The Precious Metals Week in Review

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

                                           Gold                             Silver 

Support                             2611/2590/2568            30.42/30.15/29.81 

Resistance                        2655/2678/2699            32.44/33.10/33.91 

                                          Platinum                       Palladium 

Support                             919/907/887                  944/930/903 

Resistance                        952/973/985                  985/1012/1026 

1. U.S. consumers were bracing last month for higher levels of inflation in coming years even as they marked up expectations that their personal financial situations would improve markedly, the New York Federal Reserve reported on Monday. The projected rise in inflation contrasted with expectations that gasoline prices, rent and food costs will all come in weaker a year from now. Meanwhile, the expected rise in home prices held steady at 3% in November. The Fed is widely expected to cut its benchmark overnight interest by a quarter of a percentage point at its Dec. 17-18 policy meeting, with much less certainty about what will come after that. The New York Fed survey, which was conducted throughout November, found optimism over the future of the economy. Respondents projected better income and earnings growth, although their outlook on the job market softened a bit. 
2. Spot silver gained 4.6% in 10 hours on Monday to top out at $32.268 per ounce, its highest level since precious metals sold off following the U.S. election in early November. While this surge has drawn fresh attention, it aligns with a broader trend of emerging bullish signals that could pave the way for further price gains. Investor sentiment toward silver has been notably pessimistic in recent months. Ironically, this negative sentiment is proving to be a reason for optimism, as contrarian market dynamics often see silver bounce back during such times. several technical and market-based indicators suggest silver may be on the verge of breaking out of its recent period of consolidation. There are also encouraging correlations emerging between the silver price and related markets. The close relationship between silver and copper also plays a role in silver’s performance. Copper has been hovering around its critical $4 support level, and any strong rebound in copper prices could provide additional momentum for silver. 
3. Focus is back on the inflation front in markets this week, and the release of the November Consumer Price Index (CPI) is expected to show price increases continued to make little progress toward the Federal Reserve's 2% goal. Wall Street economists expect headline inflation to rise 2.7% annually in November, an increase from 2.6% in October. On a "core" basis, which strips out food and energy prices, CPI is expected to have risen 3.3% over last year in November. This would mark the fourth straight month of a 3.3% reading of core CPI. The labor market is slowing. Wage growth looks like it's plateauing, and the Fed is still trying to get inflation down.  
4. An index measuring consumer confidence in the housing market rose again in November — the latest sign that potential buyers and sellers are growing more accustomed to higher mortgage rates and home prices. The Fannie Mae Home Purchase Sentiment Index increased 0.4 points last month to 75 points. The index has risen 10.7 points, or more than 16%, in the last year. Forty-five percent of survey respondents say they expect mortgage rates to fall in the next 12 months, while 25% expect them to rise. The percentage of consumers who think it’s a good time to buy a home remains low, at 23%, though the percentage who think it’s a bad time to buy fell slightly, to 77% in November from 80% a month earlier. Sixty-four percent of consumers think it’s a good time to sell a home, while 35% think it’s a bad time, levels that were unchanged from October. 
5. Gold climbed to a two-week high, after China’s central bank added bullion to its reserves for the first time in seven months and concerns about the Middle East bolstered haven demand. Spot gold advanced as much as 1.6%. The People’s Bank of China on Saturday said it bought 160,000 fine troy ounces in November, ending a six-month pause in purchases. The PBOC had been a major buyer of bullion since late-2022. The resumption of buying shows the PBOC is still keen to diversify its reserves and guard against currency depreciation, even with bullion near record-high levels. Gold soared to an all-time high above $2,790 an ounce in October, supported by the Fed’s pivot to monetary easing, as well as increasing haven demand on heightened tensions in the Middle East and Ukraine. Prices have eased since then but remain about 30% higher this year. 
6. The number of Americans filing new applications for jobless benefits unexpectedly rose last week and more people continued to collect unemployment checks at the end of November relative to the beginning of the year as demand for labor cools. Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 242,000 for the week ended Dec. 7, the Labour Department said on Thursday. Economists polled had forecast 220,000 claims for the latest week. Claims are likely to remain volatile in the weeks ahead, which could make it difficult to get a clear read of the labour market. Through the volatility, the labour market is slowing. 
7. Crude oil prices were set for their first weekly gain since late November on news that the U.S. was considering additional sanctions against Russia and Iran. The potential of such a move disrupting the supply balance lent upward momentum to prices. At the time of writing, Brent crude was trading at $73.67 per barrel, with West Texas Intermediate at $70.34 per barrel, after Reuters quoted Treasury Secretary Janet Yellen as saying the oil market looked well supplied and with weak demand, which could be an opportune time for Washington to try to reduce Russia’s oil revenues once again. 
8. The EUR/USD pair managed a modest rebound on Friday, rising by 0.2% to 1.0495 after testing fresh lows earlier in the week. The pair inched closer to the 20-day Simple Moving Average (SMA) near 1.0550 but failed to breach it, keeping the short-term outlook tilted to the downside. For the bulls to regain control, EUR/USD must decisively reclaim the 20-day SMA, currently near 1.0550, to shift the outlook to neutral or positive. 
9. USD/JPY buyers are re-attempting 153.00 in Asian trading on Friday. The pair's upside is due to the growing acceptance that the BoJ will not raise rates next week. Further, the ongoing US Dollar advance, bolstered by expectations for a hawkish Fed rate cut, supports the pair.  

New inflation data out Wednesday showed consumer prices rose as forecast in November, keeping the Federal Reserve on track to lower interest rates again in December. The latest data from the Bureau of Labour Statistics showed that the Consumer Price Index increased 2.7% over the prior year in November, a slight uptick from October's 2.6% annual gain in prices. The yearly increase matched economist's expectations. The index rose 0.3% over the previous month, ahead of the 0.2% increase seen in October and on par with estimates. This was the largest monthly gain since April after rising 0.2% in the previous four months. On a "core" basis, which strips out the more volatile costs of food and gas, prices in November climbed 0.3% over the prior month, matching October, and 3.3% over last year for the fourth consecutive month. The sticky nature of the print "is a little disconcerting," Paul Ashworth, chief North America economist at Capital Economics, wrote on Wednesday. "But we don’t expect it to persuade the Fed to skip another 25bp rate cut at next week’s FOMC meeting."  

The U.S. government posted a $367 billion budget deficit for November, up 17% from a year earlier, as calendar adjustments for benefit payments boosted outlays by some $80 billion compared to the same month in 2023, the Treasury Department said on Wednesday. The deficit for the first two months of the 2025 fiscal year also was a record high for that period - higher than the deficits of the COVID-19 era - reaching $624 billion, up $244 billion, or 64%, from the same period a year earlier. The government's fiscal year starts on Oct. 1. Those deficits were also inflated by calendar-related benefit shifts as well as higher receipts in October and November of 2023 due to the expiration of tax payment deferrals due to California wildfires and other weather-related disasters that year. Year-to-date receipts as reported were down 7% from a year earlier to $629 billion, while year-to-date outlays were up 18% to $1.253 trillion.  

Home shoppers hoping for more attractive mortgage rates next year may be disappointed. That's the takeaway from several economists' 2025 housing forecasts, most released over the past couple of weeks. Most of the eight forecasts call for the average rate on a 30-year mortgage to remain above 6% next year, with some including an upper range as high as 6.8%. That range would be largely in line with where rates have hovered this year. The average rate has gone as low as 6.08% in September — a 2-year low — and as high as 7.22% in May, according to mortgage buyer Freddie Mac. The average rate was 6.6% this week. "Even by the end of next year it’s hard to see sub 6% mortgage rates,” said Mark Fleming, chief economist at First American, which predicts the average rate on a 30-year mortgage will range between 6% and 6.5% next year. A couple of forecasts are more optimistic about how low the average rate on a 30-year mortgage will go in 2025. Fitch Ratings sees it ranging from 5.8% to 6.4%, while economics predicts the average rate will drop to 5.8% by the end of the year. The average rate is still below its historical average of 7% going back to 1971. But that’s little consolation to home shoppers now because over the last 10 years home prices have risen much more quickly than incomes.  

Volatility should be expected to remain high as investors will be closely watching for hints on the upcoming monetary policy direction. Many investors have redoubled their efforts to ensure that their portfolios are sufficiently diversified in the hope 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.