1. This week went by in relative calm after Federal Reserve Chairman Jerome Powell reassured investors that inflation is likely to be short-lived and that the central bank will not rush to raise interest rates. Stocks rallied as a result, and the S&P 500 closed the week at an all-time high. On Tuesday, bitcoin surprised investors with a dive below the $30,000 threshold. Despite an attempt to recover, the digital currency fell again and closed the week above $32,000. Analysts see the drop as a short-term concern instead of a long-term threat. On Thursday, President Biden announced his support to the $1.2 trillion Bipartisan Infrastructure Framework, giving the market a lift. Regardless of the market’s rallies, the week ended on a somewhat low note after the Department of Commerce reported that consumption in May flattened as the boosting effects of the government stimulus checks fade.
2. For the week ending on June 19, the seasonally adjusted number of Americans filing for unemployment decreased from the previous week’s revised level. The estimated number of initial claims declined from 418,000 to 411,000. The revised figure for the week ending on June 12 increased by 6,000 unemployment insurance applications, from 412,000 to 418,000. Meanwhile, the four-week moving average for the week ending June 19 grew by 1,500 to 397,750 from the preceding week’s revised average. The revised four-week average for the week of June 12 rose by 1,250 to 396,250 claims. The number of Americans who cannot claim unemployment benefits and who applied for Pandemic Unemployment Assistance increased this week. This unadjusted figure climbed by 6,920 applications, from 97,762 in the week ending June 12 to 104,682 by June 19.
3. On Tuesday, Federal Reserve Chairman Jerome Powell said in a hearing before a House subcommittee that it is highly unlikely that inflation will reach 1970s levels. Despite admitting significant uncertainty and larger-than-expected price increases, he underscored that shortages would eventually fade and bring inflation levels closer to the central bank’s long-run 2% target. “The categories where these prices are really going up, you’ll see that it tends to be areas that are directly affected by the reopening,” Powell explained. Despite his confidence that prices will subside, Powell said he could not predict the timing: “That’s something that we’ll go through over a period. It will then be over. And it should not leave much of a mark on the ongoing inflation process.” Some assets rallied after Powell reassured investors that inflation is likely to be short-lived and that the Fed will not rush to raise interest rates.
4- On Tuesday, the National Association of Realtors (NAR) reported that U.S. median existing-home prices had the largest annual increase in May in more than two decades, amid a swelling demand, low borrowing rates, and property scarcity. The median existing-home prices for all housing types was over $350,000, a record increase of 23.6% year-over-year and the largest since the NRA started tracking this data in 1999. The sustained price increase since last summer is leading to a decline in home-sales pace. Existing-home sales decreased for the fourth straight month in May; compared to April, this figure fell by 0.9%. NAR chief economist Lawrence Yun said that home sales fell moderately in May. He added that lack of inventory continues to hold back home sales and that the consequent price increase “is simply squeezing some first-time buyers out of the market.” Many people have been frustratingly outbid in their attempt to buy a home; some realtors are even suggesting their clients look for houses $20,000 to $30,000 below their budget so they can compete with a more substantial offer. However, Yun said that May’s figures are now approaching pre-pandemic activity and that the outlook is encouraging because supply is expected to grow.
5. The Department of Commerce reported on Friday that household spending flattened in May and revised April’s spending upwardly to 0.9% from 0.5%. As the impact of government stimulus checks fades, Americans’ personal income fell by 2%, and spending on big-ticket items decreased. Although Americans’ expenditure in services increased by $74.3 billion, a drop in goods expenditure of $71.5 billion virtually offset it. As vaccination efforts continue to foster economic reopening, more and more households opt for services that involve going out. According to a credit and debit card transaction analysis by Affinity Solutions, families with incomes above $200,000 increased restaurant spending by 16%, compared to the previous month. Meanwhile, households with incomes ranging between $31,000 to $60,000 increased their restaurant spending by 5% in May. Despite the economic recovery disparity that these figures suggest and Congress’s refusal to raise the minimum wage, pay for low-wage workers has been on the rise as employers deal with a tight labor supply. Affinity Solutions CEO Johnathan Silver thinks the retail sector will be “hot” this summer as “People are just wanting to get out.” Economists believe that as local and state governments lift restrictions, households will increase spending on restaurants, travel, and services while consuming fewer goods.
6. As announced last week, the Canadian government issued new measures as part of its phased reopening plan on Monday. “As of July 5th, if you’re permitted to enter Canada, and you’re fully vaccinated—and you meet other mandatory requirements, including pre- and on-arrival testing—you won’t need to quarantine at home or stay at an authorized hotel,” said Canadian Prime Minister Justin Trudeau on Twitter. Nevertheless, the border remains closed to all non-essential travel until July 21. Additionally, travelers must abide by the rules of each province and find out what they are prior to their trips. Reactions to the announcement were mixed. While some applauded the new rules, critics highlighted the incompleteness of the measure as kids of Canadian citizens under the minimum vaccination age cannot cross the border. Others criticized the government for not following the recommendations an expert panel issued in late May to relax border rules significantly and equitably. Indian Canadians were among the most critical for the cancellation of direct flights to Canada and other restrictions. Finally, criticisms came from business owners in the tourism and services sectors who cannot afford to lose customers for a second summer in a row. The issue of the border continues to divide Canadians; according to an Angus Reid poll conducted in May, nearly half of the Canadian population believes the border should remain closed.
7. U.S. and Taiwan officials will convene next week to revive investment and trade talks. The move is consistent with the Biden administration’s commitment to Taiwanese democracy and U.S. efforts to counter China. Although the “One-China policy” precludes any state from holding official relations with the island, chargés will hold a videoconference on Wednesday. Bi-Khim Hsiao, Taiwan’s representative in the U.S., and Brent Christensen, director of the American Institute of Taiwan—U.S.’ de facto embassy in Tapei, will head the meeting with trade representatives from each country. An agreement first signed in 1994 will provide the framework for the investment and trade dialogues and could become the base for a new free-trade deal. The last meeting of this kind between the two countries happened in 2016. These discussions mark a departure from the previous administration, which opted for preserving the framework for trade cooperation with China. Late last year, Taiwanese President Tsai Ing-wen eased restrictions on U.S. beef and pork imports with the hope to initiate a trade agreement with the U.S. The U.S. has also made friendly gestures toward the island; recently, the U.S. shipped 2.5 million vaccine doses. Although the Chinese government has not pronounced yet on the meeting, the Chinese opposition to any official exchanges between the U.S. and the island—which it considers a breakaway province—is well known.
8. Brent and West Texas Intermediate crude oils made the news after reaching 32-month highs this week. Both crudes climbed on Monday and fell on Tuesday but ascended during the remainder of the week. Brent reached a 32-month high on Friday, at $76.21, and WTI on Wednesday, at $74.25. The two benchmarks closed the week to the upside, Brent at $76.01 and WTI at $74.00—the two highest closes since October 2018. This was the fifth consecutive week of oil climbing prices. According to OANDA senior market analyst Edward Moya, “Crude prices rallied on an improving demand outlook and over expectations [that] the market will remain tight as OPEC+ is likely to only deliver a small boost to output” next Thursday at its Ministerial Meeting. Sources say participating countries will have to grapple with demand increases in the U.S., Europe, and China while considering the rise of COVID-19 cases in other countries. The chances of Iranian supply increase resulting from a U.S. sanction lift dimmed last weekend after the sixth round of talks ended without significant progress and following the presidential election of hard-liner Ebrahim Raisi. In the U.S., the number of oil rigs decreased this week by one; however, the month closed with 13 additional rigs and the second quarter with 48 more.
9. The euro regained strength this week against the U.S. dollar after two consecutive weeks of declines. The European currency opened the week touching the week’s low in negative territory. However, the euro fluctuated until reaching the week’s second-highest point on Wednesday afternoon. Although a descent followed, the currency attempted a small climb on Thursday’s session and maintained the ground it gained at the beginning of the week. On Friday’s session, the euro embarked on a final ascent and reached the week’s high in the early afternoon; nevertheless, it could not maintain the pace and closed the week to the downside against the greenback. The Japanese yen kicked off the week with an ascent that took it to the week’s high in the wee hours of Monday. Nevertheless, the currency lost ground and fell to negative territory in the afternoon. The currency continued to decline at a somewhat slow but steady pace. The yen touched the week’s low right after midnight on Thursday and regained some ground during the session. On Friday, the Japanese currency ventured on an ascent but similarly to the euro, could not keep the momentum, fell, and closed the week to the downside against the greenback.
On Thursday, a Pfizer official said that the Pfizer-BioNTech vaccine is about 90% effective against the COVID-19 Delta variant, which was first identified in India. According to the World Health Organization (WHO), Delta is becoming the globally dominant version of the coronavirus as it is the hardiest and fastest to spread. On Friday, the World Health Organization recommended fully vaccinated individuals continue using facemasks, despite Pfizer’s positive news. The recommendation came after data showed that about 50% of adults infected in Israel with the Delta variant had been fully inoculated with the Pfizer jab. WHO assistant director-general for medicine access and health products, Dr. Mariangela Simao, said that the vaccine alone will not be enough to stop community transmission during a news briefing. Dr. Simao urged people to continue practicing social distance, hand hygiene and using facemasks. “This still continues to be extremely important, even if you’re vaccinated when you have a community transmission ongoing,” Dr. Simao added. WHO officials reminded people that vaccines have only reached a small part of the world population and that, as a result, new variants continue to emerge.
Tensions between Russia and Britain flared up on Wednesday as a British warship passed close to the coast of Crimea. Reports from both governments differed wildly. The Russian Defense Ministry said in a statement to the Russian-state news agency TASS that a patrol ship fired warning shots, and one of its warplanes dropped bombs to the HMS Defender as it went 1.9 miles (3 kilometers) inside Russian waters in Crimea. In a tweet, British Defense Secretary Ben Wallace said the HMS Defender was carrying out “a routine transit … across the Black Sea.” As usual, the vessel “entered an internationally recognised traffic separation corridor,” and “Russian vessels shadowed her passage,” as is routine. The U.K. Defense Ministry Office also said in a statement that no warning shots had been fired and that they believe Russians were undertaking a gunnery exercise in the Black Sea after warning the maritime community. “No shots were directed at HMS Defender and we do not recognise the claim that bombs were dropped in her path,” the statement said. A BBC journalist on board the Defender reported that Russian warnings were increasingly hostile and that they did hear firing, but they thought it was well out of range. The Russian report came after a British warship account tweet said that Ukrainian and U.K. officials signed an agreement aboard the Defender to enhance Ukraine’s naval capabilities, which most likely drew Moscow’s ire. On Monday, the U.S. Naval Institute News reported that a Russian receiver station had shared fake tracking data concerning the HMS Defender and a Dutch frigate. The tracking information placed the ships within two nautical miles of the Sevastopol port, house to the Russian Black Sea fleet headquarter, which would have constituted a provocation to Russian sovereignty.
The disconnect between the economy and the equity market seems to continue as the economic recovery pace appears to have slowed down amid news of stock market rallies. Cautious investors continue to take measures to diversify their portfolios by including safe-haven investments. Savvy investors know well that gold and silver are instrumental in shielding capital and keeping their portfolios well diversified. Nevertheless, precious metals should always be viewed as a long-term investment. The key to profitability through the ownership of physical precious metals is to acquire the physical product and hold on to 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.
Precious Metals International, Ltd.
Friday to Friday Close (New York Closing Prices)
|
Jun. 18, 2021 |
Jun. 25, 2021 |
Net Change | ||
|
Gold |
$1,773.40 |
$1,777.34 |
3.94 |
0.22% |
|
Silver |
$25.93 |
$26.02 |
0.09 |
0.35% |
|
Platinum |
$1,052.85 |
$1,108.26 |
55.41 |
5.26% |
|
Palladium |
$2,466.97 |
$2,638.23 |
171.26 |
6.94% |
|
Dow |
33290.08 |
34433.84 |
1143.76 |
3.44% |
Previous year Comparisons
|
Jun. 26, 2020 |
Jun. 25, 2021 |
Net Change | ||
|
Gold | $1,767.05 | $1,777.34 |
10.29 |
0.58% |
|
Silver |
$17.86 |
$26.02 |
8.16 |
45.69% |
|
Platinum |
$812.40 |
$1,108.26 |
295.86 |
36.42% |
|
Palladium |
$ 1,892.90 |
$2,638. | 745.33 | 39.38% |
|
Dow |
25015.55 |
34433.84 |
9418.29 |
37.65% |
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 1750/1700/1680 | 25.00/24.00/23.00 |
| Resistance | 1800/1860/1900 | 26.00/27.00/28.00 |
| Platinum | Palladium | |
| Support | 1050/1000/950 | 2600/2500/2400 |
| Resistance | 1120/1160/1200 | 2700/2900/3100 |