1. Signs of a weaker U.S. economy suggested to the market that the Fed could ease up on its tightening campaign. But investors were reassessing those hopes after Minneapolis Fed president Neel Kashkari said on Monday the central bank likely has more work ahead of it to control inflation. “There was quite a bit of euphoria at the end of last week on the belief that the Fed is done, the jobs market is slowing, that the economy is going to experience a soft landing,” Michael Hewson, chief market analyst at CMC Markets UK, told Reuters. “People have started to become a bit more clear-eyed. There is the risk that the Fed could rise again.” Investors will listen out for hints to policymakers’ thinking when the heads of the Kansas City and Dallas Feds speak on Tuesday, and then when Chair Jerome Powell steps up later in the week.
2. The rapid growth of the hydrogen economy continues to provide solid support for platinum and 2024 could prove to be a big year for the alternative fuel and the precious metal. Analysts at the World Platinum Investment Council said on Wednesday that platinum-based hydrogen technology will be the big winner at the 2024 Summer Olympic Games in Paris, France. Last month, Toyota, the worldwide mobility partner of the International Olympic Committee unveiled its transportation plans for Paris 2024, which include using ten different hydrogen fuel-cell applications, demonstrating a hydrogen ecosystem, and encouraging the further roll-out of refueling infrastructure. The world’s top-selling automaker said that its hydrogen applications will be used in about 500 vehicles during the games, a significant increase from what was used in Tokyo 2020 and Beijing 2022. “Applications will range from buses and trucks to boats and forklifts – all demonstrating the potential of hydrogen-powered society,” the press release said. “Applications will range from buses and trucks to boats and forklifts – all demonstrating the potential of hydrogen-powered society.”
3. Credit card debt surged again during the third quarter and so did the number of people missing payments. Credit card balances rose by $48 billion in the third quarter to a record high of $1.08 trillion, according to data released Tuesday. The $154 billion year-over-year gain in debt was the largest such increase since the beginning of the series in 1999. At the same time, the 90-day delinquency rate measure for credit cardholders increased to 5.78%, up from 3.69% a year earlier. While rising delinquencies spanned incomes and regions, they were particularly acute among millennials and those with auto or student loans, the report found. Those flowing into serious delinquency on credit card debt, which are 90 days or more past due on payments, posted the largest increases out of every debt category, the study found. Overall, the flow of debt moving into delinquency hit 1.28% in the third quarter, up from 0.94% a year ago, the report found. On the other hand, the credit card delinquency rates for Gen Z, Gen X, and baby boomers were still within pre-pandemic levels.
4. It’s not just the housing market that’s depressing Americans. Broader worries about the economy are now weighing on sentiment. In the latest survey from Fannie Mae measuring housing sentiment, 85% of respondents in October said now is a bad time to buy a house because of high home prices and high mortgage rates. That marked a survey high. Their downbeat outlook extended beyond housing, with 78% of respondents saying the economy is on the wrong track, Fannie Mae found. That’s up 7 percentage points from last month, with the vast majority once again saying inflation is the main culprit. “Consumers expressed even greater pessimism toward the larger economy this month, in addition to their ongoing frustration with the housing market,” Fannie Mae chief economist Doug Duncan said in a statement. “We expect this tightness in household finances, along with high home prices and elevated mortgage rates, to prolong the affordability challenges facing many would-be homebuyers.” Elevated rates are also keeping homeowners from selling. The continued dearth of resale properties on the market has propped up home prices, increasing affordability challenges.
5. Stalling demand for electric vehicles isn’t just hitting the automakers that sell them. It’s also impacting companies along the supply chain including producers of lithium, the component used to make EV batteries. Albemarle, the world’s top lithium company, saw its stock tank as much as 7% on Monday after an analyst downgrade from UBS citing falling prices for the soft metal. Analysts lowered their rating to Neutral from Buy and cut their share price target to $140 from $253. “On UBS reduced EV forecasts, lithium demand growth declines from 30% Y/Y to 22% in 2024, and results in lithium over-supply sooner than expected,” wrote analyst Joshua Spector. “Our net sales were up 10% in the third quarter versus the same period last year. However, adjusted EBITDA was down due to softer lithium market pricing,” Kent Masters, CEO of Albemarle, said during the company’s latest earnings call. “While the U.S. and Europe make up only about one-third of total EV production in ’23 and ’24, near term we see potential challenges for EV growth in those regions related to economic softness and higher interest rates,” added Masters. Shares of the lithium technology company Livent are also on a downward trend, down 24% year to date. Unlike oil, gold, or any other major commodity, lithium is not actively traded on large international exchanges. The material is sold under contracts and the terms aren’t generally publicized. China’s spot market shows lithium prices are down around 50% from their June levels, recently moving below $20,000 per ton. The decline is a sharp contrast from a year ago when prices for the critical metal coming out of China surpassed $70,000 per ton.
6. U.S. crude oil production is booming, reeling in a record-high number of supertankers to fill up at the Gulf Coast for export to markets around the world. According to data, 48 vessels are bound for the U.S. in the next three months, the most in at least six years. That comes as top OPEC (Organization of the Petroleum Exporting Countries) producers Saudi Arabia and Russia have been slashing production to inflate oil prices. Then last month, possible spillover effects of the Israel-Hamas war have had traders biting their nails over the risk of increased tightness in oil production. Meanwhile, U.S. crude production hit an all-time high of 13.2 million barrels a day last month, and exports are at the highest levels since restrictions were lifted in 2015. According to a report from the Energy Information Administration in October, U.S. oil exports clocked in around 3.99 million barrels per day for the first half of 2023. An analyst said that shipments from the Gulf Coast are expected to rise to 4.1 million barrels a day next month, 100,000 barrels more than in December last year. The U.S. has been exporting more of its “light, sweet” crude oil overseas, keeping the heavier grades for use back home.
7. In the week ending November 4, the advance figure for seasonally adjusted initial claims was 217,000, a decrease of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 217,000 to 220,000. The 4-week moving average was 212,250, an increase of 1,500 from the previous week’s revised average. The previous week’s average was revised up by 750 from 210,000 to 210,750.
8. Oil prices continued to tumble this week as demand concerns and inventory build-ups added to bearish sentiment, but with an OPEC+ meeting at the end of the month and the potential of an escalation in the Gaza war things could change rapidly. Battered by inventory build-ups, weaker-than-expected Chinese economic data, and slackening physical demand coming from skyrocketing freight costs, oil prices have struggled this week and Brent crude is set for a $5 per barrel week-on-week drop, settling around the $80 per barrel mark. WTI was trading for $76.70 per barrel on Friday at the time of writing.
9. EUR/USD struggles to find direction on Friday and fluctuates in a narrow band slightly below 1.0700. U.S. UoM Consumer Confidence missed expectations, weakening to 60.4 in November from 63.8 in October. Wall Street trades in the green after Thursday’s slump, weighing on US Dollar demand.
10. USD/JPY seems to surpass 151.40 on U.S. dollar strength. USD/JPY receives upwards support on hawkish remarks by Fed Chairman Powell. Japanese authorities may intervene in the FX market to provide support for the JPY. BoJ (Bank of Japan) Governor Ueda mentioned that the central bank will approach the exit from ultra-loose monetary policy.
After the Federal Reserve held rates steady for the second meeting in a row, markets are rather confident that the U.S. central bank is done with its tightening cycle. However, Adrian Day, Chairman and CEO of his Asset Management company thinks there is still more than a 50% chance of another rate hike. Despite a looming recession, the Fed might not be done, warned Day. At the Fed’s latest meeting, 12 of the 19 FOMC members still called for another rate hike this year. “Recession is a freight train heading towards us,” Day pointed out. A major economic slowdown is inevitable due to the lagging effects of monetary tightening. The solid economic numbers that have recently come out, including the U.S. GDP growing at a 4.9% annualized pace in the third quarter, are temporary according to Day. “The fourth quarter GDP will likely be dramatically lower. I expect Q4 GDP to be lower, but not negative. Next quarter could be negative. Two or three-quarters from now, it’ll be negative,” he said. The lag effects of monetary policy tightening have postponed a recession, but it will filter through the economy next year. “During that long period from 2008, everyone had the opportunity to refinance their debt. Households did it with mortgages, and corporations did it by terming their debt and refinancing at lower levels,” Day said. “Everybody in the United States did it, except the U.S. government.” Day recommended additional exposure to gold, silver, and mining stocks during a recession.
The housing bubble is heating up, with median 30-year mortgage rates hitting the highest threshold since 1995. As monthly mortgage payments rise because of soaring home prices and interest rates, obtaining a mortgage has become increasingly challenging for many prospective buyers. Unsurprisingly, total application volume fell by 6.9% week-over-week as of Oct.18, 2023, according to data released by the Mortgage Bankers Association’s seasonally adjusted index. As mortgage rates rose in tandem with rising overnight federal funds rates, more loan applications are being denied, citing insufficient funds or income as the primary reason. Loan applications were denied on the grounds of insufficient income more frequently than at any other time in 2022 since records began in 2018. Approximately 9.1% of all home purchase applications were declined in 2022, an 800-basis-point rise from 8.3% in 2021. In the case of refinance applications, the rejection rate saw a significant jump, reaching 24.7% in 2022, compared to 14.2% in 2021.
Higher baseline inflation could remain for ‘decades’, according to billionaire investor Ken Griffin. Griffin, who founded and runs Citadel, a hedge fund firm that manages more than $60 billion in assets, said soaring prices could become entrenched as global unrest ushers in an era of deglobalization. Griffin predicted that higher interest rates would become the norm, with Fed officials forced to keep borrowing costs high to maintain this target. He said: “There’s a variety of reasons you want a low level of background inflation, it helps to lubricate the wheels of commerce. That number the Fed has committed to is 2 percent. They are going to fight pretty hard to keep that as the target, for a litany of good reasons.” The billionaire said that higher rates will also create more concerns about the U.S. Government’s ability to repay its $33 trillion deficit, which would become more expensive to service in the event of Federal Reserve tightening. Griffin said the Government had not counted on higher rates when it went on a ‘spending spree’ which resulted in the record debt. He added that U.S. fiscal spending needs to be put in order, as the country is “spending on the government level like a drunken sailor.” Federal debt reached $33.04 trillion in September – spiking by $1.58 trillion since the debt ceiling was lifted in early June.
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)
| Nov. 3, 2023 | Nov. 10, 2023 | Net Change | ||
| Gold | $1,993.17 | $1,936.74 | -56.43 | -2.83% |
| Silver | $23.21 | $22.27 | -0.94 | -4.05% |
| Platinum | $936.94 | $846.12 | -90.82 | -9.69% |
| Palladium | $1,126.31 | $978.64 | -147.67 | -13.11% |
| Dow | 34061.12 | 34283.50 | 222.38 | 0.65% |
Previous Years Comparisons
| Nov. 11, 2022 | Nov. 10, 2023 | Net Change | ||
| Gold | 1,764.69 | 1,936.74 | 172.05 | 9.75% |
| Silver | 21.49 | 22.27 | 0.78 | 3.63% |
| Platinum | 1,026.40 | 846.12 | -180.28 | -17.56% |
| Palladium | 2,035.40 | 978.64 | -1056.76 | -51.92% |
| Dow | 33750.11 | 34283.50 | 533.39 | 1.58% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 1930/1921/1911 | 22.06/21.75/21.50 |
| Resistance | 1952/1974/1995 | 23.50/23.71/24.22 |
| Platinum | Palladium | |
| Support | 842/830/814 | 965/960/944 |
| Resistance | 903/938/947 | 977/982/1008 |