rather than a game-changer in geopolitics as AlQaeda has become a decentralized organisation with various local leaders vying for that global leadership position. There is even a possibility that these potential leaders could be fighting alongside Anti-Qaddafi rebels in Libya (alongside NATO) as was the case in the aftermath of the USSR-Afghan war. Bin Ladens death could have a short-lived positive impact on the US currency, which presents fresh opportunities for bottom fishing in EURUSD and AUDUSD eyeing ininterim targets at 1.4890 (from current 1.4790) and 1.1020 (from current 1.0940).

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