1. It was another shortened trading week due to the timing of the New Year holiday period this year. Despite the shortened week, there was no lack of market-affecting news.

The Precious Metals Week in Review - January 3rd, 2020.
The Precious Metals Week in Review – January 3rd, 2020.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment dropped by 2,000 claims from the previous week’s revised level to remain at 222,000 for the week ending December 28. The previous week’s data was revised higher by 2,000 claims. The four-week moving average increased by 4,750 claims from the previous week’s revised average and stood at 233,250 claims. The previous week’s moving average was revised higher by 500 claims. We can continue to expect the unemployment data to remain volatile as temporary workers hired to help retailers staff up for the holiday shopping rush begin to suffer the inevitable layoffs.

3. The Senate returned to work on Friday and immediately addressed its preparations, or lack thereof, for the impeachment trial of Donald J. Trump. Senate Majority Leader Mitch McConnell resoundingly rejected House Speaker Nancy Pelosi’s attempts to direct the terms that the trial in the Senate should follow and said “we are content to continue the ordinary business of the Senate” given that Nancy Pelosi has yet to send the articles of impeachment to the Senate as is required by the process. McConnell has pledged to follow the precedent set in the impeachment trial of former President Bill Clinton in 1999 – starting with a bipartisan resolution to set up the trial and then deciding which witnesses and relevant documents should be presented at a later date. Senate Minority Leader Chuck Schumer has argued against the plan, saying “Leader McConnell’s proposal to vote on witnesses and documents later is nothing more than a poorly disguised trap.”

4. On New Year’s Eve Hashed al-Shaabi, a pro-Iranian paramilitary group operating in Iraq, staged an attack on the sprawling U.S. embassy compound in Baghdad. The U.S. State Department urged all U.S. citizens to leave Iraq, saying “On December 31, 2019, the Embassy suspended public consular services, until further notice, as a result of damage done by Iranian-backed terrorist attacks on the Embassy compound.” Early Friday morning, local time in Iran, the U.S. military carried out an airstrike at the Baghdad airport that killed Major General Qasem Soleimani, a key commander of the Iranian Revolutionary Guard Corp and widely considered to be the most powerful military commander in Iran. U.S. Secretary of State Mike Pompeo said Soleimani had “orchestrated attacks on coalition bases in Iraq and was actively planning operations against Americans in the area.” Iran’s Supreme Leader Ayatollah Ali Khamenei responded to the strike on Friday, saying via Twitter:

Iranian President Hassan Rouhani also said via Twitter on Friday that:

5. Other world leaders raised their concerns over the U.S.’ decision to conduct its airstrike on Thursday as well, calling for restraint in the region. U.K. foreign secretary Dominic Raab said, in a statement, “We have always recognized the aggressive threat posed by the Iranian Quds force led by Qasem Soleimani. Following his death, we urge all parties to de-escalate. Further conflict is in none of our interests.” Charles Michel, the president of the European Council also called for restraint, saying “The cycle of violence, provocations and retaliations which we have witnessed in #Iraq over the past weeks has to stop. Further escalation must be avoided at all cost.” Top Democratic candidates for the upcoming 2020 election also heavily criticized Trump’s decision, on one hand saying they detested Soleimani and on the other saying that the strike will only lead to further conflict escalation. Senator Joe Biden even said Trump had “just tossed a stick of dynamite into a tinderbox.”

6. The U.S. announced on Friday that it would send roughly 3,500 additional soldiers to the Middle East, deploying to Iraq, Kuwait and “other parts of the region” but said that the additional troops were part of a previously planned deployment initiative and not a direct response to the killing of Soleimani Thursday night.

7. Late on Friday, President Trump issued a statement from his Mar-a-Lago resort in Florida clarifying the U.S.’ actions in Iraq overnight, saying that the U.S. does not “seek war or regime change” with Iran. Trump went on to classify Soleimani as one of the “number one terrorists” in the world and said that the U.S. took the action it did on Thursday “to stop a war. We did not take action to start a war.” Trump went on to say that the U.S. is “ready and prepared to take whatever action is necessary” if Iran threatens further American lives.

8. Crude oil surged after the U.S. airstrike that was conducted on Thursday in Baghdad, Iraq. Brent Crude, the international benchmark, initially surged near $70-a-barrel before settling back into the mid-$60 range. West Texas Intermediate crude also surged, closing the gap to trade nearer to the same levels as Brent Crude for the first time in many months.

9. The euro began another trade-shortened week trending higher against the U.S. dollar. By New Year’s Eve, the euro appeared to have reversed its trend, drifting lower and moving back near its open for the week as New Year’s Day began. When trading reopened, the euro began moving higher again, but had peaked by late Wednesday and began a steady downward move that accelerated and saw the euro touch its lows for the week late Friday morning. The euro quickly bounced back off the lows however and had recovered much of its lost ground and appears set to close out the week essentially flat against the U.S. dollar. The Japanese yen also trended higher against the U.S. dollar throughout much of the shortened week, falling over New Year’s Day, but quickly regaining ground and resuming its move higher. The yen looks set to close out the week to the upside against the U.S. dollar.

The escalating tensions in the Middle East will likely take center stage in the coming weeks as the world waits to see what Iran’s response to the U.S. air strike that killed one of its top military commanders at the Baghdad Airport in Iraq on Thursday night will be. Multiple Iranian leaders have threatened “Severe Revenge” for the action.

The military action will also likely cast a shadow over the upcoming signing of the much-debated “Phase One” trade deal between the U.S. and China, which is supposed to take place on January 15. China, who is on friendlier terms with Iran than much of the rest of the world, urged “calm and restraint” in the region. China’s Foreign Ministry spokesperson Geng Shuang said Friday “The sovereignty and territorial integrity of Iraq should be respected, and peace and stability in the Middle East Gulf region should be maintained. We urge all parties concerned, especially the United States, to maintain calm and restraint and to avoid the further escalation of tensions.”

It is unlikely that the drone attack on Soleimani will completely derail the tenuous trade truce between the two giants, but China may scale back on its cooperation with the U.S. on talks to denuclearize North Korea as a result of the attack. Hu Xijin, the editor-in-chief of a tabloid published by the official newspaper of the Communist Party of China tweeted:

The attack will also likely galvanize the Democrats in Congress to continue their quest to remove Donald Trump from office. The Senate reconvened this week and appears in no rush to begin preparations for an impeachment trial, since the House of Representatives has not yet sent the articles of impeachment to its chamber. One Senate Republican is apparently actively entertaining trying to have the articles of impeachment dismissed, since the House of Representatives is not following the formal process to complete the impeachment.

Senate Democrats, led by Minority Leader Chuck Schumer, are already livid over the trial situation and Thursday’s attack did nothing to alleviate that tension. Schumer made it clear that the decision to carry out the airstrike on the Baghdad airport was not vetted by Congress’ so-called “Gang of Eight” which is supposed to be informed of classified intelligence and matters that affect national security concerns. Despite Schumer and Nancy Pelosi, also a member of the “Gang of Eight” not being informed, it appears that other members of Congress were told about the attack in advance. Lindsay Graham told “Fox and Friends” on Friday morning “I was briefed about the potential operation when I was down in Florida. I appreciate being brought into the orbit. I really appreciate President Trump letting the world know you cannot kill an American without impunity. We’ll stand up for our people. And that is an absolutely essential message.” The Senate is supposed to be briefed on the intelligence that led to the strike next week, but the fact that the President called for the strike without notifying the “Gang of Eight” ahead of time will most likely set the stage for more accusations of abuse of power against President Trump by the Democrats.

In Europe, the United Kingdom moves inexorably toward its exit from the European Union. With Prime Minister Boris Johnson’s new-found majority now in control of Parliament, the U.K. is set to exit the EU on January 31, most likely with a hard-won Brexit agreement in place, heading off an immediate “no-deal” Brexit. Despite the likelihood that the U.K. will finally pass its Brexit agreement, it is not a given that what passes the U.K. parliament will be immediately ratified by the European Parliament. Chief Brexit coordinator for the European Parliament Guy Verhofstadt said there are “remaining problems” relating to citizens’ rights for those EU citizens that will continue to reside in the U.K. Even if the European Parliament ratifies the agreement immediately, the U.K. will have only 11 short months to hammer out new trade agreements between itself, the EU, and the rest of the world. Such a short deadline is ambitious at best and has been deemed “unrealistic” by European Commission President Ursula von der Leyen.

As renewed tensions flared in the Middle East this week, precious renewed their upward climb as jittery investors sought assets that have long been historically viewed as a “safe haven” in times of crisis. Equity markets saw an initial pullback but ended the week down only slightly. Depending on Iran’s response to the strike in its top military commander, volatility in both equities and precious metals could increase significantly as investors, already sensing that stocks are due for a correction, possibly return to precious metals with renewed vigor.

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)

Dec. 27th 2019 Jan. 3rd 2020 Net Change
Gold $1513.65 $1549.95 36.30 + 2.40%
Silver $17.87 $18.11 0.24 + 1.34%
Platinum $949.10 $984.70 35.60 + 3.75%
Palladium $1911.20 $1988.20 77.00 + 4.03%
Dow Jones 28645.33 28634.88 (10.45) – 0.04%

Month End to Month End Close

Nov. 29th 2019 Dec. 31st 2019 Net Change
Gold $1466.55 $1520.50 53.95 + 3.68%
Silver $17.03 $17.88 0.85 + 4.99%
Platinum $898.90 $973.00 74.10 + 8.24%
Palladium $1837.60 $1941.80 104.20 + 5.67%
Dow Jones 28051.41 28538.44 487.03 + 1.74%

Previous year Comparisons

Jan. 4th 2019 Jan. 3rd 2020 Net Change
Gold $1284.00 $1549.95 265.95 + 20.71%
Silver $15.73 $18.11 2.38 + 15.13%
Platinum $822.15 $984.70  162.55 + 19.77%
Palladium $1299.40 $1988.20 688.80 + 53.01%
Dow Jones 23433.16 28634.88 5201.72 + 22.20%

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

Gold Silver
Support 1525/1480/1460 18.00/17.80/17.50
Resistance 1550/1580/1600 18.25/18.50/18.80
Platinum Palladium
Support 960/930/900 1975/1935/1900
Resistance 1000/1050/1075 2000/2040/2080
This is not a solicitation to purchase or sell.
© 2020, Precious Metals International, Ltd.

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