The Precious Metals Week in Review 03/12/2024

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

                                     Gold                            Silver 

Support                        2611/2511/2460           30.52/29.74/29.23 

Resistance                  2763/2813/2914            31.82/32.33/33.11 

                                    Platinum                       Palladium 

Support                       946/936/921                   983/957/905 

Resistance                  973/983/991                  1022/1035/1060 

1. Stocks drifted higher leading into the shortened trading week, which includes the Thanksgiving holiday. This week, a fresh reading on the Fed's preferred inflation gauge, the Personal Consumption Expenditures index, will highlight the economic calendar. Updates on third quarter economic growth and housing activity are also on the schedule. Recent sticky inflation readings have raised questions about whether the Fed will cut interest rates in December and how much the central bank will lower rates over the next year. Earlier this month, the "core" Consumer Price Index, which strips out the more volatile costs of food and gas, showed prices increased 3.3% in October for the third consecutive month. Meanwhile, the "core" Producer Price Index revealed prices increased by 3.1% in October, up from 2.8% the month prior and above economist expectations for a 3% increase. Markets will be closed on Thursday for Thanksgiving, and Friday's trading session will end early at 1 p.m. ET. 
2. Gold tumbled on signs of de-escalating geopolitical tension in the Middle East. Israel is potentially days away from a cease-fire agreement with Lebanon’s Hezbollah, the Israeli ambassador to the U.S. said. Prices extended losses after Axios reported that Israel and Lebanon have accepted the terms of a ceasefire agreement. Bullion tumbled as much as 3% as traders unwound positions built last week amid rising geopolitical tensions, which helped the metal register the biggest weekly rally in 20 months. Gold has still climbed roughly 30% this year, supported by central bank purchases and the Fed’s pivot to rate cuts. Haven buying has also been a feature on an escalation in the Russia-Ukraine war. Most banks remain positive on the outlook, with Goldman Sachs Group Inc. and UBS seeing further gains in 2025. 
3. The American economy expanded at a healthy 2.8% annual pace from July through September on strong consumer spending and a surge in exports, the government said Wednesday, leaving unchanged its initial estimate of third-quarter growth. U.S. gross domestic product, the economy's output of goods and services slowed from the April-July rate of 3%. But the GDP report still showed that the American economy, the world's largest is proving surprisingly durable. Growth has topped 2% for eight of the last nine quarters. Within the GDP data, a category that measures the economy’s underlying strength rose at a solid 3.2% annual rate from July through September, up from 2.7% in the April-June quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending. 
4. A tense presidential election, wars in the Middle East and Ukraine, European governments falling apart: Despite a flurry of risk events, equity volatility is heading for its lowest annual average since 2019. The Cboe Volatility Index, or VIX, has averaged 15.5 points in 2024, more in line with quiet periods that preceded the Covid pandemic than with the tumultuous last few years. The S&P 500 Index has surged more than 25% in 2024, posting 51 all-time highs, with stock markets from Asia to Europe mostly up. The Aug. 5 scare that sent the VIX for a record jump intraday now looks like just a hiccup. Solid corporate fundamentals, easing inflation and central-bank rate cuts have helped global shares reach fresh records, while optimism about artificial intelligence keeps lifting the biggest companies. “The level of the VIX largely reflects the macroeconomic uncertainty embedded in the economy,” said Garrett DeSimone, head quant at OptionMetrics. “With the exception of a few blips, we have not experienced a sustained liquidity crisis posing systemic risks to the economy, which would be a major driver for above-average VIX levels.” 
5. Key OPEC+ nations have begun discussions to delay the oil production restart planned for January, potentially for several months, delegates said. The nations doubt that they can go ahead with the 180,000 barrel-a-day increase currently scheduled for January and may also need to postpone further hikes planned for the following months, amid signs of a global oversupply, said the delegates, who asked not to be identified as the talks are private. Eight OPEC+ nations are supposed to revive 2.2 million barrels a day in monthly installments from January, a sequence postponed from October as oil prices struggled. The group has been withholding output since late 2022 in a bid to shore up prices. Global oil markets are set to tip into a renewed glut next year even if OPEC+ cancels the supply hikes entirely, the International Energy Agency forecasts. Traders widely expect that the increase will be delayed, potentially until the second quarter, according to a survey last week.  
6. In the week ending November 23, the advance figure for seasonally adjusted initial claims was 213,000, a decrease of 2,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 213,000 to 215,000. The 4-week moving average was 217,000, a decrease of 1,250 from the previous week's revised average. The previous week's average was revised by 500 from 217,750 to 218,250. 
7. Crude oil prices were set for a weekly loss today despite a flare-up in the Middle East and the virtual certainty OPEC+ would not be bringing any barrels back anytime soon. Brent crude was trading at $73.38 per barrel at the time of writing, and West Texas Intermediate was changing hands for $69.15, both up from Thursday but down on the start of the week as the U.S. brokered a ceasefire between Israel and Lebanon’s Hezbollah. OPEC+, meanwhile, is keeping both energy analysts and oil traders guessing as it delayed its meeting, originally planned for Sunday, until next Friday. The reason given for the delay was a scheduling conflict. The group was almost unanimously expected to announce yet another delay to its planned easing of the production cuts in light of recent price movements. 
8. EUR/USD surrenders its entire gains after posting a fresh weekly high near 1.0580 in the North American session on Friday. The major currency pair falls as the flash Eurozone Harmonized Index of Consumer Prices data for November, showed that price pressures deflated on a month-on-month basis and the U.S. Dollar rebounded. The monthly headline and core HICP – which excludes volatile food and energy prices deflated by 0.3% and 0.6%, respectively, a scenario that would prompt expectations of European Central Bank’s larger-than-usual interest rate cut of 50 basis points in the December meeting.  
9. USD/JPY has breached the bottom of a bearish Broadening Formation price pattern and is falling toward the first downside target at 148.54, the 61.8% Fibonacci extrapolation of the height of the pattern extrapolated down. USD/JPY extends sell-off to test 150.00 in Friday's Asian session following the release of hotter-than-expected November inflation figures from Tokyo, Japan’s capital. The data strengthens the case for another BoJ rate hike in December, sending the Japanese Yen through the roof.   

Americans continue to feel more upbeat about the outlook for the U.S. economy. The latest index reading from the Conference Board was 111.7 in November, above the 109.6 seen in October, and the highest level in more than a year. The expectations index, which is based on consumers' short-term outlook for income, business and labor market conditions, ticked up 0.4 percentage point to 92.3, significantly above the threshold of 80 that typically signals recession ahead. Less than 64% of respondents to the survey said they believe a U.S. recession is "somewhat" or "very likely" in the next 12 months, marking lowest number of consumers fearing an incoming recession since the Conference Board began asking the question in July 2022. “November’s increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding the labor market," said Dana M. Peterson, chief economist at The Conference Board. "Compared to October, consumers were also substantially more optimistic about future job availability, which reached its highest level in almost three years."  

Sales of new single-family homes plummeted in October to the lowest level in about two years as mortgage rates remained elevated during the month and hurricanes took a toll on housing activity. New home sales dropped 17.3% in October from the previous month to a seasonally adjusted rate of 610,000 units, according to Census Bureau data released on Tuesday. Analysts surveyed had expected a pace of 725,000. Sales in the South fell 28% to 339,000 in October, marking the slowest rate of increase since April 2020. In addition to the hurricanes, buyers dealt with expensive borrowing costs as well as rising home prices. The median sales price of new houses sold was $437,300 in October, up from $426,300 the previous month. "October's weak sales came alongside increases in mortgage rates throughout the month," Colin Johanson, U.S.macro-economic research analyst at Barclays, wrote in a note after the release. Mortgage rates continue to march higher, with the average 30-year fixed mortgage rate hovering around 6.8% last week, according to Freddie Mac, compared to the 6.7% a week prior.  

Demand for options protection against an equity market crash is rising, even as a post-election rally takes U.S. stocks to record highs. But several barometers gauging uptake for protection against extreme market swings — such as the Nations TailDex Index and Cboe Skew are picking up. While the rise in these indexes does not necessarily mean investors expect catastrophic events, they suggest elevated caution in the face of several weighty risks, including the potential of an inflationary snap-back to disturbances in global trade next year. Amy Wu Silverman, RBC Capital Markets head of derivatives strategy, said investors are guarding against so-called "fat tail" risks. These reflect an abnormal distribution of returns that carries higher expected probabilities of extreme market moves.  

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.