The Precious Metals Week in Review

28/10/2024 

Here are your Short-Term Support and Resistance Levels for the upcoming week. 

                                    Gold                           Silver 

Support                       2693/2664/2609         32.72/31.67/31.40 

Resistance                  2749/2778/2833         34.70/35.75/37.73 

                                    Platinum                     Palladium 

Support                       1007/996/978              1069/1050/1021 

Resistance                   1025/1036/1054         1203/1234/1260 

1. Gold and silver futures prices are solidly up in early U.S. trading Monday, with gold hitting another record high of $2,754.50, based on December Comex futures, while silver futures notched a 12-year high. Safe-haven demand worries about “de-dollarization” and bullish technicals continue to push both precious metals prices higher. December gold was last up $23.20 at $2,753.20 and December silver was up $1.146 at $34.38. The recent rallies in gold and silver come as Russia hosts the BRIC summit on Tuesday, attended by China’s Xi Jinping and other developing nations’ officials. Russian President Putin wants a new global financial payments system to counter the U.S. dollar dominance of global foreign reserves. Around 58% of central bank foreign-reserve currencies currently are in dollar-denominated assets. Gold stands to benefit from more “de-dollarization” by BRICS and other countries. 
2. It’s all about trust. The nation may have left the gold standard behind in 1971, but Costco shoppers have proven that gold is a red-hot buy this month. Sure, it’s an investment, but it’s also “reflecting this yearning for real money,” economist at the Independent Institute Judy Shelton said. “Gold is kind of a surrogate for the real economy, and it represents commodities, but also that traditional role of money you can trust.” The popular Costco bullion program was introduced to warehouse club members last year via 24 karat 1oz bars. The product has flown off the shelves, with Costco raking in a reported $200 million per month in gold bar sales. Demand has been so great that the retailer has begun to offer platinum bars. According to Shelton, the gold rush at Costco likely has personal meaning to the financially skittish consumer. Over the past few years, they’ve become accustomed to watching inflation spike as high as 9% while the dollar has lost 20% of its purchasing power. This haven't exactly stoked Americans' confidence. The sudden rise in gold’s popularity could also relate to consumers’ overall trust in the precious metal and what it represents. “It’s a meaningful unit of account. It works across borders,” she said. “It has universal value, and it’s highly recognized.” 
3. U.S. stocks retreated on Tuesday as investors digested a recent bond-market selloff and braced for the next wave of earnings reports. Stocks are coming under pressure amid growing doubts that the Federal Reserve will continue to cut rates aggressively — or even hold steady in November. Amid the uncertainty, the 10-year Treasury yield steadied around 4.2% after Monday's sharp gains helped push it above that level for the first time since July. The bond selling has weighed on rate-sensitive stocks such as real estate, with rising yields typically a catalyst for stock drawdowns. Despite higher yields, gold prices rose, on track to reclaim Monday's record high. The gains came as investors sought safety with the presidential election looming and Middle East tensions still on the rise.  
4. Elon Musk has supporters in finance for his idea to create DOGE, or the Department of Government Efficiency. “I would like to see government cut, but in a thoughtful way,” economist Judy Shelton said recently. “It’s not a matter of eliminating all regulations. It’s a matter of subjecting them to a cost-benefit analysis. Maybe we have too many people doing things that don’t necessarily provide the service intended by the government,” she added. “I would like to see more efficiency in the government.” In the past, Shelton has also been critical of government bureaucracy and the power of the Federal Reserve over the economy and asset markets. The new DOGE entity would oversee government efficiency and be headed up by Musk and would ‘eliminate fraud and improper payments within six months.’ Notably, Musk agreed to take the job without a salary. “No pay, no title, no recognition is needed,” he shared on X. Musk has had the national deficit in his crosshairs for a while, with DOGE being his idea to get government spending under control. “Musk may be ahead of all of us,” Shelton said of the idea. “It’s a harsh thing to do, but I also think that if you have layers of government bureaucracy that are impeding growth and making life difficult for entrepreneurs, I think you could benefit.”   
5. Gold retreated from an all-time high as some investors booked profits while assessing geopolitical risks from the U.S. election and Middle East conflicts. A stronger dollar and rising bond yields also weighed on bullion. Gold earlier climbed to a fresh record of $2,758.49 as geopolitical risks from the presidential race and the Middle East boosted safe-haven demand. Standard Chartered Plc analyst Suki Cooper expects a further upside risk in the coming weeks. The bank sees gold averaging $2,800 an ounce in the fourth quarter, with prices set to average $2,900 for the first three months of next year. The precious metal has surged by more than 30% this year, hitting successive highs, with the rally intensifying in the last couple of months as the Fed pivoted to cutting interest rates. Money managers have also added to the strength of the increase, with hedge funds boosting net-long positions in gold in recent sessions and investors adding to exchange-traded fund holdings. 
6. The number of Americans filing for unemployment benefits fell last week, but the total number of those collecting benefits rose to its highest level in almost three years. The Labour Department reported Thursday that applications for jobless claims fell by 15,000 to 227,000 for the week of Oct. 19. That’s less than the 241,000 analysts forecast. Continuing claims, the total number of Americans collecting jobless benefits, rose by 28,000 to 1.9 million for the week of Oct. 12. That's the most since November 13, 2021. The rising level of continuing claims suggests that some who are receiving benefits are finding it harder to land new jobs. That could mean that demand for workers is waning, even as the economy remains strong. 
7. Oil prices fell on Wednesday after data showed U.S. crude inventories rose by more than expected even as refining activity rebounded, though futures remained up about 2% this week as traders factored in continuing conflict in the Middle East. Brent crude futures settled at $74.96, down $1.08, or 1.42%. U.S. West Texas Intermediate crude futures settled down 97 cents, or 1.35%, to $70.77. Last week oil fell more than 7% on worries about Chinese demand and easing worries about potential disruptions of Middle East oil supplies. Oil settled higher in the first two sessions this week as buyers emerged. 
8. EUR/USD extends Thursday’s recovery to near 1.0830 in Friday’s North American session. The recovery move in the shared currency pair is driven by a retracement move in the U.S. Dollar. The Dollar Index, which gauges Greenback’s value against six major currencies, extends correction slightly below 104.00. The Dollar faces pressure after the release of the U.S. Durable Goods Orders, which declined steadily by 0.8% in September, slower than estimates of -1.0%. 
9. The Japanese Yen stalls the overnight recovery move from a multi-month low amid BoJ uncertainty. Mixed Tokyo consumer inflation figures and a positive risk tone also undermine the safe-haven Yen. Bets for less aggressive Fed easing revive the USD demand and offer some support to the USD/JPY.  

Home sales fell to the lowest level in 14 years, as high home prices, inflation-depleted savings, still-elevated mortgage rates, and election uncertainty kept buyers on the sidelines. Sales of existing homes fell in September as house hunters remained on the sidelines despite mortgage rates easing during the month. Existing home sales slipped 1% from August to a seasonally adjusted annual rate of 3.84 million. This marked the lowest monthly rate since October 2010. Economists polled expected existing home sales to hit a pace of 3.88 million in September. On a year-over-year basis, sales of previously owned homes were 3.5% lower in September. Meanwhile, the median home price rose 3% from last September to $404,500, marking the 15th consecutive month of annual price increases.  

U.S. money market funds attracted substantial inflows in the week to Oct. 23 as uncertainty over the U.S. presidential election and a reassessment of Federal Reserve rate outlook boosted demand for safer assets. According to data, investors acquired a net $29.98 billion worth of money market funds during the week, posting their fourth weekly net purchase in five weeks. Riskier equity funds, meanwhile, saw a net $2.54 billion worth of outflows, halting a three-weeks buying trend. Investors sold U.S. large-cap, multi-cap, mid-cap and small-cap funds worth $2.68 billion, $1.5 billion, $1.03 billion and $201 million, respectively, in contrast to $15.2 billion, $672 million, $1.49 billion and $473 million worth of net purchases, a week ago. U.S. sectoral equity funds, however, gained inflows for the second successive week, valued at a net $1.03 billion. Investors scooped up consumer discretionary, gold and precious metals, and communication services sector funds worth $802 million, $677 million and $599 million, respectively. 

Governments around the world need to rebuild fiscal capacity and central banks should think carefully about the timing of interest rate cuts, International Monetary Fund Managing Director Kristalina Georgieva said on Friday. "In the short term, focus on the fiscal side as an immediate priority. Fiscal buffers have been exhausted, yet fiscal pressures are high," Georgieva said in a press conference during the IMF and World Bank annual meetings in Washington. Central banks need to "remain attentive, be evidence-based and carefully monitor data to make sure that they don't cut either too early or too late," she added.  

Volatility should be expected to remain high as investors will be closely watching for hints on upcoming monetary policy direction. Many investors have redoubled their efforts to ensure that their portfolios are sufficiently diversified in the hopes that they will be able to withstand corrections in multiple market sectors. Many of these investors have included physical precious metals as part of their diversification plans, given their long history as a hedge against both inflation and during times of economic turmoil. Remember, the key to profitability through the ownership of physical precious metals is to own the physical product and hold it for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long run. 

Trading Department – GCILBullion 

This is not a solicitation to purchase or sell