The Precious Metals Week in Review

November 11/11/ 2024  

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

                               Gold                            Silver 

Support                  2684/2644/2615           31.10/30.85/29.39 

Resistance             2750/2775/2815            33.10/33.89/35.35 

                              Platinum                      Palladium 

Support                 974/961/950                  980/974/945 

Resistance            996/1005/1018              1013/1026/1055 

1. Investors are counting on Federal Reserve Chair Jay Powell to keep rate-cutting plans on track this week with a 25-basis point reduction, despite some signs of stubborn inflation and mixed signals about the job market. That doesn’t mean the discussion among members of the Federal Open Market Committee on Wednesday and Thursday will necessarily be a smooth one. Fed policymakers will have to make sense of recent data indicating a strong economy, persistent inflation and a muddled jobs market disrupted by weather and worker strikes. There could be a debate between those who want to cut, those who could support a pause, or those who would support a cut combined with language designed to communicate a more gradual approach to future reductions. Fed watchers expect Powell to forge a consensus around the small cut, following a jumbo-sized reduction in September. 
2. Oil futures jumped nearly 2% on Monday after OPEC+ announced it would delay unwinding production cuts by a month and traders digested a new report that said Iran is planning a "strong and complex" attack against Israel. The Organization of the Petroleum Exporting Countries, along with Russia and other countries, said it would continue with its output cuts for one month until the end of 2024. The decision to delay adding 180,000 million barrels per day starting in December had already been postponed in recent months amid volatile oil prices. "This delay could reflect a calculated strategy by OPEC+ to manage current market volatility, which includes a decline in global demand due to the economic slowdown in China," Rania Gule, senior market analyst at brokerage XS.com, said in a note on Monday. Oil futures have been volatile over the past month amid back-and-forth strikes between Israel and Iran and speculation over whether Tel Aviv would target Tehran's oil facilities. 
3. Credit markets are rallying around the world following Donald Trump’s U.S. presidential win, signaling investor support to anticipated tax cuts and relief there was a clear outcome to the election. The Markit CDX North American High Yield Index, which rises as perceived credit risk declines, briefly reached its highest level since January 2022 on Wednesday. Measures of credit risk in Europe and Asia also fell, even as a second Trump administration brings the potential of increased tariffs and possible trade wars. The moves occurred as U.S. equities hit all-time highs, the dollar strengthened the most since 2020 and Bitcoin hit a record on bets that Trump’s pro-business stance will boost the economy. Yields for safe-haven Treasuries surged as Republicans will also control the Senate. “We now have permanency, and likely some further easing, of the Trump corporate-tax policy passed during his first administration,” said Scott Kimball, chief investment officer at Loop Capital Asset Management. “That’s good for the top and bottom line. It should stimulate investment, which is good for revenues, and it is a positive for cash flows, which is king for credit investors.” 
4. AI chipmaker Nvidia has officially joined the Dow Jones Industrial Average, cementing the tech giant's significance in the artificial intelligence era. Despite a broader decline in chip stocks on Friday afternoon, Nvidia was on track to notch a weekly gain of roughly 9%. That surge has helped it overtake Apple this week as the world’s most valuable company, with its $3.6 trillion market cap ahead of Apple’s $3.4 trillion. Meanwhile, the former tech darling Intel, which Nvidia replaced in the Dow, has fallen nearly 50% since the beginning of 2024 as investors grow wary of its ongoing production issues and gloomy financials. In Trump's second term, Nvidia, like the rest of the AI chip market, could face hurdles in the form of high tariffs on Chinese goods and heightened trade tensions. The president-elect has suggested imposing 10%-20% tariffs across the board and a 60% tariff on imports from China — levels unseen since the Great Depression. Nvidia manufactures its chips in Taiwan with TSMC, which uses components from China to make those chips. 
5. The number of Americans filing new applications for unemployment benefits rose slightly last week, suggesting no material change in the labor market and reinforcing views that hurricanes and strikes had resulted in job growth almost stalling in October. Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 221,000 for the week ended Nov. 2, the Labor Department said. Economists polled had forecasted 221,000 claims for the latest week. Unadjusted claims rose 10,827 to 212,274 last week. They were boosted by a 4,278 jump in filings in California. Applications rose by 3,563 in Michigan and shot up 1,927 in Ohio, more than offsetting significant drops in Florida and Georgia. 
6. Oil prices navigated a turbulent terrain this week, caught between bullish supply signals and bearish demand concerns. From the fallout of the U.S. presidential election to shifting OPEC+ strategies and China’s demand struggles, the crude market reflected the clash of forces shaping global energy. At the time of writing on Friday, WTI is trading at $70.24 per barrel with Brent crude at $73.67. 
7. EUR/USD faces selling pressure near the key resistance of 1.0800 in North American trading hours on Friday. The major currency pair fails to extend Thursday’s recovery as the U.S. Dollar resumes its upside journey after a sharp correction. The Dollar Index, which tracks the Greenback’s value against six major currencies, bounces back to nearly 104.70. The index had retraced to nearly 104.20 on Thursday following the more than four-month high of 105.50 registered after Donald Trump won the presidential election in the United States. 
8. USD/JPY has pulled back to support from a major trendline for the long-term uptrend at about 152.55. Despite the correction, the pair is in an uptrend on a short and medium-term basis and given the technical analysis dictum that “the trend is your friend” the odds still favor a recovery and eventual continuation higher. A break above the 154.71 November 7th high would renew the uptrend and probably lead to a continuation up to resistance at 155.24, the July 30 high. A break above that would provide a stronger bullish signal and might lead to a target at 157.86 (July 19 high).  Alternatively, a break below the trendline and then also below 151.29 might indicate a bearish reversal of the trend over the short-term.  

The Federal Reserve cut interest rates by a quarter percentage point, avoiding any surprises just days after the election. The central bank voted unanimously Thursday to cut its benchmark rate by 25 basis points to a new range of 4.5%- 4.75%, making the decision at the conclusion of its two-day policy meeting in Washington, D.C. The move marks the second rate cut in seven weeks, following a jumbo half percentage point reduction in September that kicked off the Fed’s first easing cycle in more than four years. Fed policymakers this week had to make sense of a lot of mixed data as of late indicating both persistent inflation and a muddled jobs market disrupted by weather and worker strikes. The latest reading from the central bank’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, contained both good news and not-so-good news for the Fed as it works to get inflation down to its 2% goal. It showed inflation rose 2.1% during the month of September, within shouting distance of the Fed’s target.  

Mortgage rates rose for a sixth consecutive week, following Treasury yields as they climbed higher through the presidential election. The average 30-year fixed-rate mortgage rose to 6.79% through Wednesday, up from 6.72% a week earlier, according to Freddie Mac data. The average 15-year fixed-rate mortgage was essentially unchanged, to 6% from 5.99%. Bond yields surged an additional 16 basis points on Wednesday following Trump’s victory, before giving back some of their increase on Thursday to yield around 4.36%. Higher rates also chilled housing activity for the sixth straight week. Applications to purchase a home were down 5% from a week earlier, while refinancings dropped 19%, according to the Mortgage Bankers Association.  

The latest consumer sentiment survey from the University of Michigan revealed that consumers expect inflation to sit at 2.6% in a year, a decrease from last month's expectation of 2.7%. November's reading is the lowest since December 2020 and within the 2.3% to 3% range seen in the two years before the pandemic. Expectations for long-run inflation did tick higher, though, rising to 3.1% from 3% the month prior. The overall consumer sentiment index popped to a reading of 73, up from 71 in October. Interviews for the survey concluded on Monday and therefore don't capture any reactions to election results.  

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.