1. The bullish run of gold has cooled off, but the potential for strong upside remains, according to Richard Snow, Strategist at DailyFX. “Gold is highly sensitive to geopolitical conflict and therefore, it comes as no surprise to see the safe haven metal posting an exponential rise in recent weeks, near 10% from the low,” he said. Gold prices dipped at the start of the week but recovered as the week progressed. “US Yields remain elevated, suggesting that the dominant driver of gold is centered around its safe-haven appeal” Snow said that this doesn’t mean gold prices will decline steeply, as gold maintains potential for further upside in times of uncertainty. “This does not suggest that the precious metal will start selling off, even if the RSI has entered overbought territory,” he said. $2010 appears as the next level of resistance, followed by the all-time high around $2081.80. He also noted that “gold is now well above the 200 simple moving average (SMA). In the event price action pulls back from here, support emerges at $1937 which coincides with the 200 SMA.”
2. As a follow-up to a story we have been covering, Sam Bankman-Fried (FTX) was found guilty of embezzling $10 billion of his client’s money, in what the prosecutor said was ‘one of the biggest financial frauds in American history.’ Bankman-Fried now faces up to 115 years in prison. The 31-year-old, who founded the crypto exchange FTX, was convicted on all seven counts against him. The jury reached their unanimous verdict in less than five hours. Damian Williams, the U.S. attorney for the Southern District of New York, said “’when I became U.S. attorney, I promised we would be relentless in rooting corruption in our financial markets. This is what relentless looks like. This is also a message, a warning in this case, to every single fraudster out there who thinks that they’re untouchable or that their crimes are too complex for us to catch. Or that they’re too powerful for us to prosecute, or that they could try to talk their way out of it when they get caught. Those folks should think again and cut it out – and if they don’t I promise we’ll have enough handcuffs for all of them.”
3. Home prices finished the summer at another record high as home affordability tanks to a historical low. The S&P CoreLogic National Home Price Index increased 0.9% in August month over month and 2.6% annually on a seasonally adjusted basis. The index has risen for seven consecutive months and hit an all-time index high in August. The index tracking existing home prices in the 20 largest U.S. cities also gained 1.0% in August from July, exceeding the consensus estimate of 0.8%. The 20-city index rose 2.2% compared to last August. August’s home price increase demonstrates that underlying demand for housing is still outpacing supply even as it becomes more expensive to buy. On a national level, the average mortgage payment rose 26.2%, or $464, in the last 12 months to $2,234 in August and 2.9%, or $63, from July. “When you start to throw in things like fighting inflation when you start to throw in things like a non-balancing your budget and a government shutdown, there’s so many moving pieces right now that there’s instability in the markets,” Nathaniel Bittman, president of the Florida Association of Mortgage Professionals, said. “So, there’s no telling where rates are going to go.” The same could be said for home prices.
4. Rates for almost every mortgage type fell last Friday, including a moderate dip in 30-year rates. Now down to 8.25%, the flagship average is at its cheapest level in almost two weeks. That’s the lowest average since Oct. 16 and is a significant improvement over the recent peak of 8.45%, which is estimated to be the highest average in 23 years. Rates on 15-year mortgages shed 2 basis points Friday, falling to 7.54%. A week ago, 15-year rates notched a historic peak of 7.59%, which was the average’s highest point since 2000. The jumbo 30-year average meanwhile fell 13 basis points, sinking to 7.31%. A record of daily jumbo rates is not available before 2009, but it’s estimated that a recent peak of 7.52% is the most expensive average for jumbo 30-year loans in more than 20 years. Almost every other new purchase average was down Friday as well, except for 5/6 ARM rates, which inched up a single basis point, and jumbo 7/6 ARM rates, which were flat.
5. GM has reportedly reached a tentative deal with the United Auto Workers (UAW), joining its rivals Ford and Stellantis in coming one step closer to putting behind an acrimonious labor dispute that has shut down key operations for over six weeks. To recap, Ford and Stellantis have agreed to pay union workers 25% wage increases, reinstate COLA (cost of living adjustment) benefits, institute a three-year wage progression to top pay, convert temporary employees to full-time, and end wage tiers among other benefits. GM declined to comment on the deal at this time given the sensitive nature of the discussions. GM’s talks with the UAW reportedly took longer than its rivals because of pension payment obligations and the conversion of workers from temporary workers to full-time, though it appears those issues have been resolved.
6. Elon Musk warned that artificial intelligence is ‘one of the biggest threats’ to humanity today as he made a star appearance at the UK’s AI Safety Summit. The billionaire X boss used the event to say it was ‘timely’ because AI poses an ‘existential risk’ to humans, who face being outsmarted by machines for the first time. His intervention came after senior Meta executive Nick Clegg – a former UK deputy prime minister warned generative AI ‘deepfakes’ may pose a risk to upcoming elections in the US and UK next year. Some 28 nations including the US and China have signed the Bletchley Declaration setting out a shared understanding of the opportunities and risks posed by frontier AI and the need for governments to work together to meet the most significant challenges. A government paper published last week revealed how advances in AI will make it cheaper and easier for hackers, scammers, and terrorists to attack innocent victims, all within the next 18 months. It predicts so-called bots – social media accounts that appear like real people will target users with ‘personalized disinformation’, machines will launch their own cyberattacks without needing human direction, and anyone will be able to learn how to create the world’s most dangerous weapons. Researchers are now looking for signs of AI reaching ‘The Singularity‘, such as the technology’s ability to translate speech with the accuracy of a human and perform tasks faster.
7. In the week ending October 28, the advance figure for seasonally adjusted initial claims was 217,000, an increase of 5,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 210,000 to 212,000. The 4-week moving average was 210,000, an increase of 2,000 from the previous week’s revised average. The previous week’s average was revised up by 500 from 207,500 to 208,000.
8. Should the conflict expand beyond the borders of the Gaza Strip to a repeat of the Arab oil embargo in 1973, oil prices could surge to $157 per barrel, the World Bank noted in its latest Commodity Markets Outlook report. The highest price of oil on record was in July 2008, when Brent traded as high as $147.5 per barrel, according to data. At the time of writing, Brent crude was trading at $84.96 per barrel with WTI (West Texas Intermediate) trading at $80.42 per barrel.
9. EUR/USD rallies during Friday’s North American session after data from the United States paints a looser U.S. jobs market, as Nonfarm Payrolls missed estimates. Hence, traders reduced the chances for another Fed rate hike; instead, are expecting cuts for the second half of next year. The major trades at 1.0726, gains 1%. In October, the economy added a decent 150,000 jobs but missed forecasts of 180,000 and trailed the 290,000 jobs added to the workforce in September. That, along with the uptick in the Unemployment Rate and Average Hourly Earnings, sparked speculations the Fed is done raising rates.
10. USD/JPY is corrected after a rebound from the resistance level. The pair is going above the Ichimoku Cloud, which implies an uptrend. A test of the upper boundary of the Cloud is expected at 149.95, followed by a rise to 152.25. An added signal confirming the growth could be a rebound from the upper boundary of the bearish channel. The scenario might be canceled by a breakout of the lower Cloud boundary with the price finding a foothold under 149.25, which could show further falling to 148.35.
Soaring mortgage rates have poured cold water on America’s property market, deterring many would-be buyers from moving. But lenders are reportedly attempting to sweeten the deal by offering free refinancing down the line. Such agreements mean a borrower agrees on a mortgage at today’s rates on the condition they can refinance in the future without paying a fee, typically worth between 2 and 6 percent of the full loan. The deal assumes that mortgage rates – which are currently at a multi-decade high and edging closer to 8 percent – will come down in that time. However, experts are urging homebuyers to think carefully before agreeing to a ‘buy now refinance later’ agreement. Nobody can predict the future but it’s unlikely mortgage rates will go back to the record lows of the pandemic in our lifetime. It’s more likely that they will fall to around 6-6.5 percent by the end of next year and into 2025. Many lenders won’t cover the full cost of the refinance; many just offer a $1,500 credit which isn’t enough for most loans. And to qualify for these deals, some lenders offer a higher rate than the average upfront, on the understanding it may go down. If potential buyers think they can afford a higher rate for maybe the next two years but then you’re relying on rates coming down, then right now probably isn’t the best time to buy.
Consumer spending has powered the U.S. economy to nearly a full year of defying expectations. But exactly who is doing that spending is changing. And opening a new question about the next phase of this economic expansion. A new report from economists published late last month showed the top quintile of earners, or households in the top 20% of income, has accounted for 45% of all consumer spending between 2020 and 2022. Since 2004, this cohort has typically accounted for closer to 39% of all spending. Historically, rich people have slowed spending when their financial assets lose value, i.e., stock prices drop like after the tech bubble, or real estate values fall like during the 2008 financial crisis. This spending also supports demand for goods and services, contributing to the job market holding up and serving as the main reason the economy hasn’t yet fallen into recession. On the other hand, this robust spending is one of the factors contributing to the persistence of inflation, which hurts lower-income households more.
The U.S. government is contemplating releasing up to 180 million barrels of oil from its emergency supplies, in a desperate bid to lower high fuel prices and curb inflation. If the White House follows through with this plan, it would represent the largest release from the Strategic Petroleum Reserve (SPR) in its nearly 50-year history and mark the third time in the past six months that the U.S. government has tapped into its emergency supplies. The 180 million barrels of oil reportedly set to be accessed is equivalent to approximately two days of global demand, and will be drawn from gradually over several months, with some sources saying that the plan is to tap into as much as 1 million barrels of oil per day. President Biden’s intentions were revealed a day before the International Energy Agency (IEA) member countries are due to meet to discuss and decide on a collective oil release aimed at cooling global crude prices that hit 14-year highs in March after Russia invaded Ukraine. President Biden is desperate to lower fuel prices as it has contributed to high inflation and hurt his administration’s approval rating ahead of the midterm elections in November.
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 – Precious Metals International Ltd.
Friday to Friday Close (New York Closing Prices)
| Oct. 27, 2023 | Nov. 3, 2023 | Net Change | ||
| Gold | $1,996.33 | $1,993.17 | -3.16 | -0.16% |
| Silver | $22.89 | $23.21 | 0.32 | 1.40% |
| Platinum | $904.03 | $936.94 | 32.91 | 3.64% |
| Palladium | $1,122.68 | $1,126.31 | 3.63 | 0.32% |
| Dow | 32418.24 | 34061.12 | 1642.88 | 5.07% |
Month End to Month End Close
| Sep. 29, 2023 | Oct. 31, 2023 | Net Change | ||
| Gold | $1,849.92 | $1,983.86 | 133.94 | 7.24% |
| Silver | $22.19 | $22.84 | 0.65 | 2.93% |
| Platinum | $906.60 | $937.53 | 30.93 | 3.41% |
| Palladium | $1,250.42 | $1,125.09 | -125.33 | -10.02% |
| Dow | 33508.85 | 33052.87 | -455.98 | -1.36% |
Previous Years Comparisons
| Nov. 4, 2022 | Nov. 3, 2023 | Net Change | ||
| Gold | 1,674.30 | 1,993.17 | 318.87 | 19.04% |
| Silver | 20.74 | 23.21 | 2.47 | 11.91% |
| Platinum | 957.42 | 936.94 | -20.48 | -2.14% |
| Palladium | 1,866.32 | 1,126.31 | -740.01 | -39.65% |
| Dow | 32404.80 | 34061.12 | 1656.32 | 5.11% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 1969/1934/1914 | 22.61/22.08/21.72 |
| Resistance | 2025/2045/2081 | 23.50/23.86/24.39 |
| Platinum | Palladium | |
| Support | 885/868/853 | 1091/1060/1033 |
| Resistance | 950/964/985 | 1149/1177/1208 |