1. The U.S. Federal Reserve was the primary driver for market movements this week as analysts awaited the release of the Non-Farm Payrolls report for April on Friday.

The Precious Metals Week in Review - May 3rd, 2019.
The Precious Metals Week in Review – May 3rd, 2019.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment was unchanged from the previous week’s unrevised level of 230,000 for the week ending April 27. The four-week moving average of claims increased by 6,500 claims to reach a new level of 212,500. The previous week’s moving average was also unrevised.

3. The Non-Farm Payrolls report was released on Friday and showed that the U.S. economy added 263,000 new jobs in April, beating Wall Street expectations for the addition of 190,000 jobs by a large margin. The unemployment rate fell to 3.6%, the lowest since December of 1969 when it was 3.5%, which also beat economist’s expectations. The jobs data for previous months saw upward revisions, with February moving from 33,000 jobs to 56,000 although March’s numbers did dip slightly lower. Average job gains in the U.S. for the year-to-date come out to roughly 205,000 per month.

4. The Federal Reserve held its Federal Open Market Committee meeting this week and opted to keep interest rates unchanged, though the market had apparently already begun to price in a rate cut. St. Louis Fed President James Bullard said on Friday that the central bank’s current monetary policy might be “a little tight” and may need to be reconsidered in the near future. President Trump has been pushing the Fed to begin cutting rates, claiming that such a move would continue boosting the U.S. economy further. Bullard seemed to reiterate Chairman Powell’s stance that the Fed would take a “wait and see” approach to interest rates, saying “I would like to take this opportunity to recenter inflation expectations at 2%. I think that would pay handsome dividends for the Fed going forward. We’ve made some big moves in monetary policy over the three or four months. I think it’s time to wait and see how that’s going to impact the economy going forward.” At his post-meeting news conference, Chairman Powell said that the Federal Reserve was comfortable with current policy and will most likely keep interest rates steady for “an extended period of time.” Inflation in the U.S. continues to run below the Fed’s expectations.

5. On Tuesday President Donald Trump continued increasing pressure on the Federal Reserve, calling on them to cut interest rates by a full percentage point and to re-embark on a new round of quantitative easing, which is effectively printing money out of thin air. In a two-part extensive tweet, Trump compared the U.S. Federal Reserve to its counterpart in China and said that if they were to take him up on his “suggestions” that the U.S. economy would “go up like a rocket.”

6. French President Emmanuel Macron, in an attempt to appease the so-called “yellow vest” protesters that have disrupted things in France for months, promised to implement sweeping new tax cuts. The cuts, if France follows through on them, would push their budget deficit higher and put them at odds with the European Council in Brussels, much the same way that Italy’s public spending plans have. Macron’s plan calls for income tax cuts totaling nearly 5 billion euros. Macron also said that worker bonuses of up to 1,000 euros would not be subject to taxation and that single parents would get extra support. The plan would likely increase the fiscal deficit of France well beyond the rules that govern European Union members and call for budget deficits of not more than 3%.

7. The socialists successfully managed to win the most seats in Spain’s snap elections over the weekend but they were far from establishing a clear majority. The outcome likely means that there will be several weeks, if not several months, of discussions as the different political parties look to form alliances and create a coalition government that can effectively rule Spain. If the socialists can manage to take the leadership role, then Spain may also join the growing list of those EU countries who are beginning to step outside of the restrictions and boundaries placed upon them by their membership in the bloc.

8. North Korea reportedly fired multiple short-range missiles off its east coast in the early morning hours of Saturday morning. A South Korean military official told NBC News “We confirm that North Korea has launched an unidentified short-range missile at around 09:06 KST off eastern area in Hodo Bando (near Wonsan in Gangwon Province) towards the eastern direction.”

9. A surge in U.S. crude inventories reported earlier in the week sent crude prices tumbling roughly 2 percent lower for the week. Saudi Arabia could boost production next month but the rise is ostensibly to meet local demand for power generation. Strong U.S. economic data released later in the week boosted sentiment that demand would continue to be strong and lent support to prices despite the build in U.S. inventories.

10. The euro climbed higher against the U.S. dollar at the start of the week but had hit its highs by Wednesday. Late Wednesday the euro took a vertical, but brief, plunge lower and then drifted lower through Thursday and Friday’s trading sessions. The euro reversed course late into Friday’s trading session and had moved back into positive territory by market closing and closed out the week higher against the U.S. dollar. The Japanese yen moved lower at the start of trading, but soon reversed course and began a relatively steep climb that peaked on Monday. The yen drifted slightly lower through Monday’s trading and then spiked higher around mid-morning on Tuesday. The move to the upside was short-lived and the yen had dipped back to near even for the week by Thursday. The yen also saw a last-minute surge to the upside late on Friday and will also close out the week higher against the U.S dollar.

The stellar U.S. Non-Farm Payrolls report for March seemed to signal that the U.S. economy is finally operating on all cylinders. The official unemployment rate is now the lowest it has been since December of 1969. Despite the better-than-expected numbers, the Federal Reserve chose to hold interest rates at current levels and hinted that it might be more inclined to cut rates than it would be to hike them again in the near future.

Inflation has remained stubbornly low and President Trump has been increasingly calling on the Fed to cut rates and perhaps even embark on further quantitative easing to provide an additional boost to the U.S. economy. Trump also appears to be increasingly trying to politically influence the Fed with his nominations for its upcoming membership turnovers. Both of Trump’s picks for Fed membership have now requested that their names be withdrawn from consideration after increasing pressure and scrutiny from Democratic leaders. The Democratic party firmly believes that Trump is attempting to politicize the Fed by seeking out candidates that will support his own personal views rather than maintain the independence of the Federal Reserve.

The Fed’s closely watched inflation gauge, the core personal consumption expenditures index, was flat for the month of March and up just 1.6 percent year over year which missed economists’ expectations and added fuel to Trump’s call for the Fed to cut rates early.  Vice President Mike Pence has added his own voice to the chorus of calls for the Fed to cut rates as well.

According to U.S. Treasury Secretary Steven Mnuchin, the trade talks with China are in “the final laps.” Mnuchin went on to clarify that comment, according to the New York Times, saying that while both sides are hoping to reach agreement, negotiations remain at a stage where they either come to terms, or walk away from any deal at all. The latest economic numbers released in the U.S. this week will further reinforce the strength of its negotiating position in those talks. Both Secretary Mnuchin and Trade Representative Robert Lighthizer traveled to Beijing this week to continue the negotiations.

In Europe, the elections in Spain resulted in the socialists gaining the most governmental seats, but they did not capture a clear majority so it will likely be months before any expected spending increases occur as all sides begin the process of trying to put together a coalition government.

The real surprise in Europe was in France, where Emmanuel Macron announced that he would be granting the so-called “yellow vest” protesters the tax cuts that they have been calling for. Macron announced roughly 5 billion euros worth of tax cuts, which will likely put France beyond the 3% budget deficit target that members of the European Union are required not to exceed. France, Italy, and likely Spain once the primarily socialist government takes full control, are now all on fiscal paths that put them at odds with the rules of the EU. The U.K. also remains a hotbed of uncertainty in Europe as no real news of progress in the ongoing quest to come up with a viable Brexit plan was reported.

In these times of ongoing uncertainty, savvy investors continue to take steps to make sure that their portfolios remain diversified against a potential sudden and swift downturn in equity markets. Many of these investors have continued to carry out their plan of acquiring physical precious metals while prices remain suppressed to assist in diversifying their portfolios.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Apr. 26th2019 May 3rd2019 Net Change
Gold $1287.00 $1280.20 (6.80) – 0.53%
Silver $15.05 $14.96 (0.09) – 0.60%
Platinum $899.85 $872.05 (27.80) – 3.09%
Palladium $1467.20 $1368.00 (99.20) – 6.76%
Dow Jones 26543.33 26504.95 (38.38) – 0.14%

Month End to Month End Close

Mar. 29th2019 Apr. 30th2019 Net Change
Gold $1294.00 $1285.70 (8.30) – 0.64%
Silver $15.14 $14.98 (0.16) – 1.06%
Platinum $849.25 $891.70 42.45 + 5.00%
Palladium $1371.80 $1382.70 10.90 + 0.79%
Dow Jones 25928.68 26592.91 664.23 + 2.56%

Previous year Comparisons

May 4th2018 May 3rd2019 Net Change
Gold $1314.50 $1280.20 (34.30) – 2.61%
Silver $16.50 $14.96 (1.54) – 9.33%
Platinum $911.00 $872.05  (38.95) – 4.28%
Palladium $968.50 $1368.00 399.55 + 41.25%
Dow Jones 24262.51 26504.95 2242.44 + 9.24%

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

Gold Silver
Support 1280/1260/1240 15.00/14.80/14.60
Resistance 1300/1320/1340 15.20/15.50/15.80
Platinum Palladium
Support 880/860/840 1400/1350/1300
Resistance 910/940/960 1480/1520/1560
This is not a solicitation to purchase or sell.
© 2019, Precious Metals International, Ltd.

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