The Precious Metals Week in Review

11/09/2024

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

                                 Gold                              Silver 

Support                    2488/2473/2453             27.75/26.81/26.50 

Resistance              2523/2544/2559             29.80/30.74/31.29 

                                  Platinum                        Palladium 

Support                     916/907/889                    916/900/880 

Resistance                943/961/970                987 /1010/1023 

1. September has traditionally been a terrible month for traders and risks being even harder to navigate in 2024 given lingering questions about the Federal Reserve’s anticipated interest-rate cut. Bonds, stocks, and gold have typically suffered losses in the month, as traders reassessed their portfolios after the summer break. The S&P 500 Index and Dow Jones Industrial Average have had their biggest percentage losses since 1950 in September. Bonds have slid in eight of the last 10 Septembers, while bullion has dropped every time since 2017. Investors may need to prepare for stormier weather this time, facing uncertainties including a crucial jobs report seen key to the magnitude and frequency of the Fed’s future interest-rate cuts. Stocks trading near records and Treasuries enjoying their longest monthly winning streak in three years look vulnerable to data shocks or surprises. “Fall comes with falls — especially with markets pricing in so much for Fed cuts and people chasing the ‘Goldilocks’ scenario out there,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “Markets would be more edgy than normal.” 
2. Gold prices are just slightly up and silver prices are lower in early U.S. trading Tuesday, as a big and busy week of U.S. economic reports lies ahead. This is also the first trading day of September, a month that has a history of causing stock and financial market turbulence. Reads a Wall Street Journal headline today: “Markets’ summer vacation is over.” December gold was last up $1.20 at $2,528.80 and December silver was down $0.426 at $28.305. Technically, December gold bulls have a solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,600.00. December silver futures bulls have a slight overall near-term technical advantage but are fading. A price uptrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at the August high of $30.67. The next downside price objective for the bears is closing prices below solid support at the August low of $26.885.
3. U.S. tech stocks extended losses on Wednesday morning, coming off a steep sell-off fueled by worries about economic growth and the AI trade amid a slide in Nvidia shares. Stocks are pulling back as Nvidia shares slump, an indication that faith in the AI boom that has driven much of this year's gains is seeping out of the market. The AI juggernaut lost $279 billion in market value on Tuesday, and its shares were lower by more than 2% Wednesday morning after regulators reportedly stepped up an antitrust probe. At the same time, concerns about cracks in the economy have revived somewhat after a lukewarm reading on factory activity. Investors are keeping a watchful eye on fresh data as they calibrate the likely size of the Federal Reserve interest-rate cut expected within weeks. The rocky start to September now has investors bracing for more volatility, as a historically tough month for stocks follows a turbulent August. Though markets managed to shake off that month's losses, analysts suggest stocks may not be in the clear yet. 
4. U.S. job openings dropped to a 3-1/2-year low in July, suggesting the labour market was losing steam, but probably not enough for the Federal Reserve to consider a big interest rate cut this month. Job openings, a measure of labour demand, had fallen by 237,000 to 7.673 million on the last day of July, the lowest level since January 2021. Data for June was revised lower to show 7.910 million unfilled positions instead of the previously reported 8.184 million. Economists polled had forecast 8.100 million job openings. Hires increased by 273,000 to 5.521 million. Layoffs rose 202,000 to a still low 1.762 million. The data suggested that the labor market is not cratering, but slowing in an orderly manner, which would reduce the need for the Fed to deliver a half-percentage-point interest rate cut at the U.S. central bank's Sept. 17-18 policy meeting. A 50-basis-point rate reduction was also put in doubt by strong consumer spending in July. A rise in the unemployment rate to near a three-year high of 4.3% in July rattled financial markets and ignited fears of a recession. 
5. The U.S. economy added fewer jobs than expected in August while the unemployment rate ticked lower. Data from the Bureau of Labor Statistics released Friday showed the labour market added 142,000 nonfarm payroll jobs in August, fewer additions than the 165,000 expected by economists. Meanwhile, the unemployment rate fell to 4.2% from 4.3% in July. August job additions came in higher than the revised 89,000 added in July. Overall, revisions to the June and July labour reports showed the economy added 86,000 fewer jobs than initially reported in those months.  
6. The number of Americans filing new applications for jobless benefits declined last week as layoffs remained low, which could help to allay fears that the labour market was deteriorating. Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 227,000 for the week ended Aug. 31, the Labor Department said on Thursday. Economists polled had forecast 230,000 claims for the latest week. The Federal Reserve's "Beige Book" report on Wednesday described employment levels as "generally flat to up slightly in recent weeks." 
7. Crude oil futures were on pace for a deep weekly loss, as the OPEC+ decision to postpone a production hike failed to ease worries that supply would outstrip demand. OPEC+ delayed plans to increase production by 180,000 barrels per day until December as oil sold off steeply this week. The output hike will bring about 2.2 million bpd back onto the market through the end of next year. West Texas Intermediate October contract: $69.43 per barrel, up 63 cents, or 0.4%. Year to date, U.S. crude has fallen 5.5%. Brent November contract: $72.97 per barrel, up 28 cents, or 0.39%. Year to date, the global benchmark has declined 7.3%. 
8. EUR/USD surrenders intraday gains and slides below 1.1100 after posting a fresh weekly high of 1.1150 in Friday's North American session. Decent gains in the shared currency pair have waned due to a firm recovery in the U.S. Dollar. The Dollar Index, which tracks the Greenback’s value against six major currencies, jumps to nearly 101.40 after reversing intraday losses. 
9. USD/JPY has fallen close to the August 5 lows and bounced. It is forming a large, bullish Hammer Japanese candlestick pattern on the 4-hour chart – if the current period ends with the pattern intact it could signal the start of a substantial pull-back or correction higher. The trend remains bearish although a correction higher looks likely. 

Investors should "go for gold" as the precious metal's stellar run isn't over, Goldman Sachs analysts said in a research note. On Tuesday, gold futures hovered above $2,515 per ounce. The precious metal is off its all-time high touched last month but still up nearly 22% year to date, making it the world's second best-performing asset behind crypto. "Our preferred near-term long is gold. It remains our preferred hedge against geopolitical and financial risks, with added support from imminent Fed rate cuts and ongoing EM central bank buying," wrote Goldman Sachs analysts on Sunday. The firm maintains a 2025 target of $2,700 per ounce and issued a "long gold" recommendation. Purchases by central banks, which hit a record in the first quarter of 2024, have been one of the biggest drivers of the precious metal's rise this year. BofA analysts estimate gold has now surpassed the euro to become the world's largest reserve asset, second only to the U.S. dollar. Geopolitical risks such the Israel-Hamas war and Russia-Ukraine conflict, as well as signals from the Federal Reserve of a September rate cut amid signs of a slowing labor market, have also buoyed prices. "We're seeing gold being used as an uncertainty hedge," said Tom Bruni, head of market research at Stocktwits.  

Crypto investment firm Galois Capital Management will pay a $225,000 fine over Securities and Exchange Commission allegations that it broke rules for safeguarding client assets, including holding some of them in accounts with the now bankrupt exchange FTX. The SEC said Tuesday that in addition to breaking custody rules, Galois misled investors about how much notice they needed to give to redeem funds. Galois Capital didn’t admit to or deny SEC’s findings, but it agreed to cease and desist from further violations, according to a statement from the agency. “After an exhaustive and costly investigation of nearly two years, and without admitting or denying the findings detailed in the SEC’s order, we agreed to settle with the SEC and pay a $225,000 penalty which will go directly to our investors,” Galois Capital wrote in a social-media post. 

Fresh data out Thursday is raising the question of whether the job market is weakening further, and that could cause the Federal Reserve to cut rates by more than a quarter percentage point when officials meet in less than two weeks. ADP's National Employment Report for August showed 99,000 jobs were added in the month, well below economists’ estimates for 145,000, and fewer than the 122,000 jobs added in July. The August data marked the fifth straight month payroll additions had slowed from the month prior. The release was the fewest jobs added from the private sector in a month since January 2021. 

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.